Agenda packet — City Council and Authorities Concurrent, June 10, 2025 (part 5 of 8)

City of Santa Clara
Agenda Report
1500 Warburton Avenue
Santa Clara, CA 95050
santaclaraca.gov
@SantaClaraCity
25-578 Agenda Date: 6/10/2025

REPORT TO STADIUM AUTHORITY BOARD

SUBJECT
Action on Stadium Authority Bills and Claims for the Month of April 2025

BOARD PILLARS
Enhance Community Engagement and Transparency
Ensure Compliance with Measure J and Manage Levi’s Stadium

BACKGROUND
Disbursements made by the Stadium Authority are based on invoices submitted for payment. Prior to payment, staff reviews all disbursement documents to ensure that the invoiced goods or services have been provided.

The Bills and Claims listing represents the cash disbursements required of normal and usual operations during April 2025. Budget control is set by the Stadium Authority Board through the budget adoption process.

DISCUSSION
At its March 11, 2025 meeting, the Stadium Authority Board adopted the Santa Clara Stadium Authority Fiscal Year 2025-26 Operating, Debt Service, and Capital Budget which runs from April 1, 2025 to March 31, 2026. Significant expenditures (greater than $5,000) paid in April 2025 include:
· Payments totaling $191,537.56 to the City of Santa Clara for reimbursement of General and Administrative (G&A) City payroll costs (e.g., Executive Director’s Office (City Manager’s Office), Stadium Authority Counsel’s Office (City Attorney’s Office), and Treasurer’s Office (Finance Department))
· Payment totaling $28,551.00 to Cupertino Electric for CapEx Project - Stadium Event Power Upgrades & Switchgear
· Payment totaling $102,890.78 to Devcon Construction, Inc. for CapEx Project - Aesthetic Improvements - Premium Areas / Special Event Spaces
· Payment totaling $1,536,202.65 to Forty Niners Stadium Management Company, LLC for April 2025 Stadium Manager Expenses, inclusive of Shared Stadium Expenses · Payment totaling $5,344.70 to InTWO, Inc for Financial Management System Monthly Services (March 2025)
· Payment totaling $12,654,502.82 to Stadium Funding Trust for Term A Loan Payment - Principal & Interest

ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to section 15378(b)(4) of Title 14 of the California Code City of Santa Clara Page 1 of 2 Printed on 6/6/2025
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25-578 Agenda Date: 6/10/2025
of Regulations in that it is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment.

FISCAL IMPACT
The fiscal impact to the Stadium Authority is $14,519,044.03

COORDINATION
This report has been coordinated with the Executive Director and Stadium Authority Counsel’s Office.

PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email [email protected] or at the public information desk at any City of Santa Clara public library.

RECOMMENDATION
Approve the list of Stadium Authority Bills and Claims for April 2025.

Reviewed by: Kenn Lee, Treasurer
Approved by: Jovan D. Grogan, Executive Director

ATTACHMENT

1. April 2025 SCSA Bills and Claims
City of Santa Clara Page 2 of 2 Printed on 6/6/2025
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Payment Date Vendor Invoice No. Description Fund Amount 4/15/2025 City of Santa Clara N/A B2506 SCSA Payroll Costs Operating 97,532.85 4/25/2025 City of Santa Clara N/A B2507 SCSA Payroll Costs Operating 94,004.71 191,537.56
4/14/2025 Cupertino Electric 106737 CapEx Project - Stadium Event Power Upgrades & Switchgear CapEx 28,551.00 4/14/2025 Devcon Construction, Inc. 92384 CapEx Project - Aesthetic Improvements - Premium Areas / Special Event Spaces CapEx 46,909.33 4/14/2025 Devcon Construction, Inc. 92385 CapEx Project - Aesthetic Improvements - Premium Areas / Special Event Spaces CapEx 55,981.45 102,890.78
4/1/2025 Forty Niners Stadium Management Co, LLC SLS-24898 April 2025 Stadium Manager Expenses - Security Operating 145,127.00 4/1/2025 Forty Niners Stadium Management Co, LLC SLS-24898 April 2025 Stadium Manager Expenses - Stadium Ops Operating 306,617.61 4/1/2025 Forty Niners Stadium Management Co, LLC SLS-24898 April 2025 Stadium Manager Expenses - Engineering Operating 356,567.46 4/1/2025 Forty Niners Stadium Management Co, LLC SLS-24898 April 2025 Stadium Manager Expenses - Guest Services Operating 56,228.73 4/1/2025 Forty Niners Stadium Management Co, LLC SLS-24898 April 2025 Stadium Manager Expenses - Groundskeeping Operating 28,676.23 4/1/2025 Forty Niners Stadium Management Co, LLC SLS-24898 April 2025 Stadium Manager Expenses - SBL Sales & Service Operating 206,278.10 4/1/2025 Forty Niners Stadium Management Co, LLC SLS-24898 April 2025 Stadium Manager Expenses - Insurance Operating 74,037.26 4/1/2025 Forty Niners Stadium Management Co, LLC SLS-24898 April 2025 Stadium Manager Expenses - Utilities Operating 245,871.44 4/1/2025 Forty Niners Stadium Management Co, LLC SLS-24898 April 2025 Stadium Manager Expenses - StadCo Tenant Improvements Operating 2,283.99 4/1/2025 Forty Niners Stadium Management Co, LLC SLS-24898 April 2025 Stadium Manager Expenses - Naming Rights Operating 49,659.39 4/1/2025 Forty Niners Stadium Management Co, LLC SLS-24898 April 2025 Stadium Manager Expenses - Other G&A Operating 64,855.44 1,536,202.65
4/15/2025 JPMorgan Chase Bank, N.A. N/A Bank Fees Operating 14.52 4/14/2025 InTWO, Inc. 44677-US Financial Management System Monthly Services (March 2025) Operating 369.80 4/14/2025 InTWO, Inc. 44678-US Financial Management System Monthly Services (March 2025) Operating 4,974.90 5,344.70
4/1/2025 Stadium Funding Trust N/A Term A Loan Payment - Principal & Interest Debt Service 12,654,502.82 April 2025 Total $ 14,519,044.03
Santa Clara Stadium Authority
Bills and Claims
Expenses Paid by Wire or ACH Transfer
For the Month of April 2025

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City of Santa Clara
Agenda Report
1500 Warburton Avenue
Santa Clara, CA 95050
santaclaraca.gov
@SantaClaraCity
25-57 Agenda Date: 6/10/2025

REPORT TO COUNCIL

SUBJECT
Public Hearing: Action on Resolutions Approving Water, Sewer and Recycled Water Amended Rates to be Effective July 1, 2025

COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure

BACKGROUND
In November 1996, California voters approved Proposition 218, which amended the State Constitution to establish a new category of fees and charges referred to as “property-related fees and charges” and created new procedural requirements for their adoption. Under these requirements, proposed fees or charges for water, sewer, and recycled water service are subject to a written notice and public hearing not less than 45 days after the mailing of the notice as well as an explanation of the protest procedure for customers who may wish to formally protest their adoption. At the public hearing, all protests against the proposed fees or charges are tabulated and if protests are presented by a majority of utility customers (50% plus 1), the fees or charges cannot be imposed. If there is not a majority of utility customers protesting the proposed fees or charges, Council can make and act on a motion to approve increases. The required number of protests needed to deny Council the option to approve rate increases is 11,886.

The City updates the rates it charges Santa Clara residents and businesses for water, sewer, and recycled water services on an annual basis. Each of these three utilities are self-sustaining and rates are adopted to pay for revenue requirements associated with operations and maintenance (O&M) costs, capital improvement program (CIP) projects and, when possible and feasible, the funding for reserves associated with the respective utility systems.

Staff is seeking approval of the attached resolutions assigning water and recycled water rates (Attachment 1), and sewer rates (Attachment 2) to be effective July 1, 2025.

The Water & Sewer Utilities Department engaged Black & Veatch Management Consulting, LLC (Black & Veatch) to conduct an ongoing cost-of-service study of water, sewer, and recycled water rates charged to City residents and businesses.

DISCUSSION
In the fall of 2021, the City conducted a competitive procurement, and in December 2021, entered into a new agreement with Black & Veatch for consulting services related to rate setting for the next five (5) years.

As in years past, Black & Veatch conducted a cost-of-service analysis for all three utilities, projected City of Santa Clara Page 1 of 4 Printed on 6/6/2025
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25-57 Agenda Date: 6/10/2025
three years of rates and created a ten-year financial plan to fund O&M and capital expenditures with adequate reserves. Black & Veatch also updated the Rate Study (Attachment 3) to reflect funding reserves analysis and financial plans on cost-of-service analyses. The methodology in the rate study allocates cost components of each utility’s operation and capital costs to customers and customer classes within each utility based on their use of the respective utilities.

Water Rates
The potable water rates charged to Santa Clara residents and businesses are primarily driven by wholesale water purchases, O&M costs, and capital improvements for rehabilitation and replacement of aging infrastructure. The San Francisco Public Utilities Commission (SFPUC) voted on May 13, 2025, to raise the rates it charges to its wholesale customers by 2.3% for FY 2025/26. On May 13, 2025, the Santa Clara Valley Water District (Valley Water) Board adopted a 9.9% increase of wholesale water rates for FY 2025/26. The City’s Water Utility is proposing to complete approximately $29 million in CIP projects over the next five years to address aging infrastructure and ensure ongoing water quality standards are met. These costs, including O&M costs, have resulted in the need to propose an 11.2% increase in the potable water rate. For an average residential customer that uses 12 units (1 unit=1 HCF=748 gallons) of water, the monthly water bill will increase by $11.88.

Sewer Rates
The sewer rates charged to Santa Clara customers are primarily driven by the City’s contribution to the capital and O&M costs at the San José-Santa Clara Regional Wastewater Facility (RWF), of which the City is a co-owner. O&M and capital costs on the City’s collection system are also drivers of sewer rates. The RWF has been undergoing a large rehabilitation/replacement project that may last upwards of 30 years. Santa Clara’s share of this project’s costs is currently budgeted to be approximately $89.4 million over the next five (5) years. The Sewer Utility issued $35 million in installment sale financing Certificates of Participation (COPs) in October 2023 in an effort to mitigate the rate impacts of the RWF capital project and to ensure generational equity as the project is funded. Future additional financing for this project is likely. The costs associated with the Sewer Utility have resulted in the need to propose a 9.9% increase for single-family residential customers. Based on the cost-of-service analysis, multi-family residential customers will see a proposed 7.8% increase to their sewer rates. Non-residential customers will see a proposed average 6.6% increase to their sewer rates, however the actual increase for individual customers will be based on their customer class.

If proposed rates are adopted, single-family residential customers will see their monthly sewer bill increase by $5.19, and multi-family residential customers will see their monthly sewer bill increase by $3.84. Even after adopting increased rates, Santa Clara utilities would remain very competitive with neighboring agencies in Santa Clara County.

Recycled Water Rates
The recycled water rates charged to City customers are primarily driven by wholesale rates charged by the City of San José through South Bay Water Recycling (SBWR). SBWR’s rates are tied to the groundwater charge levied by Valley Water. The rate charged to the City of Santa Clara to purchase recycled water will increase by 10.4%. These costs, along with O&M costs, have resulted in the need to propose a 7.3% increase in the recycled water rate. Non-residential customers use recycled water for irrigation, dual plumbing, and various industrial processes.

ENVIRONMENTAL REVIEW
City of Santa Clara Page 2 of 4 Printed on 6/6/2025
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25-57 Agenda Date: 6/10/2025
The action being considered is not subject to the California Environmental Quality Act (“CEQA”) pursuant to Public Resources Code section 21080(b)(8) and CEQA Guidelines section 15273 as it concerns the establishment, modification, structuring, restructuring, or approval of rates, tolls, fares, or other charges that are for the purpose of (A) meeting operating expenses, (B) purchasing or leasing supplies, equipment, or materials, (C) meeting financial reserve needs and requirements, or (D) obtaining funds for capital projects necessary to maintain service within existing service areas.

As described above, the proposed rate increases will cover operations and maintenance costs, capital improvement program projects and the funding of reserves associated with the respective utilities’ systems.

FISCAL IMPACT
The proposed rates are reflected in the FY 2025/26 Water & Sewer Utilities operating budget, recommended as part of the FY 2025/26 and FY 2026/27 Proposed Biennial Operating Budget.

Failure to adopt the proposed rates will result in lower-than-expected revenues and the need to amend the upcoming budgets by further drawing down reserve funds for the three utilities and to change the ten-year financial outlook for each of the utilities.

COORDINATION
This report has been coordinated with the Finance Department, City Manager’s Office and the City Attorney’s Office.

Additionally, on April 22, 2025, which is not less than 45 days before the public hearing, as required by Article XIII D of the California Constitution (Proposition 218), notices were mailed to all 23,770 current utility customers in the City Utility Billing System. Also, staff reached out to utility customers via social media platforms and through the utility rates page on the City’s website.

ALTERNATIVES

1. Adopt the Proposed Resolutions Establishing Water Rate Schedule 2025-01, Recycled Water Rate Schedule 2025-02 and Sewer Rate Schedule S-25

2. Do Not Adopt the Proposed Resolutions Establishing Water Rate Schedule 2025-01, Recycled Water Rate Schedule 2025-02 and Sewer Rate Schedule S-25 and Direct Staff to Return to Council with Necessary Budget Amendments.

RECOMMENDATION
Alternative 1: Conduct a public hearing, tabulate protest votes, and if less than a majority protest is tabulated, Adopt the Proposed Resolutions Establishing the Water Rate Schedule 2025-01, Recycled Water Rate Schedule 2025-02 and Sewer Rate Schedule S-25, with Increases in Rates as Indicated in the Schedules
Reviewed by: Gary Welling, Director, Water & Sewer Utilities City of Santa Clara Page 3 of 4 Printed on 6/6/2025
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25-57 Agenda Date: 6/10/2025
Approved by: Jovan D. Grogan, City Manager

ATTACHMENTS

1. Proposed Resolution Establishing Water Rate Schedule 2025-01 & Recycled Water Rate Schedule 2025-02

2. Proposed Resolution Establishing Sewer Rate Schedule S-25

3. Draft 2025 Water and Sewer Rate Study Report by Black & Veatch Management Consulting, LLC City of Santa Clara Page 4 of 4 Printed on 6/6/2025
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Resolution/Establishing Water Rate Schedule 2025-01
& Recycled Water Rate Schedule 2025-02
Rev: 11/22/17

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RESOLUTION NO. 25-XXX

A RESOLUTION OF THE CITY OF SANTA CLARA, CALIFORNIA,
ESTABLISHING WATER RATE SCHEDULE 2025-01 AND
RECYCLED WATER RATE SCHEDULE 2025-02 FOR CITY

SERVICE
WHEREAS, all water furnished to utility customers by the City of Santa Clara shall be charged, paid for and supplied only in accordance with such applicable schedules, rules and regulations as the City Council shall adopt pursuant to the provision of Section 13.15.020 [entitled "Water Rates to be Determined by City Council"] of "The Code of the City of Santa Clara, California" ("SCCC") and the Rules and Regulations for Water Service of the City of Santa Clara; WHEREAS, Article XIII D of the California Constitution requires that increases to property related fees and charges, including water service rates, be approved by the City Council at a Public Hearing conducted not less than 45 days after mailing notice of the proposed rate increase;
WHEREAS, notice of a Public Hearing to be held on June 10, 2025 was mailed to water utility customers on April 22, 2025, which is more than 45 days prior to the Public Hearing; WHEREAS, the notice was sent to 23,770 utility customers; WHEREAS, the Council has reviewed the Water Rate Schedule 2025-01 and Recycled Water Rate Schedule 2025-02 (the "Rate Schedules") attached and incorporated into this Resolution by reference;
WHEREAS, the amounts shown on the Rate Schedules reflect the actual costs to provide utility services; and,
WHEREAS, on June 10, 2025, the Council conducted a Public Hearing, at which it reviewed all protests regarding the proposed rate increases.
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Resolution/Establishing Water Rate Schedule 2025-01
& Recycled Water Rate Schedule 2025-02
Rev: 11/22/17

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NOW THEREFORE, BE IT RESOLVED BY THE CITY OF SANTA CLARA AS FOLLOWS:

1. That based on a tabulation of all the protests received prior to the close of the Public Hearing, XX protests were received, which does not constitute a majority of affected water utility customers.

2. In accordance with Article XIIID § 6 of the California Constitution and as set forth in the accompanying Agenda Report, incorporated herein by this reference, the City Council finds:

A. The revenue derived from the Water Rates and Recycled Water Rates, as stated in the attached Rate Schedules, do not exceed the funds required to cover the operating and capital improvement project expenses for the provision of water; B. The revenue derived from the Water Rates and Recycled Water Rates will not be used for any purpose other than the provision of water and recycled water and related capital improvement projects;
C. The Water Rates and Recycled Water Rates will not exceed the proportional cost of the service attributable to each parcel;
D. The Water Rates and Recycled Water Rates are only charged for water service and programs that are currently available;
E. The Water Rates and Recycled Water Rates are not charged for general governmental services.

3. That Water Rate Schedule 2025-01 and Recycled Water Rate Schedule 2025-02, attached to this Resolution and incorporated by this reference, are hereby adopted and shall be effective per Section 4 of this Resolution.
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Resolution/Establishing Water Rate Schedule 2025-01
& Recycled Water Rate Schedule 2025-02
Rev: 11/22/17

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4. All previously adopted water rate schedules, to the extent that they are inconsistent with those contained herein, are superseded by those charges provided for hereinabove as follows: Commencing with the billing cycle for water service provided on or after July 1, 2025, and each subsequent billing cycle thereafter as set forth in Water Rate Schedule 2025-01 and Recycled Water Rate 2025-02.

5. Effective date. This resolution shall become effective immediately.

I HEREBY CERTIFY THE FOREGOING TO BE A TRUE COPY OF A RESOLUTION PASSED

AND ADOPTED BY THE CITY OF SANTA CLARA, CALIFORNIA, AT A REGULAR MEETING THEREOF HELD ON THE 10TH DAY OF JUNE, 2025, BY THE FOLLOWING VOTE:

AYES: COUNCILORS:

NOES: COUNCILORS: None
ABSENT: COUNCILORS: None
ABSTAINED: COUNCILORS: None
ATTEST:

Attachments incorporated by reference:

1. Water Rate Schedule 2025-01

2. Recycled Water Rate Schedule 2025-02
City of Santa Clara Water Rate Schedule 2025-01 Page 1 of 2

CITY OF SANTA CLARA
WATER RATE SCHEDULE 2025-01
(Replaces Water Rate Schedule 2024-01)
ADOPTED BY RESOLUTION NO. 25-XXX, June 10, 2025
RATE W-1, METERED POTABLE WATER SERVICE
Applicable to allmetered potable water service provided by the City of Santa Clara (1) MONTHLY QUANTITY CHARGES:

All potable water use, $9.89 per Hundred Cubic Feet (HCF). The Monthly Quantity Charge recovers the annual cost to operate the Water Utility, including groundwater charges, treated water purchased from others for resale, and energy for pumping. (2) MINIMUM MONTHLY METER RATES:

The minimum monthly meter rate includes a consumption allowance to recover fixed cost elements and accommodate water considered essential for health and safety.

WATER METER SIZE MINIMUM CHARGE($)
5/8 x 3/4 inch 26.46
1 inch 41.70
1 ½ inch 79.79
2 inch 125.50
3 inch 247.40
4 inch 384.53
6 inch 765.46
8 inch 1,222.58
10 inch 1,832.07
12 inch 2,574.88
RATE W-2, FIRE SERVICE
(1) MONTHLY FIRE SERVICE CHARGE:

SERVICE SIZE MONTHLY CHARGE($)
2 inch 3.50
4 inch 19.83
6 inch 58.33
8 inch 124.25
10 inch 223.42
12 inch 361.08
City of Santa Clara Water Rate Schedule 2025-01 Page 2 of 2 (2) SPECIAL CONDITIONS:

Fire Service charges are imposed for maintenance and operation of the metering components, including capital replacement. No charge will be made for water used to extinguish fires or for testing. Any other usage of water through leakage or for general use shall result in the imposition of regular water service rates (RATE W-1) for a minimum of three (3) billing cycles or longer, until such time as illicit use of water through the fire service connection has ceased.

Continued water usage through a fire service is a violation of City's Rules and Regulations and may cause interruption of service.

RATE W-3, CROSS CONNECTION CONTROLS
Applicability - Applicable to all service connections where a public cross connection control device has been required by the City or County Health Department. (1) MONTHLY CHARGE:

SIZE OF SERVICE MONTHLY CHARGE ($)
1 inch 7.47
2 inch 11.95
3 inch 23.89
4 inch 37.33
6 inch 74.66
8 inch 119.46
10 inch 179.19
City of Santa Clara Recycled Water Rate Schedule 2025-02 Page 1 of 2

CITY OF SANTA CLARA
RECYCLED WATER RATE SCHEDULE 2025-02
(Replaces Recycled Water Rate Schedule 2024-02)
ADOPTED BY RESOLUTION NO. 25-XXX, June 10, 2025
RATE RW-1, METERED RECYCLED WATER SERVICE
Applicable to allmetered service connections served by the City of Santa Clara Recycled Water System, except for those specified recycled water uses described in Rate RW-2. (1) MONTHLY QUANTITY CHARGES:

All use: $5.43 per Hundred Cubic Feet (HCF).
(2) MINIMUM MONTHLY METER RATES:

The minimum monthly meter rate includes a consumption allowance to recover fixed cost elements and accommodate water considered essential for health and safety.

WATER METER SIZE MINIMUM CHARGE($)
5/8 x 3/4 inch 17.80
1 inch 29.07
1 ½ inch 57.26
2 inch 91.08
3 inch 181.27
4 inch 282.74
6 inch 564.59
8 inch 902.82
10 inch 1,353.78
12 inch 1,903.40
RATE W-2, FIRE SERVICES
Applicable to separate fire services (automatic sprinklers, private fire hydrants, etc.) required by the City of Santa Clara or insurance underwriters.

City of Santa Clara Recycled Water Rate Schedule 2025-02 Page 2 of 2 (1) MONTHLY FIRE SERVICE CHARGE:

SERVICE SIZE MONTHLY CHARGE($)
2 inch 3.50
4 inch 19.83
6 inch 58.33
8 inch 124.25
10 inch 223.42
12 inch 361.08
(2) SPECIAL CONDITIONS:

Continued water usage through a fire service is a violation of City's Rules and Regulations and may cause interruption of service.

RATE W-3, CROSS CONNECTION CONTROLS
Applicable to all service connections where a public cross connection control device has been required by the City or County Health Department. (1) MONTHLY CHARGE:

SIZE OF SERVICE MONTHLY CHARGE ($)
1 inch 7.47
2 inch 11.95
3 inch 23.89
4 inch 37.33
6 inch 74.66
8 inch 119.46
10 inch 179.19
Resolution No. 25-xxx/Sewer Rate Schedule (S-25)
Rev: 11/22/17

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RESOLUTION NO. 25-XXX

A RESOLUTION OF THE CITY OF SANTA CLARA, CALIFORNIA,

ESTABLISHING MONTHLY SEWER SERVICE CHARGES AND
SEWER RATE SCHEDULE S-25
WHEREAS, Section 13.10.090, entitled “Rates – Users Within the City”, of "The Code of the City of Santa Clara" (“SCCC"), provides that the City Council may by resolution establish and amend the monthly sewer service charges;
WHEREAS, Article XIII D of the California Constitution requires that utility customers be given a minimum of 45 days notice of any proposed rate increase; WHEREAS, notice of a Public Hearing to be held on June 10, 2025 was mailed to utility customers on April 22, 2025, which is more than 45 days prior to the Public Hearing; WHEREAS, the notice was sent to 23,770 utility customers; WHEREAS, the Council has reviewed the Sewer Rate Schedule S-25 (attached) and incorporated into this Resolution by reference;
WHEREAS, the amounts shown on the Schedule S-25 reflect the actual costs to provide utility services; and,
WHEREAS, on June 10, 2025, the Council conducted a Public Hearing, at which it reviewed all protests regarding the proposed rate increases.

NOW THEREFORE, BE IT RESOLVED BY THE CITY OF SANTA CLARA AS FOLLOWS:

1. That based on a tabulation of all protests received prior to the close of the Public Hearing XX protests were received, which do not constitute a majority of affected utility customers.
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Resolution No. 25-xxx/Sewer Rate Schedule (S-25)
Rev: 11/22/17

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2. That, in accordance with Article XIIID § 6 of the California Constitution and as set forth in the accompanying Agenda Report, incorporated herein by this reference:

A. The revenues derived from the Sewer Rates, as stated in the attached Schedule S-25, do not exceed the funds required to cover the operating and capital improvement project expenses for the provision of sewer services;
B. The revenues derived from the Sewer Rates will not be used for any purpose other than the provision of sewer services and related capital improvement projects; C. The Sewer Rates will not exceed the proportional cost of the service attributable to each customer class;
D. The Sewer Rates are only charged for sewer programs that are currently available;
E. The Sewer Rates are not charged for general governmental services.

3. That Sewer Rate Schedule S-25, attached to this Resolution and incorporated by this reference, are hereby adopted and shall be effective per Section 4 of this Resolution. //
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Resolution No. 25-xxx/Sewer Rate Schedule (S-25)
Rev: 11/22/17

Page 3 of 3 ends

4. All previously adopted sewer rate schedules, to the extent that they are inconsistent with those contained herein, are superseded by those charges provided for hereinabove as follows:

Commencing with the billing cycle for sewer service provided on or after July 1, 2025, and each subsequent billing cycle thereafter as set forth in Sewer Rate Schedule S-25.

5. Effective date. This resolution shall become effective immediately.

I HEREBY CERTIFY THE FOREGOING TO BE A TRUE COPY OF A RESOLUTION PASSED

AND ADOPTED BY THE CITY OF SANTA CLARA, CALIFORNIA, AT A REGULAR MEETING THEREOF HELD ON THE 10TH DAY OF JUNE, 2025, BY THE FOLLOWING VOTE:

AYES: COUNCILORS:

NOES:

ABSENT:

COUNCILORS:

ABSTAINED: COUNCILORS:

ATTEST:

Attachments incorporated by reference:

1. Sewer Rate Schedule S-25
Sewer Rate Schedule S-25 Page 1 of 3
SCHEDULE S-25

MONTHLY SEWER SERVICE CHARGES
EFECTIVE JULY 1, 2025
(REPLACES SCHEDULE S-24)
A. Residential Users:

Single Family dwelling units including accessory dwellings: $57.56 per month Multiple dwelling unit structures including, but not limited to, duplexes, retirement homes, mobile home courts, college dormitories, and apartments: $53.15 per month per dwelling unit B. Miscellaneous Users:

For all users other than residential users and major commercial and industrial users, the monthly service charges per month shall be as follows, depending on the appropriate North American Industrial Classification System (NAICS) class:

NAICS CLASS DESCRIPTION SERVICE
CHARGE
$/HCF1
SEWAGE

VOLUME AS A

PERCENTAGE

OF METERED

WATER USE
111998, 311XXX, 3121XX Food and Kindred Products $17.53 70% 211112, 325:XXX Industrial Chemical $12.69 90%
332812, 332813 Metal Plating $4.92 90%
332XXX, 333:XXX,
3341 IX, (excepting 332812,
332813, 333314) Machinery Manufacturers $9.98 90%
334XXX, 335XXX, 33632X
(excepting 33451X, 33411X,
334611) Electric & Electronic Equip. $6.33 90%
4411XX, 4412XX, 4471XX Auto Dealers & Service Station $8.38 90% 722110, 722410 Restaurants $17.88 90%
721XXX Motels & Hotels $8.56 90%
561740, 811490, 8123XX Laundries $7.01 90%
1Referencesthe volume ofsewage discharged. HCF=one hundred cubic feet=748 gallons Sewer Rate Schedule S-25 Page 2 of 3
811lXX, 812930 Repair Shops & Car Washes $6.47 90%
713:XXX Amusement Parks $7.22 90%
621:XXX, 622XXX,
623:XXX Hospitals & Convalescent Homes $8.00 90%
611:XXX Schools & Colleges $7.71 24%
8131XX Churches $6.12 35%
Commercial/Industrial/Miscellaneous not otherwise specified in this schedule of charges
$6.85 90%
In no case shall the minimum charge be less than $57.56 per month.

C. Major Commercial and Industrial Users are those having (1) a sewage discharge of at least 25,000 gallons per day, or (2) having a daily discharge which is intermittent or irregular in strength, amount or nature. Major Commercial and Industrial Users shall have monthly sewer charges, which may consist of any or all of the following charges:

Annual Capital Cost Recovery:

Volume: $1,175,044 per million gallons per day of flow capacity BOD2: $112,855 per 1,000 pounds per day of BOD removal
capacity SS3: $98,598 per 1,000 pounds per day of SS removal capacity NH3
4 : $516,337 per 1,000 pounds per day of NH3 removal capacity Operating and Maintenance Cost Recovery:

Volume: $3,982.86 per million gal
BOD: $751.02 per 1,000 pounds
SS: $869.45 per 1,000 pounds
NH3: $6,630.54 per 1,000 pounds
2 Biochemical Oxygen Demand: This is the quantity of oxygen utilized in the biological oxidation of organic matter under standard laboratory conditions for 5 days at a temperature of 20 degrees Centigrade. The determination of the charge for BOD is as follows: BOD in parts per million x 8.34 x volume in million gallons = pounds of BOD. 3 Suspended Solids – That which either floats on the surface or is in suspension in sewage and which is determined by laboratory filtering. The determination of the charge for Suspended Solids is as follows: SS in parts per million x

8.34 x volume in million gallons = pounds of Suspended Solids 4 Ammonia is that form of nitrogen in the tri-negative oxidation state which is chemically definable as the compound NH3. The determination of the charge for Ammonia is as follows: NH3 in parts per million x 8.34 x volume in million gallons = pounds of Ammonia.

Sewer Rate Schedule S-25 Page 3 of 3
The volume of sewage shall be based upon a fixed percentage of water usage noted, or based on standard methods acceptable to the Director.

The City may require the installation of special metering and sampling devices whenever the Director deems that such devices are required to determine the volume and/or strength of the sewage discharge. A customer may also request the installation of a special metering device.

Whenever special metering devices are installed, they shall be devices approved by the Director, and the cost of furnishing and installing said devices shall be borne by the customer.

DRAFT FINAL

WATER AND SEWER RATE STUDY
BLACK & VEATCH PROJECT NO. 410918

PREPARED FOR

City of Santa Clara, CA
10 JUNE 2025
~ .BLACK&VEATCH
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Table of Contents i
Table of Contents
Legal Notice............................................................................................................................................ 1

1.0 Executive Summary .................................................................................................................1-1

1.1 Water System.........................................................................................................................1-1

1.2 Recycled Water System ........................................................................................................1-1

1.3 Sewer System ........................................................................................................................1-1

1.4 Financial Plan ........................................................................................................................1-2

1.4.1 Water Utility ...........................................................................................................1-2

1.4.2 Recycle Water Utility .............................................................................................1-3

1.4.3 Sewer Utility...........................................................................................................1-5

1.5 Adequacy of Existing Rates to Meet Costs of Service........................................................1-6

1.6 Cost of Service Analysis .......................................................................................................1-6

1.7 Rate Design............................................................................................................................1-7

1.7.1 Water and Recycled Water Utilities......................................................................1-7

1.7.2 Sewer Utility...........................................................................................................1-9 Water and Recycled Water Utilities.......................................................................................................1-1

2.0 Revenue and Revenue Requirements.......................................................................................2-1

2.1 Customer and Water Consumption......................................................................................2-1

2.1.1 Customer Classes.................................................................................................2-1

2.1.2 Minimum Bills........................................................................................................2-1

2.1.3 Water Consumption ..............................................................................................2-2

2.2 Revenue under Existing Rates ..............................................................................................2-3

2.3 Other Revenue .......................................................................................................................2-5

2.4 Operating and Maintenance Expenses ................................................................................2-5

2.5 Capital Improvement Program .............................................................................................2-6

2.5.1 Capital Improvement Financing Plan...................................................................2-7

2.6 Transfers................................................................................................................................2-8

2.7 Reserves.................................................................................................................................2-8

2.8 Projected Operating Results .................................................................................................2-9

3.0 Cost of Service Analysis ..........................................................................................................3-1

3.1 Functional Cost Components ...............................................................................................3-2

3.2 Allocation to Cost Components ...........................................................................................3-3

3.2.1 System Base, Max Day, and Max Hour Allocations ............................................3-3

3.2.2 Allocation of Operating and Maintenance Expenses..........................................3-4

3.2.3 Allocation of Capital Investments........................................................................3-5

3.3 Units of Service......................................................................................................................3-5

3.4 Cost of Service Allocations...................................................................................................3-6

3.4.1 Units Costs of Service...........................................................................................3-6

3.4.2 Distribution of Costs of Service to Customer Classes .......................................3-6 City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Table of Contents ii

4.0 Rate Design .............................................................................................................................4-1

4.1 Existing Rates ........................................................................................................................4-1

4.2 Proposed Rates .....................................................................................................................4-1

4.2.1 Monthly Service Charge........................................................................................4-1

4.2.2 Fire Service ............................................................................................................4-3

4.2.3 Cross Connection..................................................................................................4-3

4.2.4 Consumption Charge ............................................................................................4-4

4.3 Typical Monthly Costs under Proposed Charges ................................................................4-4

4.4 Neighboring Water Utilities ...................................................................................................4-5 Sewer Utility.........................................................................................................................................4-1

5.0 Revenue and Revenue Requirements.......................................................................................5-1

5.1 Customer and Water Consumption Projections..................................................................5-1

5.1.1 Customer Classes.................................................................................................5-1

5.1.2 Equivalent Dwelling Units .....................................................................................5-1

5.1.3 Minimum Bills........................................................................................................5-2

5.1.4 Contributed Sewage Flow.....................................................................................5-2

5.1.5 Major Users ...........................................................................................................5-3

5.2 Revenue under Existing Rates ..............................................................................................5-3

5.3 Other Revenue .......................................................................................................................5-5

5.4 Operating and Maintenance Expenses ................................................................................5-5

5.5 Debt Service Requirements...................................................................................................5-6

5.6 Capital Improvement Program .............................................................................................5-6

5.6.1 Capital Improvement Financing Plan...................................................................5-7

5.7 Transfers................................................................................................................................5-8

5.8 Reserves.................................................................................................................................5-8

5.9 Projected Operating Results .................................................................................................5-8

6.0 Cost of Service Analysis ..........................................................................................................6-1

6.1 Functional Cost Components ...............................................................................................6-1

6.2 Allocation to Cost Components ...........................................................................................6-2

6.2.1 Volume and Strength Allocations ........................................................................6-2

6.2.2 Allocation of Operating and Maintenance Expenses..........................................6-2

6.2.3 Allocation of Capital Investments........................................................................6-3

6.3 Units of Service......................................................................................................................6-3

6.4 Cost of Service Allocations...................................................................................................6-4

6.4.1 Units Costs of Service...........................................................................................6-4

6.4.2 Distribution of Costs of Service to Customer Classes .......................................6-4

7.0 Rate Design .............................................................................................................................7-1

7.1 Existing Rates ........................................................................................................................7-1

7.2 Proposed Rates .....................................................................................................................7-1

7.2.1 Monthly Service Charge........................................................................................7-1 City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Table of Contents iii

7.2.2 Consumption Charge ............................................................................................7-2

7.2.3 Major Users ...........................................................................................................7-2

7.3 Typical Monthly Costs under Proposed Charges ................................................................7-3

7.4 Neighboring Sewer Utilities...................................................................................................7-3 Appendix A – Ten-Year Financial Plan .................................................................................................7-1 Water Utility .........................................................................................................................................7-1 Recycled Water Utility .........................................................................................................................7-2 Sewer Utility.........................................................................................................................................7-3

LIST OF TABLES
Table 1-1 Proposed Revenue Adjustments ..........................................................................................1-6 Table 1-2 Proposed Three-Year Water Rate Schedule.........................................................................1-8 Table 1-3 Proposed Three-Year Recycled Water Rate Schedule ........................................................1-9 Table 1-4 Proposed Three-Year Sewer Rate Schedules ....................................................................1-10 Table 2-1 Minimum Bills ........................................................................................................................2-1 Table 2-2 Billed Water Consumption ....................................................................................................2-3 Table 2-3 Existing Water and Recycled Water Rates ...........................................................................2-4 Table 2-4 Projected Revenue under Existing Rates .............................................................................2-5 Table 2-5 O&M Expenses.......................................................................................................................2-6 Table 2-6 Capital Improvement Projects..............................................................................................2-7 Table 2-7 Construction Fund Financing Plan (Water)..........................................................................2-7 Table 2-8 Construction Fund Financing Plan (Recycled Water)..........................................................2-8 Table 2-9 Operating Fund (Water).......................................................................................................2-12 Table 2-10 Operating Fund (Recycled Water).......................................................................................2-13 Table 3-1 Cost of Service Revenue from Rates (Water)......................................................................3-1 Table 3-2 Cost of Service Revenue from Rates (Recycled Water)......................................................3-2 Table 3-3 Allocation of O&M Expenditures (Water).............................................................................3-4 Table 3-4 Allocation of O&M Expenditures (Recycled Water).............................................................3-4 Table 3-5 Allocation of Capital Costs (Water)......................................................................................3-5 Table 3-6 Allocation of Capital Costs (Recycled Water)......................................................................3-5 Table 3-7 Units of Service (Water and Recycled Water)......................................................................3-1 Table 3-8 Units Cost of Service (Water) ...............................................................................................3-1 Table 3-9 Distribution of Costs to Customer Classes (Water)............................................................3-2 Table 3-10 Units Cost of Service (Recycled Water) ...............................................................................3-3 Table 3-11 Distribution of Costs to Customer Classes (Recycled Water)............................................3-3 Table 4-1 Costs within the Minimum Monthly Service Charge for FY 2026 (Water) .........................4-1 Table 4-2 Proposed Minimum Monthly Service Charge (Water).........................................................4-2 Table 4-3 Costs within the Minimum Monthly Service Charge for FY 2025 (Recycled Water).....................................................................................................................................4-2 City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Table of Contents iv
Table 4-4 Proposed Minimum Monthly Service Charge (Recycled Water).........................................4-2 Table 4-5 Costs within the Fire Service Charge for FY 2026...............................................................4-3 Table 4-6 Proposed Fire Service Charge ..............................................................................................4-3 Table 4-7 Costs within the Cross-Connection Charge for FY 2026 ....................................................4-4 Table 4-8 Proposed Cross Connection Charge....................................................................................4-4 Table 4-9 Proposed Consumption Charges .........................................................................................4-4 Table 4-10 Typical Monthly Bill (Water)..................................................................................................4-5 Table 4-11 Typical Monthly Bill (Recycled Water)..................................................................................4-5 Table 5-1 EDUs.......................................................................................................................................5-2 Table 5-2 Minimum Monthly Service Bills ............................................................................................5-2 Table 5-3 Contributed Sewage Flow.....................................................................................................5-3 Table 5-4 Existing Sewer Rates.............................................................................................................5-4 Table 5-5 Projected Revenue under Existing Rates .............................................................................5-5 Table 5-6 O&M Expenses.......................................................................................................................5-6 Table 5-7 Long-Term Debt Service........................................................................................................5-6 Table 5-8 Capital Improvement Projects..............................................................................................5-7 Table 5-9 Construction Fund Financing Plan .......................................................................................5-7 Table 5-10 Operating Fund (Sewer) ......................................................................................................5-11 Table 6-1 Cost of Service Revenue from Rates....................................................................................6-1 Table 6-2 Allocation of O&M Expenditures...........................................................................................6-3 Table 6-3 Allocation of Capital Costs ...................................................................................................6-3 Table 6-4 Units of Service......................................................................................................................6-1 Table 6-5 Units Cost of Service.............................................................................................................6-1 Table 6-6 Distribution of Costs to Customer Classes .........................................................................6-1 Table 7-1 Proposed Monthly Service Charge .......................................................................................7-1 Table 7-2 Proposed Consumption Charges .........................................................................................7-2 Table 7-3 Proposed Major User Charges..............................................................................................7-3 Table 7-4 Typical Monthly Bill ...............................................................................................................7-3

LIST OF FIGURES
Figure 1-1 Water Operating Cashflow....................................................................................................1-3 Figure 1-2 Water Reserves......................................................................................................................1-3 Figure 1-3 Recycled Water Operating Cash Flow..................................................................................1-4 Figure 1-4 Recycled Water Reserves......................................................................................................1-4 Figure 1-5 Sewer Operating Cash Flow..................................................................................................1-5 Figure 1-6 Sewer Reserves .....................................................................................................................1-6 Figure 2-1 Water Sales............................................................................................................................2-2 Figure 2-2 Status Quo Operating Cash Flow (Water)............................................................................2-9 Figure 2-3 Status Quo Operating Cash Flow (Recycled Water)..........................................................2-10 City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Table of Contents v
Figure 2-4 Water Operating Cash Flow ................................................................................................2-14 Figure 2-5 Recycled Water Operating Cash Flow................................................................................2-14 Figure 4-1 Comparison to Neighboring Water Utilities .........................................................................4-6 Figure 5-1 Status Quo Operating Cash Flow .........................................................................................5-9 Figure 5-2 Sewer Operating Cash Flow................................................................................................5-12 Figure 7-1 Comparison to Neighboring Sewer Utilities.........................................................................7-4 City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Legal Notice LN-1
Legal Notice
Black & Veatch Corporation (Black & Veatch) has prepared this report for the City of Santa Clara (City), and it is based on information not within the control of Black & Veatch. The City has not requested Black & Veatch to make an independent analysis, verify the information provided to us, or render an independent judgment of the validity of the information provided by others. Because of this, Black & Veatch cannot, and does not, guarantee the accuracy thereof to the extent that such information, data, or opinions were based on information provided by others.

In conducting these analyses and in forming an opinion of the projection of future financial operations summarized in this report, Black & Veatch made certain assumptions on the conditions, events, and circumstances that may occur in the future. The methodology utilized in performing the analyses follows generally accepted practices for such projections. Such assumptions and methodologies are reasonable and appropriate for the purpose for which they are used. While we believe the assumptions are reasonable and the projection methodology valid, actual results may differ materially from those projected, as influenced by the conditions, events, and circumstances that occur. Such factors may include the utilities’ ability to execute the capital improvement program as scheduled and within budget, regional climate and weather conditions affecting the demand for water, discharge of sewage flow, and adverse legislative, regulatory, or legal decisions (including environmental laws and regulations) affecting the utilities’ ability to manage the system and meet water quality requirements.

City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Executive Summary 1-1

1.0 Executive Summary
The City of Santa Clara commissioned Black & Veatch Corporation to perform an update of the Water and Sewer Rate Study (Study) for its Water, Recycled Water, and Sewer Utilities. The Study included the development of a three-year financial plan, a cost-of-service analysis, and the design of rates. In addition, a ten-year financial plan was developed to provide the City with a high-level view of each utility’s operations. The specific objectives of the Study were to:
 Evaluate the adequacy of projected revenues under existing rates to meet projected revenue requirements.
 Develop sound financial plans for the utilities covering a three and ten-year period for both ongoing operations and planned capital improvements.
 Allocate the utilities’ projected revenue requirements to the various customer classes in accordance with their respective service requirements.
 Develop a suitable rate schedule that produces revenues adequate to meet financial needs while recognizing customer costs of service and regulatory considerations such as Proposition 218 and applicable judicial decisions.

1.1 Water System
The Water Utility provides water services to over 26,306 residential, commercial, irrigation, schools, and agricultural customers. The City obtains potable water from three primary sources: local groundwater, surface water from the Santa Clara Valley Water District (Valley Water) and imported water from the Hetch Hetchy watershed through the San Francisco Public Utilities Commission (SFPUC). The water system infrastructure consists of 335 miles of transmission and distribution mains, 7 storage tanks totaling 28.8 million gallons of storage capacity, 26 wells, and 3 booster pump stations. The City has a target of obtaining 68% of the 5.8 billion gallons of water that flows to its customers each year from the City’s wells.

1.2 Recycled Water System
The Recycled Water Utility, operating since 1989, provides recycled water services to over 292 commercial, irrigation, and industrial customers. The City obtains recycled water from South Bay Water Recycling. The recycled water comes from the San Jose-Santa Clara Regional Wastewater Facility (RWF), an advanced tertiary treatment facility located in San Jose, of which the City is a co-owner. The recycled water infrastructure within the City limit boundary mainly consists of 34 miles of recycled water pipelines.

A portion of the recycled water from the RWF supplies the Valley Water’s Silicon Valley Advanced Water Purification Center for advanced treatment (microfiltration, reverse osmosis, and advanced oxidation) to create a mix of high-quality recycled water that is blended back into the recycled water system.

1.3 Sewer System
The Sewer Utility provides sewer services to over 26,785 residential, commercial, industrial, and municipal customers. Services include the construction and maintenance of the sewer system and installing sewer lateral clean-outs at the property line. Sanitary sewer flows in the City are collected and transported through more than 288 miles of sewer main by way of six pumping stations to the San Jose-Santa Clara Regional Wastewater Facility. The RWF is a regional treatment facility that receives waste from seven agencies in Santa Clara County and can treat 167 million gallons a day (MGD) of liquid waste.

City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Executive Summary 1-2

1.4 Financial Plan
The City operates the utilities as individual self-supporting enterprises. Therefore, the utilities must develop financial plans that provide sufficient revenues to meet all operation and maintenance expenses, water purchases, wastewater treatment, debt service requirements, capital improvements funded from current revenues, and other expenditures.

The Study develops financial plans that project operating revenue, expenses, and capital financing costs for the utilities over a ten-year planning period beginning July 1, 2025 and ending June 30, 2035. This report will focus on a three-year planning period for discussion, beginning July 1, 2025 and ending June 30, 2028. The full ten-year financial plans can be found in Appendix A.

The financial plans project future rate revenues under existing rates, operations, and maintenance (O&M) expenses, principal and interest expense on debt, transfers, and capital improvement program (CIP) requirements. In the projection of rate revenues, annual projections of customers and water consumption rely upon the City’s historical data and estimates of growth. In addition, the Water Utility’s forecast incorporates efforts to continue to encourage conservation measures of maintaining a 15% voluntary water use reduction and the City’s Water Shortage Contingency Plan.

1.4.1 Water Utility
The Water Utility’s revenue requirements are summarized below:
 Operation and Maintenance Expenses: The Water Utility anticipates O&M expenses to increase from $66.4M in FY 2026 to $78M in FY 2028. Water production and water purchases account for most of this increase, representing an average of 67% of O&M expenses.  Debt Service: The Water Utility has no existing debt service, and no future debt is planned.  Capital Improvements: The Water Utility plans to execute an average of $6.7M annually in capital projects from FY 2026 to FY 2028.
 Reserves: The Water Utility plans to continue funding the operating reserve, construction fund, and rate stabilization reserve.
● The operating fund reserve is to help cover fluctuations in day-to-day expenses. The scheduled target is 90 days of O&M expenses.
● The construction fund reserve is to help maintain enough funds on hand to help mitigate unexpected capital costs. The scheduled target is the average of the following two-year’s CIP.
● The rate stabilization fund reserve is to help mitigate future increases in drought-stricken years. The scheduled target is 10% of the prior year’s rate revenues.

The Water Utility is proposing revenue adjustments to allow it to operate the enterprise on a revenueneutral basis and meet reserve targets, as shown in Figure 1-1.

City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Executive Summary 1-3
Figure 1-1 Water Operating Cashflow
Figure 1-2 Water Reserves

1.4.2 Recycle Water Utility
The Recycled Water Utility’s revenue requirements are summarized below:
 Operation and Maintenance Expenses: The Recycled Water Utility anticipates O&M expenses to increase from $10.9M in FY 2026 to $13.3M in FY 2028. Recycled water purchase costs constitute most of the increase, averaging 83% of O&M expenses.  Debt Service: The Recycled Water Utility has no existing debt service, and no future debt is planned.
 Capital Improvements: The Recycled Water Utility plans to execute an average of $53.6k annually in capital projects from FY 2026 to FY 2028.
 Reserves: The City plans to continue funding the operating reserve, construction fund reserve, and rate stabilization reserve.
$100,000,000
$90,000,000
$80,000,000
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
$0
2026
Water Utility- Operating Fund
2027 2028
- O&M - Debt Service - Capital Projects - Rate Stabilization ~ Revenue ~ Cash Balance $45,000,000
$40,000,000
$.35,000,000
$.30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
so
Water Utility - Reserves
2026 2027 2028
■ 0 perating ■ Capital ■ R a:e St cbiliza:ion ■ Pension Stabiizati:m City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Executive Summary 1-4
● The operating reserve is to help cover fluctuations in day-to-day expenses. The scheduled target is 90 days of O&M expenses.
● The construction fund is to help maintain enough funds on hand to help mitigate unexpected capital costs. The scheduled target is the average of the following two-year’s CIP.
● The rate stabilization fund reserve is to help mitigate future increases in drought-stricken years. The scheduled target is 10% of the prior year’s rate revenues.

The Recycled Water Utility is proposing revenue adjustments and drawing down on reserves to allow it to operate the enterprise on a revenue-neutral basis and meet reserve targets, as shown in Figure 1-2.

Figure 1-3 Recycled Water Operating Cash Flow
Figure 1-4 Recycled Water Reserves
$16,000,000
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$0
Recycled Water Utility- Operating Fund
2026 2027 2028
- o&M - Debt Service - capital Projects - Rate Stabilization ~ Revenue ~ Cash Balance $6,000,000
$5,000,000
$4,000,000
S-3,000,000
$2,000,000
$1,000,000
so
Recycled Water Utility - Reserves
2026 2027 2028
■ 0 perating ■ Capital ■ R a::e St abiliza::ion ■ Pension Stabiilatbn City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Executive Summary 1-5

1.4.3 Sewer Utility
The Sewer Utility’s revenue requirements are summarized below:
 Operation and Maintenance Expenses: The Sewer Utility anticipates O&M expenses to increase from $40.3M in FY 2026 to $43.1M in FY 2028. RWF-related costs represent an average of 70% of O&M expenses.
 Debt Service: The Sewer Utility anticipates an average debt service payment of $3.9M annually from FY 2026 to FY 2028 associated with existing and proposed debt issuances. The City anticipates a new revenue bond for $15M to be issued in 2027.  Capital Improvements: The Sewer Utility plans to execute an average of $18.6M annually in capital projects from FY 2026 to FY 2028.
 Reserves: The Sewer Utility plans to continue funding the operating reserve, construction fund, rate stabilization fund reserve, and pension stabilization reserve. ● The operating reserve is to help cover fluctuations in day-to-day expenses. The scheduled target is 90 days of O&M expenses.
● The construction fund is to help maintain enough funds on hand to help mitigate unexpected capital costs. The scheduled target is the average of the following two-year’s City CIP and 6-months of the following year’s San Jose Santa Clara Regional Wastewater Facility CIP.
● The rate stabilization reserve is to help mitigate future increases in drought-stricken years. The scheduled target is 10% of the prior year’s rate revenues. ● The pension reserve is to pay for the unfunded pension liabilities and the increase in the City’s share of pension costs due to factors such as higher CalPERS rates and negotiated pay increases.

The Sewer Utility is proposing revenue adjustments and drawing down on reserves to allow it to operate the enterprise on a revenue-neutral basis and meet reserve targets, as shown in Figure 1-5.

Figure 1-5 Sewer Operating Cash Flow
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
$0
2026
Sewer Utility- Operating Fund
2027 2028
- O&M - Debt Service - Capital Projects - Rate Stabilization ~ Revenue ~ Cash Balance City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Executive Summary 1-6
Figure 1-6 Sewer Reserves

1.5 Adequacy of Existing Rates to Meet Costs of Service Based on the financial plans, Black & Veatch recommends the revenue adjustments shown in Table 1-1 to meet the projected revenue requirements for FY 2026 to FY 2028. These do not represent proposed rate increases to customers. Rather, these represent the overall revenue increases the utilities need to meet their overall obligations and maintain current service levels.

Table 1-1 Proposed Revenue Adjustments

1.6 Cost of Service Analysis
The cost-of-service analysis allocates the costs to the various customer classes of service in a fair and equitable manner. The methodologies used in the Study are specific to the respective utility operations.

The following is a brief description of the methodologies.

The water and recycled water cost-of-service allocation performed in this Study uses the Base-Extra Capacity Method endorsed by the American Water Works Association (AWWA) Principles of Water Rates, Fees, and Charges, M1 manual. Under cost-of-service principles, costs are allocated to the different customer classes in proportion to their water system use. As recommended by AWWA, Black & Veatch distributed functional costs to the base (average load conditions), extra capacity (peaking), and customer-related parameters. This allocation methodology produces unit costs for allocation to individual customer classes based on the projected customer service requirements.

The sewer cost-of-service allocation performed in this Study follows the Functional Cost Allocation Method endorsed by the Water Environment Federation (WEF) Financing and Charges for Wastewater Systems, Manual of Practice 27 manual. Like the methodology used for water systems, the sewer cost of service analysis allocates costs to the different customer classes in proportion to their use of the sewer FY 2026 July 11.00% 11.00% 8.00%
FY 2027 July 6.00% 15.00% 10.50%
FY 2028 July 6.00% 15.00% 10.00%
Recycled
Water
Sewer
Fiscal Year Utility
Water
Utility
Effective
Month
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
so
20 26
Sewer Utility - Reserves
20 27 2028
■ Operating apit l ■ Repla:ement and Improvement ■ Ra::eStci>ilila::ion ■ Pension Stabiilatb n ■ Litigation City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Executive Summary 1-7
system. As recommended by WEF, Black & Veatch distributed functional costs to volume, strength, and customer-related parameters. This allocation methodology produces unit costs for allocation to individual customer classes based on the projected customer service requirements.

1.7 Rate Design
The Right to Vote on Taxes Act, also known as Proposition 218, was passed by California voters in 1996 and added Article XIIIC and Article XIIID to the California Constitution. These articles provide the regulatory framework that guides and informs the rate-setting process. The cost-of-service analyses provide the cost nexus for the proposed rate structures. The regulatory framework helps ensure cost recovery is proportionate to the cost of providing the service.

1.7.1 Water and Recycled Water Utilities
To minimize impacts, retain simplicity, and ensure the reasonable stability of revenue, Black & Veatch recommends the following rate structure.
 Monthly Service Charge: The Water and Recycled Water Utilities should retain the minimum monthly service charge based on meter sizes for all customer classes. The minimum monthly service charge includes a minimum consumption allowance and recovers portions of fixed cost elements such as operating and capital components, meter maintenance and services, meter reading, issuing bills, and maintenance and capacity costs associated with public fire protection.

The minimum consumption allowance accommodates water considered essential for health and safety.
 Consumption Charge: The Water and Recycled Water Utilities should maintain the uniform consumption charge for all customer classes. The consumption charge recovers costs associated with the base and extra capacity demands.
 Fire Service Charge: The Water Utility should continue to utilize the fire service charge based on meter size for private fire service connections. The fire service charge will recover maintenance and capacity costs associated with private fire protection costs.  Cross Connection Charge: The Water Utility should continue to utilize the cross-connection charge based on meter size for backflow connections. The cross-connection charge will recover the costs of maintenance associated with backflow devices.

Table 1-2 summarizes the recommended three-year rate schedules for all Water Utility components.

City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Executive Summary 1-8
Table 1-2 Proposed Three-Year Water Rate Schedule
Table 1-3 summarizes the recommended three-year rate schedules for all Recycled Water Utility components.

Proposed
Customer Class FY 2026 FY 2027 FY 2028
Minimum Monthly Meter Rates ($/Month) $/month $/month $/month 5/8" x 3/4" 26.46 28.50 29.60
1" 41.70 45.10 46.87
1-1/2" 79.79 86.61 90.05
2" 125.50 136.42 141.87
3" 247.40 269.23 280.05
4" 384.53 418.65 435.49
6" 765.46 833.71 867.30
8" 1,222.58 1,331.77 1,385.46
10" 1,832.07 1,995.86 2,076.34
12" 2,574.88 2,805.22 2,918.35
Fire Service ($/Month) $/month $/month $/month
2" 3.50 3.65 3.81
4" 19.83 20.70 21.57
6" 58.33 60.89 63.45
8" 124.25 129.70 135.15
10" 223.42 233.23 243.02
12" 361.08 376.94 392.76
Cross Connection ($/Month) $/month $/month $/month
1" 7.47 7.52 7.76
2" 11.95 12.03 12.42
3" 23.89 24.06 24.83
4" 37.33 37.59 38.80
6" 74.66 75.17 77.60
8" 119.46 120.28 124.16
10" 179.19 180.41 186.24
Consumption Charges ($/HCF)
General Customer 9.89 10.49 11.13
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Executive Summary 1-9
Table 1-3 Proposed Three-Year Recycled Water Rate Schedule

1.7.2 Sewer Utility
To minimize impacts, retain simplicity, and ensure the reasonable stability of revenue, Black & Veatch recommends the following rate structure.
 Monthly Service Charge: The Sewer Utility should retain the monthly service charge based on equivalent dwelling units (EDUs) for all residential customer classes. In addition, the monthly service charge serves as the base amount, or minimum, for all non-residential customer classes.  Consumption Charge: The Sewer Utility should retain its uniform consumption charges for each non-residential customer class. The recommended rate structure should be based on customer class.
 Major Commercial and Industrial Users: The Sewer Utility should retain the major commercial and industrial user charge for customers with high discharge quantities and/or high strength loadings.

Table 1-4 summarizes the recommended three-year rate schedules for all Sewer Utility components.

Proposed
Customer Class FY 2026 FY 2027 FY 2028
Minimum Monthly Meter Rates ($/Month) $/month $/month $/month 5/8" x 3/4" 17.80 20.42 23.57
1" 29.07 33.41 38.62
1-1/2" 57.26 65.89 76.23
2" 91.08 104.87 121.37
3" 181.27 208.80 241.72
4" 282.74 325.72 377.13
6" 564.59 650.51 753.24
8" 902.82 1,040.26 1,204.58
10" 1,353.78 1,559.93 1,806.37
12" 1,903.40 2,193.27 2,539.80
Consumption Charges ($/HCF)
General Customers 5.43 6.24 7.18
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Executive Summary 1-10
Table 1-4 Proposed Three-Year Sewer Rate Schedules

Proposed
Customer Class FY 2026 FY 2027 FY 2028
Monthly Service Charge ($/EDU) $/month $/month $/month
Single Family 57.56 64.49 71.88
Multi-Family 53.15 59.51 66.28
Minimum Commercial Bill Charge ($/Month) $/month $/month $/month All Customers 57.56 64.49 71.88
Commodity Charge ($/HCF) $/HCF $/HCF $/HCF
Amusement Parks 7.22 7.76 8.31
Auto Dealers & Service Station 8.38 9.08 9.82
Churches 6.12 6.56 6.96
Com/Ind/Misc 6.85 7.35 7.85
Electric & Electronic Equip. 6.33 6.74 7.15
Food and Kindred Products 17.53 19.53 21.62
Hospitals & Convalescent Homes 8.00 8.65 9.33
Industrial Chemical 12.69 14.00 15.36
Laundries 7.01 7.52 8.04
Machinery Manufacturers 9.98 10.93 11.91
Metal Plating 4.92 5.19 5.39
Motels & Hotels 8.56 9.28 10.04
Paper 0.00 0.00 0.00
Repair Shops & Car Washes 6.47 6.96 7.44
Restaurants 17.88 19.93 22.07
Schools & Colleges 7.71 8.32 8.97
Major Commercial and Industrial Users
Operating and Maintenance Cost Recovery
Volume ($/MG) 3,982.86 4,256.22 4,821.20
BOD ($/1,000 lbs) 751.02 869.93 986.80
SS ($/1,000 lbs) 869.45 1,007.10 1,142.39
NH3 ($/1,000 lbs) 6,630.54 7,680.17 8,710.77
Annual Capital Cost Recovery
Volume ($/MGD) 1,175,044 1,210,456 1,143,407
BOD ($/1,000 lbs/day) 112,855 124,559 139,957
SS ($/1,000 lbs/day) 98,598 106,931 118,008
NH3 ($/1,000 lbs/day) 516,337 541,495 576,299
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Water and Recycled Water Utilities 2-1 Water and Recycled Water Utilities

2.0 Revenue and Revenue Requirements
To meet the costs associated with providing water services to its customers, the Water and Recycled Water Utilities derive revenue from a variety of sources, including water user charges (rates), developer contributions, solar water heating, interest earned from the investment of available funds, engineering fees, and other miscellaneous revenues. Both utilities are constantly looking for other sources of revenue, such as grants, to fund infrastructure investments. Black & Veatch has projected the level of future revenue generated in the Study through an analysis of historical and future system growth in terms of the number of bills and water consumption. This section also projects the expenses, or revenue requirements, necessary to operate and maintain the system, invest in capital improvements, make debt service payments, and cover other water and recycled water systems expenses.

2.1 Customer and Water Consumption

2.1.1 Customer Classes
The Water Utility’s customer base includes both residential and non-residential accounts. The City has three distinct customer classes: General Customer, Fire Service, and Cross Connection.

The Recycled Water Utility’s customers are mainly non-residential. The City has two distinct customer classes: General Customer and Industrial Process. The City is working on transitioning Industrial Process to General Customer.

2.1.2 Minimum Bills
The City provides potable water services to 26,306 customers and recycled water services to 292 customers. All customers connected to the water and recycled water systems do so through metered connections. The City bills customers based on water consumption, but several bills do not meet the consumption allowance identified by meter size. Therefore, the City refers to these bills as minimum monthly service bills. Since the City bills customers based on minimum bills generated, the analysis included a review of historical bill patterns for customers and anticipated growth within the City. The projected total number of bills is expected to increase by average of 0.2% for the Water Utility and increase by an average of 1.0% for the Recycled Water Utility.

Table 2-1 summarizes the projected number of minimum bills for the Water and Recycled Water Utilities.

Table 2-1 Minimum Bills

Fiscal Year Ending June 30,
FY 2026 FY 2027 FY 2028
(Bills) (Bills) (Bills)
Water Utility
1 General Customers 53,363 53,496 53,629
2 Total 53,363 53,496 53,629
Recycled Water Utility
3 General Customers 801 809 817
4 Total 801 809 817
Line No. Description
I
---
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-2

2.1.3 Water Consumption
Table 2-2 shows the projected water and recycled water consumption for the Study period. In determining the projected water and recycled water consumption, Black & Veatch analyzed historical water consumption patterns in conjunction with future water conservation requirements set by the City’s Water Shortage Contingency Plan. In 2017, the State of California formally lifted the water restrictions as it declared the drought over. Unfortunately, in 2022 after another three year of dry weather, Governor Newsom called for local water suppliers to move to Level 2 of their Water Shortage Contingency Plans to drive water conservation. The City then moved to Level 2 in conjunction with Valley Water. In July 2023, after increased rainfall, the City rescinded Level 2 and have returned to normal. Despite this, the City and Valley Water work together to maintain a 15% voluntary water use reduction.

Figure 2-1 below represents the population growth and a decline in water consumption. Many factors have contributed to the City’s steady decline in consumption despite the increase in population. The City’s primary conservation goals can be found in the Water Shortage Contingency Plan, and Santa Clara’s Council codified the continuing goal to conserve in July of 2017. The City offers a rain barrel rebate program and works with the Valley Water on other outreach and rebate programs for water conservation.

Expanding the use of recycled water to existing and new customers has also been important for the City in supplementing the use of potable water. Overall, customers have done well to increase efficiency in the use of water resources.

Figure 2-1 Water Sales

Recognizing that the City’s water conservation goals, the City anticipates consumption to increase by

2.5% annually for the Water Utility and 1.0% annually for the Recycled Water Utility over the Study period.

The City currently bills water consumption in hundred cubic feet (HCF) and only charges for consumption more than the allowance.
2024 City Water Demand
135,000 ---------------------------~
C: :8 115,000 +-------~-...~~~=-<~~~::_ _________ ~ ns
::::s g- 105,000 +------------:::::;;;;;ao~-----~--o,:::_~--:___ ~ ___ ~J\ a.

Lowest Waler Use
During 14-17 Drought 85,000 ~-------------:===;:====:::=:;:=-,_ _________ ~ ~2>~ Year ~~ ~~ ~
r65 r65 ~ ~ ~ ~ ~ ~ & ~
-Population - Water Demand
10,000
9,000 -
C)
~
8,000 -U)
C:
0 7,000 ns
C)
6,000 C:
.2
5,000 ~
4,000
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-3
Table 2-2 Billed Water Consumption

2.2 Revenue under Existing Rates
Water and recycled water user rates serve as the primary source of revenue for the Water and Recycled Water Utilities. Therefore, the level of future rate revenue is important in developing a long-range financial plan. To determine rate revenue, the projected system growth in terms of the number of minimum bills and billed water consumption is multiplied by the applicable rates to determine water and recycled water rate revenue.

Table 2-3 shows the current Water and Recycled Water Utilities rate schedules. It is important to note that the minimum monthly service charge applies to customers that do not exceed the consumption allowance within the meter sizes. Therefore, the minimum monthly service charge serves as a baseline cost that the City needs to recover.
(Section left intentionally blank)
Fiscal Year Ending June 30,
FY 2026 FY 2027 FY 2028
(HCF) (HCF) (HCF)
Water Utility
1 General Customers 6,806,680 6,976,847 7,151,268
2 Total Usage (HCF) 6,806,680 6,976,847 7,151,268
3 Total Usage (AF) 15,626 16,017 16,417
Recycled Water Utility
4 General Customers 1,665,011 1,681,661 1,698,478
5 Total Usage (HCF) 1,665,011 1,681,661 1,698,478
6 Total Usage (AF) 3,822 3,861 3,899
Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-4
Table 2-3 Existing Water and Recycled Water Rates
Table 2-4 summarizes projected water and recycled water rate revenue under existing rates. As shown, the revenue generated is projected to increase for recycled water over the Study period in conjunction with the increase in the number of minimum bills and water consumption. The projected Water Utility revenues will increase from $65.9M from FY 2026 to $69M in FY 2028, while the projected Recycled Water Utility revenue increases from $8.2M in FY 2026 to $8.4M in FY 2028, reflecting an overall increase of 4.7% and 2% over the three-year Study period, respectively.

All City All City All City
FY 2025 FY 2025 FY 2025
Water Recycled Water
Minimum Monthly Meter Rates ($/mo) ($/mo) Consumption Charges 5/8" x 3/4" 23.42 17.44 Water Utility ($/HCF)
1" 36.67 28.43 General Customers 8.90
1-1/2" 69.78 55.91
2" 109.51 88.88 Recycled Water Utility ($/HCF)
3" 215.46 176.80 General Customers 5.06
4" 334.66 275.71
6" 665.77 550.46
8" 1,063.09 880.16
10" 1,592.86 1,319.76
12" 2,238.52 1,855.53
Fire Service Charges ($/mo)
2" 3.15
4" 17.84
6" 52.48
8" 111.78
10" 201.00
12" 324.85
Cross Connection Charges ($/mo)
1" 8.60
2" 13.76
3" 27.53
4" 43.01
6" 86.02
8" 137.63
10" 206.44
Description Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-5
Table 2-4 Projected Revenue under Existing Rates

2.3 Other Revenue
Other sources of operating revenue include charges for hydrant flow tests, meter tests, engineering plan review, water installation and relocation, interest on investments, and other miscellaneous revenues. In total, other operating revenues represent an average of 3.3% of the Water Utility’s total revenue and an average of 10% of the Recycled Water Utility’s total revenue. The City anticipates that these revenues will remain relatively constant for the duration of the Study period.

2.4 Operating and Maintenance Expenses
Table 2-5 summarizes the Water and Recycled Water Utilities’ projected O&M expense for the Study period. These expenses include costs related to salaries and benefits, materials and supplies, contract and professional services, water supply costs, indirect and direct costs, and routine capital outlay. The City anticipates that all O&M expenditures, excluding water supply costs, will increase on average by 3.8% annually for the Water Utility and an average of 5.9% annually for the Recycled Water Utility from the FY 2026.

Water supply costs include water produced and water purchased costs. In the case of the Water Utility, the City has three main sources of water: 1) groundwater pumped from City-owned wells; 2) surface water from the Valley Water and 3) imported water from the Hetch Hetchy watershed from SFPUC. The City operates 26 groundwater wells that tap the underground aquifers, which make up a targeted amount of approximately 60% of the City's water supply. The City imports the remainder of its water supplies from the two wholesale water agencies. Based on estimates of groundwater and wholesale rates provided by Valley Water and SFPUC, the City expects water production and purchased water costs to increase by at least 22.4% over the Study period.

Recycled water is a reliable drought-proof source of water that helps offset the use of potable sources, especially in drought-prone years in California. In the case of the Recycled Water Utility, the City has one main source of recycled water: The San Jose-Santa Clara Regional Wastewater Facility. This facility produces highly treated water delivered through separate pipelines. Based on estimates from the facility, the City expects purchased recycled water costs to increase by at least 24.2% over the Study period.

Fiscal Year Ending June 30,
FY 2026 FY 2027 FY 2028
($) ($) ($)
Water Utility
1 General Customers 63,229,900 64,757,200 66,322,800
2 Fire Service 1,113,800 1,114,800 1,115,900
3 Cross Connection 1,588,300 1,590,000 1,591,600
4 Total $ 65,932,000 $ 67,462,000 $ 69,030,300
Recycled Water Utility
5 General Customers 8,234,300 8,316,700 8,399,700
6 Total $ 8,234,300 $ 8,316,700 $ 8,399,700
Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-6
Table 2-5 O&M Expenses
As shown in Table 2-5, the Water Utility’s O&M expenses increase from $66.4M in FY 2026 to $78M in FY 2028, while the Recycled Water Utility’s O&M expenses increase from $10.9M in FY 2026 to $13.3M in FY 2028.

2.5 Capital Improvement Program
The Water and Recycled Water Utilities develop five-year Capital Improvement Plans annually to identify water and recycled water system needs, including assessments, inspections, maintenance, and rehabilitation and replacement requirements.

Table 2-6 summarizes the Water and Recycled Water Utilities CIP for FY 2026 through FY 2028. The Water Utility is projecting $20.2M in CIP, and the Recycled Water Utility is projecting $160.9k in CIP over the Study period, which includes both capital and replacement projects. The City has posted the CIP Budget on its website for complete details associated with each CIP project.

Fiscal Year Ending June 30,
FY 2026 FY 2027 FY 2028
($) ($) ($)
Water Utility
1 Salaries 6,071,500 6,460,100 6,679,600
2 Benefits 3,703,200 3,758,400 3,908,700
3 Materials/Services/Supplies 4,173,600 4,248,800 4,325,000 4 Interfund Services 8,699,100 9,081,000 9,488,600
5 Resource & Production 43,629,500 48,269,100 53,422,900 6 Capital Outlay 153,000 156,100 159,200
7 Total $ 66,429,900 $ 71,973,500 $ 77,984,000
Recycled Water Utility
8 Salaries 818,100 864,700 899,300
9 Benefits 499,400 504,800 523,500
10 Materials/Services/Supplies 39,900 40,700 41,500
11 Interfund Services 567,300 627,300 694,600
12 Resource & Production 8,962,100 9,988,000 11,127,100 13 Capital Outlay 0 0 0
14 Total $ 10,886,800 $ 12,025,500 $ 13,286,000
Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-7
Table 2-6 Capital Improvement Projects

2.5.1 Capital Improvement Financing Plan
The City funds annual expenditures for the CIP from a combination of available funds on hand, connection charges, developer contributions, and revenues derived from user rates. As shown in Table 2-7 and Table 2-8, the average annual CIP expenditure is $6.7M for the Water Utility and $53.6k for the Recycled Water Utility. There is no planned annual CIP contribution from the Water Utility Operating Fund and Recycled Water Utility over the Study period. The CIP will be funded through funds on hand.

Table 2-7 Construction Fund Financing Plan (Water)
Fiscal Year Ending June 30,
FY 2026 FY 2027 FY 2028
($) ($) ($)
Water Utility
1 7005 Buildings and Grounds 2,847,200 53,600 55,500
2 7054 Distribution System
Replacement/Restoration 4,659,100 3,215,900 3,329,600
3 7057 Asset Management Program 0 0 0
4 7058 SCADA Improvements 336,500 375,200 277,500
5 7059 New and Replacement Wells 621,200 1,929,600 1,997,800 6 PW Paving Project Support 517,700 0 0
7 Total $ 8,981,700 $ 5,574,300 $ 5,660,400
Recycled Water Utility
8 7505 Recycled Water System Mains and
Services 51,800 53,600 55,500
9 Total $ 51,800 $ 53,600 $ 55,500
Line No. Description
Fiscal Year Ending June 30,
FY 2026 FY 2027 FY 2028
($) ($) ($)
Source of Funds
1 Intra Transfer In - Debt Financing 0 0 0
2 Intra Transfer In - Customer Service Charge 5,000,000 7,000,000 7,000,000 3 Connection Charges 0 0 0
4 Developer Contributions 0 0 0
5 Total Sources $ 5,000,000 $ 7,000,000 $ 7,000,000
Use of Funds
6 Improvements Projects 8,981,700 5,574,300 5,660,400
7 Infrastructure Reserve 6,249,200 (1,660,650) (804,900) 8 Total Uses $ 15,230,900 $ 5,574,300 $ 5,660,400
9 Net Annual Cash Balance (10,230,900) 1,425,700 1,339,600 10 Beginning Unrestricted Fund Balance 6,604,600 (3,626,300) (539,950) 11 Net Cumulative Fund Balance $ (3,626,300) $ (2,200,600) $ 799,650 12 Construction + Infrastructure Reserves $ 3,651,700 $ 3,416,750 $ 5,612,100 13 Minimum Reserves $ 7,278,000 $ 5,617,350 $ 4,812,450 Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-8
Table 2-8 Construction Fund Financing Plan (Recycled Water)

2.6 Transfers
The Water and Recycled Water Utilities will each conduct transfers from their respective Operating Funds and other funds and reserves over the Study period. Table 2-9, Lines 18 to 21 for the Water Utility and Table 2-10, Lines 13 to 15 for Recycled Water Utility summarize these associated amounts, respectively.

The other funds consist of the Operating Reserve, Rate Stabilization Reserve, and Construction Fund. See Section 2.7 for further explanation on Rate Stabilization Reserve. The Construction Fund transfers represent money to cover planned CIP project expenditures. These transfers do not represent direct operating expenses for either enterprise; therefore, Black & Veatch includes these costs as “below-theline” cash flow items and does not include them as O&M expenses.

2.7 Reserves
A utility typically establishes reserves for several reasons, such as covering shortfalls in operating revenues, maintaining strong bond ratings, covering day-to-day operating costs, and easing the burden on ratepayers associated with large rate increases. Per the reserve level recommendations, the Water and Recycled Water Utilities will maintain the following three reserves:
 Operating Reserve represents working capital maintained by the Operating Fund to cover day-today expenses and maintain enough funds to cover accounts receivables if there are supplier issues, periods of lower-than-expected water sales, or unforeseen cost increases. The reserve will maintain a minimum balance of 90 days of operating expenses once fully funded.  Construction Reserve represents funds used for unforeseen and unbudgeted capital costs. Once fully funded, this reserve will maintain a minimum balance of the average of the following twoyear’s planned CIP.

Fiscal Year Ending June 30,
FY 2026 FY 2027 FY 2028
($) ($) ($)
Source of Funds
1 Intra Transfer In - Debt Financing 0 0 0
2 Intra Transfer In - Customer Service Charge 50,000 100,000 100,000 3 Connection Charges 0 0 0
4 Developer Contributions 0 0 0
5 Total Sources $ 50,000 $ 100,000 $ 100,000
Use of Funds
6 Improvements Projects 51,800 53,600 55,500
7 Infrastructure Reserve 1,200 1,850 1,950
8 Total Uses $ 53,000 $ 55,450 $ 57,450
9 Net Annual Cash Balance (3,000) 44,550 42,550
10 Beginning Unrestricted Fund Balance 41,100 38,100 82,650 11 Net Cumulative Fund Balance $ 38,100 $ 82,650 $ 125,200 12 Construction + Infrastructure Reserves $ 90,800 $ 137,200 $ 181,700 13 Minimum Reserves $ 52,700 $ 54,550 $ 56,500
Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-9
 Rate Stabilization Reserve represents funds used to absorb revenue shortfall due to short-term decreases in water sales. This reserve stabilizes water and recycled water rate revenue and is an effort to avoid wide swings in rates charged to customers over time. The reserve will maintain a minimum balance of 10% of water and recycled water sales revenue when fully funded.

Appropriate reserve levels help the Water and Recycled Water Utilities with liquidity, provide operational flexibility, and demonstrate fiscal responsibility to the rating agencies, which allows the City to access lower-cost funds.

2.8 Projected Operating Results
The revenue requirements of the Water and Recycled Water Utilities consist of O&M expenses, debt service, capital expenditures, and reserve requirements.

To fully understand the current condition of the Water and Recycled Water Utilities, it is important to examine the cash flow projections under the status quo scenario. As shown in Figure 2-2 and Figure 2-3, the status quo conditions would project that both utilities would operate from an annual deficit position, thus requiring the use of reserves to keep operating. In this scenario, the Water and Recycled Water Utilities would not impose any revenue increases over the Study Period and continue to incur O&M expenses, pay for the execution of the planned CIP, and transfer to reserves.

Figure 2-2 Status Quo Operating Cash Flow (Water)
$100,000,000
$80,000,000
$60,000,000
$40,000,000
$20,000,000
so
-$20,000,000
-$40,000,000
2026
Water Utility - Operating Fund
2027 2028
- o&M - Debt Service - Capital Projects - RcteStcbi ilction -e-Re1enue -e-Cash Balance City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-10
Figure 2-3 Status Quo Operating Cash Flow (Recycled Water) The analyses performed for the Study indicate that the City should implement the proposed revenue increases shown in Table 2-9 and Table 2-10 if it wishes to keep the Water and Recycled Water Utilities in a balance financial condition. The revenue increases represent the overall total revenue adjustment needed to meet revenue requirements. The revenue adjustment does not represent adjustments to the individual rates but reflects the overall level of revenue needed to meet the Water and Recycled Water Utilities’ obligations.

The suggested revenue increases help the Water and Recycled Water Utilities meet the following goals:
 Meet budgeted operating obligations in the three FYs.  Meet planned capital investments in the three FYs.
 Maintain an operating reserve of 90 days of operating expenses.  Increase combined construction and infrastructure reserve to the average of the next two-year’s CIP.
 Continue transfers for the rate stabilization reserve to meet the goal of 10% of rate revenues.

Table 2-9 and Table 2-10 summarize proposed Operating Funds for the Study Period. The Operating Funds consist of 1) Revenue and 2) Revenue Requirements.

Revenue
 Line 1 is the revenue under existing rates.
 Lines 2 through 4 are the additional revenues generated from the required annual revenue increases. The additional revenue generated is a direct reflection of the number of months the increase is effective for, and therefore amount might calculate at less than that stated amount.  Line 6 is the total revenue generated from user charges.  Line 14 for the Water Utility and Line 9 for the Recycled Water Utility represent other operating revenues.
$15,000,000
Sl0,000,000
$5,000,000
so
-$5,000,000
-$10,000,000
Recycled Water Utility - Operating i=und
2026 2027 2028 l - O&M - DebtService - Capital Projects - Rat:eStabililat:ion ~ Re,,enue ~ Cash Balance City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-11
 Line 15 for the Water Utility and Line 10 for the Recycled Water Utility represent total revenues for the enterprises.

Revenue Requirements
 Line 17 for the Water Utility and Line 12 for the Recycled Water Utility represent O&M expenses.

The O&M expenses include water production and water purchase.  Line 22 for the Water Utility and Line 16 for the Recycled Water Utility represent transfers. The transfers include money to the Rate Stabilization Fund, Operating Reserve, and Construction Fund.
 Line 23 for the Water Utility and Line 17 for the Recycled Water Utility represent total revenue requirements for the enterprises.

Line 27 for the Water Utility and Line 21 for the Recycled Water Utility represent the net cumulative cash balance (unrestricted) within the Operating Funds. The net unrestricted plus operating reserve intends to match, to the extent possible, Line 28 for the Water Utility and Line 29 for the Recycled Water Utility. The cash balance reserve is required to ensure the Operation Fund can continue in the event of a supplier interruption, market price fluctuations of critical equipment or supplies, or an abrupt drop in account receivables. The reserve target minimum is 90 days of O&M expenses. (Section left intentionally blank)
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-12
Table 2-9 Operating Fund (Water)

Fiscal Year Ending June 30,
FY 2026 FY 2027 FY 2028
($) ($) ($)
Revenue
Rate Revenue
1 Revenue from Existing Rates 65,932,000 67,462,000 69,030,300 Year Months Effective Rate Adj
2 FY 2026 12 11.00% 7,252,500 7,420,800 7,593,300
3 FY 2027 12 6.00% 4,493,000 4,597,400
4 FY 2028 12 6.00% 4,873,300
5 Increased Revenue Due to Adjustments 7,252,500 11,913,800 17,064,000 6 Subtotal Rate Revenue $ 73,184,500 $ 79,375,800 $ 86,094,300 Other Operating Revenue
7 Solar System Maintenance 88,000 88,000 88,000
8 Water System Maintenance 1,135,600 1,135,600 1,135,600 9 Water Construction 0 0 0
10 Water System Operations 0 0 0
11 Administration Design 1,484,000 1,492,200 1,500,500
12 Water Quality 0 0 0
13 Water Resources 0 0 0
14 Subtotal Other Operating Revenue $ 2,707,600 $ 2,715,800 $ 2,724,100 15 Total Revenue $ 75,892,100 $ 82,091,600 $ 88,818,400 Revenue Requirements
Operating & Maintenance
16 O&M Expenses 66,429,900 71,973,500 77,984,000
17 Subtotal O&M $ 66,429,900 $ 71,973,500 $ 77,984,000
Transfers
18 Transfer to Other Funds 346,500 154,500 292,400
19 Transfer to Rate Stabilization Reserve 0 351,100 888,700 20 Transfer to Operating Reserve 8,944,400 1,366,900 1,482,000 21 Transfer to Water Construction Fund 5,000,000 7,000,000 7,000,000 22 Total Transfers $ 14,290,900 $ 8,872,500 $ 9,663,100 23 Total Revenue Requirements $ 80,720,800 $ 80,846,000 $ 87,647,100 24 Net Annual Cash Balance (4,828,700) 1,245,600 1,171,300 25 Beginning Fund Balance 4,933,700 105,000 1,350,600
26 Net Cumulative Fund Balance $ 105,000 $ 1,350,600 $ 2,521,900 27 Unrestricted + Operating Reserve $ 16,485,000 $ 19,097,500 $ 21,750,800 28 Minimum Operating Reserves (90 Days) $ 16,380,000 $ 17,746,900 $ 19,228,900 Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-13
Table 2-10 Operating Fund (Recycled Water)

Figure 2-4 presents the proposed Water Utility Operating Fund, and Figure 2-5 presents the Recycled Water Utility Operating Fund.

Fiscal Year Ending June 30,
FY 2026 FY 2027 FY 2028
($) ($) ($)
Revenue
Rate Revenue
1 Revenue from Existing Rates 8,234,300 8,316,700 8,399,700 Year Months Effective Rate Adj
2 FY 2026 12 11.00% 905,800 914,800 924,000
3 FY 2027 12 15.00% 1,384,700 1,398,600
4 FY 2028 12 15.00% 1,608,300
5 Increased Revenue Due to Adjustments 905,800 2,299,500 3,930,900 6 Subtotal Rate Revenue $ 9,140,100 $ 10,616,200 $ 12,330,600 Other Operating Revenue
7 System Maintenance 100,500 102,500 104,600
8 South Bay Water Recycling System Maintenance 1,034,600 1,073,800 1,114,100 9 Subtotal Other Operating Revenue $ 1,135,100 $ 1,176,300 $ 1,218,700 10 Total Revenue $ 10,275,200 $ 11,792,500 $ 13,549,300 Revenue Requirements
Operating & Maintenance
11 O&M Expenses 10,886,800 12,025,500 13,286,000
12 Subtotal O&M 10,886,800 12,025,500 13,286,000
Transfers
13 Transfer to Rate Stabilization Reserve 0 0 0
14 Transfer to Operating Reserve (115,600) 280,800 310,800 15 Transfer to Recycled Water Const Fund 50,000 100,000 100,000 16 Total Transfers (65,600) 380,800 410,800
17 Total Revenue Requirements $ 10,821,200 $ 12,406,300 $ 13,696,800 18 Net Annual Cash Balance (546,000) (613,800) (147,500) 19 Beginning Fund Balance 1,590,200 1,044,200 430,400
20 Net Cumulative Fund Balance $ 1,044,200 $ 430,400 $ 282,900 21 Unrestricted + Operating Reserve $ 3,728,600 $ 3,395,600 $ 3,558,900 22 Minimum Operating Reserves (90 Days) $ 2,684,400 $ 2,965,200 $ 3,276,000 Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-14
Figure 2-4 Water Operating Cash Flow
Figure 2-5 Recycled Water Operating Cash Flow
$100,000,000
$90,000,000
$80,000,000
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
$0
2026
Water Utility- Operating Fund
2027 2028
- O&M - Debt Service - Capital Projects - Rate Stabilization ~ Revenue ~ Cash Balance $16,000,000
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
Recycled Water Utility- Operating Fund
$0 L 2026 2027 2028
- O&M - Debt Service - Capital Projects - Rate Stabilization ~ Revenue ~ Cash Balance City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 3-1

3.0 Cost of Service Analysis
The cost-of-service analysis requires recovery of the City’s needed revenues from water and recycled water service rates, allocated to customer classes according to the service rendered. An equitable rate structure allocates the capture of revenue requirements to customer classes based on the quantity of water consumed, peak flows, the number of customer connections, and other relevant factors.

In analyzing the Water and Recycled Water Utilities’ cost of service for allocation to its customer classes, Black & Veatch selected the annual revenue requirements for FY 2026 as the Test Year (TY) requirements to demonstrate the development of cost-of-service water and recycled water rates. Table 3-1 summarizes the total costs of service that need to be recovered from water user rates. Table 3-2 summarizes the total costs of service that need to be recovered from recycled water user rates. Both tables represent TY 2026.

Table 3-1 Cost of Service Revenue from Rates (Water)
Operating Capital Total
Expense Cost Cost
($) ($) ($)
Revenue Requirements
1 O&M Expenses 66,429,900 0 66,429,900
2 Debt Service 0 0 0
3 Transfers 9,290,900 5,000,000 14,290,900
4 Subtotal 75,720,800 5,000,000 80,720,800
Less Revenue Requirements Met from Other Sources
5 Solar System Maintenance 88,000 0 88,000
6 Water System Maintenance 1,135,600 0 1,135,600
7 Water Construction 0 0 0
8 Water System Operations 0 0 0
9 Administration Design 1,484,000 0 1,484,000
10 Water Quality 0 0 0
11 Water Resources 0 0 0
12 Subtotal 2,707,600 0 2,707,600
Adjustments
13 Adjustment for Annual Cash Balance 4,828,700 0 4,828,700 14 Subtotal 4,828,700 0 4,828,700
15 Cost of Service to be Recovered from Rates $ 68,184,500 $ 5,000,000 $ 73,184,500 Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 3-2
Table 3-2 Cost of Service Revenue from Rates (Recycled Water) The total revenue requirement is shown in Line 4, which corresponds with Table 2-9, Line 23, and Table 2-10, Line 17. As shown in Line 12 for the Water Utility and Line 7 for the Recycled Water Utility, we deduct revenues from other sources to derive the net revenue requirement recovered through rates, which correspond with Table 2-9, Line 14 and Table 2-10, Line 9, respectively.

Line 13 for the Water Utility and Line 8 for the Recycled Water Utility represent the net annual cash balance during the TY. If the enterprise is drawing down funds already in the Operating Fund, this number is positive. The number will be negative if the enterprise is replacing funds. In the case of the Water Utility, the $4.8M figure indicates that the forecast is projecting a negative cash balance for the year. In the case of the Recycled Water Utility, the $546.0k figure indicates that the forecast is projecting a negative cash balance for the year.

3.1 Functional Cost Components
The first step in conducting a cost-of-service analysis involves analyzing the cost of providing water and recycled water service by system function to properly allocate the costs to the various customer classes and, subsequently, design rates. As a basis for allocating costs of service among customer classes, the study separates costs into the following four basic functional cost components: (1) Base; (2) Extra Capacity; (3) Customer; and (4) Direct Assignment, described as follows:
 Base costs represent operating and capital costs of the system associated with service to customers to the extent required under constant or average annual load conditions without the elements necessary to meet water consumption variations or peak demands.  Extra Capacity costs represent those operating and capital costs incurred in meeting peaking demands. Peaking demands represent water consumption more than the average rate of use.  Customer costs are those expenditures that tend to vary in proportion to the number of customers connected to the system. These include meter reading, billing, collecting, accounting, maintenance, and capital costs associated with meters and services.

Operating Capital Total
Expense Cost Cost
($) ($) ($)
Revenue Requirements
1 O&M Expenses 10,886,800 0 10,886,800
2 Debt Service 0 0 0
3 Transfers (115,600) 50,000 (65,600)
4 Subtotal 10,771,200 50,000 10,821,200
Less Revenue Requirements Met from Other Sources
5 System Maintenance 100,500 0 100,500
6 South Bay Water Recycling System Maintenance 1,034,600 0 1,034,600 7 Subtotal 1,135,100 0 1,135,100
Adjustments
8 Adjustment for Annual Cash Balance 546,000 0 546,000
9 Subtotal 546,000 0 546,000
10 Cost of Service to be Recovered from Rates $ 9,090,100 $ 50,000 $ 9,140,100 Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 3-3
 Directly assigned costs are specifically identified as those incurred to serve specific customers.

These costs include fire protection and cross-connections for the Water Utility. The Recycled Water Utility has no direct assigned categories.

3.2 Allocation to Cost Components
The next step of the cost-of-service process involves allocating each cost element to functional cost components based on the parameter or parameters having the most significant influence on the magnitude of that cost element. O&M expenses are allocated directly to appropriate cost components. A detailed allocation of related capital investment is used as a proxy for allocating capital and replacement costs. The separation of costs into functional components provides a means for distributing such costs to the various classes of customers based on their respective responsibilities for each type of service.

3.2.1 System Base, Max Day, and Max Hour Allocations
The water and recycled water systems consist of various facilities designed and operated to fulfill a given function. For the systems to provide adequate service to its customers, it must be capable of meeting the annual volume requirements and the maximum demand rates placed on the system. Because not all customers and types of customers exert maximum demand at the same time, the capacities of the various facilities must meet the maximum coincidental demand of all classes of customers. Each water and recycled water service facility within the systems has an underlying average demand exerted by the customers for whom the base cost component applies. For those facilities designed solely to meet average day demand, 100% of the costs go to the base cost component. Extra capacity requirements associated with coincidental demands more than average use consist of maximum daily and maximum hourly demand subcomponents.

The first step in determining the allocation percentages for volume-related cost allocations is to assign system peaking factors. The base element is equal to the average daily demand (ADD) and assigned a value of 1.0. Based on the City’s 2002 Water Master Plan, the Water Utility’s maximum day (max day) demand is 1.5 times the ADD. The maximum hourly (max hour) demand is 1.8 times the ADD. Based on the City’s 2014 Strategic and Master Planning Report, 2002 Water Master Plan, the Recycled Water Utility’s max day demand is 1.7 times the ADD. The max hour demand is 2.38 times the ADD.

The costs associated with facilities required to meet maximum day demand are allocable to base and maximum day extra capacity as shown below for the Water Utility. Recycled Water Utility would use a similar allocation based on its respective max day and max hour ratios.  Base = (1.0/1.5) x 100 = 66.7%
 Max Day = (1.5 – 1.0)/1.5 x 100 = 33.3%
These calculations indicate that the average or base use requires 66.7% of the capacity of facilities designed and generated to meet maximum day demand, and the remaining 33.3% meets maximum day extra capacity requirements.

The costs associated with facilities required to meet maximum hour demand are allocable to base, maximum day extra capacity and maximum hour extra capacity as follows:
 Base = (1.0/1.8) x 100 = 55.6%
 Max Day = (1.5 – 1.0)/1.8 x 100 = 27.7%
 Max Hour = (1.8 – 1.5)/1.8 x 100 = 16.7%
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 3-4

3.2.2 Allocation of Operating and Maintenance Expenses
In allocating O&M expenses for TY 2026, costs are directly allocated to the cost components to the extent possible. The Water and Recycled Water Utilities book operating costs by functional categories.

Therefore, Black & Veatch used the factors noted in Section 3.1 to allocate the operating expenses to the cost components. The study based the allocation of Administration and Transfer cost elements on the average of all other costs. The direct assignment represents fire protection and cross-connections for the Water Utility. Table 3-3 and Table 3-4 represent the allocation of O&M to the cost components. Next, revenues are subtracted from other sources as shown in Table 3-1, Lines 12 and 14 and Table 3-2, Lines 7 and 9. The analysis deducts any drawdown of available cash balances and normalizes the rate adjustments for a full year to determine the net O&M costs for each utility.

Table 3-3 Allocation of O&M Expenditures (Water)
Table 3-4 Allocation of O&M Expenditures (Recycled Water) Common to All Customers
Base Extra Capacity Customer Fire Cross
Base Max. Day Max. Hour Meters Cust/Bill. Protection Connection ($) ($) ($) ($) ($) ($) ($) ($)
Water Utility
Operating Expenses
1532 Solar System Maintenance 287,300 0 0 0 287,300 0 0 0 1 1422 Water System Maintenance
2 Customer Service 394,100 0 0 0 0 394,100 0 0
3 Backflow Prevention 1,023,300 0 0 0 0 0 0 1,023,300
4 All Other 834,800 456,100 231,300 139,100 0 0 8,300 0 1423 Water Construction 4,192,400 2,290,000 1,161,800 698,700 0 0 41,900 0 5 1424 Water System Operations
6 Generation & Pumping 1,395,400 917,300 464,100 0 0 0 14,000 0 7 Customer Billing & Meter Reading 811,200 0 0 0 0 811,200 0 0 8 Meters 381,700 0 0 0 381,700 0 0 0
Hydrants 1,529,400 0 0 0 0 0 1,529,400 0
9 All Other 7,649,100 4,177,900 2,119,800 1,274,900 0 0 76,500 0 10 1411 Administration Design 4,412,900 3,066,200 283,000 150,300 605,000 85,800 149,800 72,800 11 1412 Water Quality 659,100 533,900 0 0 118,600 0 6,600 0 12 1413 Water Resources
Water Purchase 42,234,100 34,209,700 0 0 7,602,100 0 422,300 0 13 All Other 625,100 506,300 0 0 112,500 0 6,300 0
14 Transfers 9,290,900 6,455,600 595,800 316,500 1,273,700 180,600 315,400 153,300 15 Total O&M Expenses $ 75,720,800 $ 52,613,000 $ 4,855,800 $ 2,579,500 $ 10,380,900 $ 1,471,700 $ 2,570,500 $ 1,249,400 Less Other Revenue
16 Miscellaneous Revenues 2,707,600 1,881,400 173,600 92,200 371,200 52,600 91,900 44,700 17 Other Adjustments 4,828,700 3,355,100 309,700 164,500 662,000 93,800 163,900 79,700 18 Net Operating Expenses $ 68,184,500 $ 47,376,500 $ 4,372,500 $ 2,322,800 $ 9,347,700 $ 1,325,300 $ 2,314,700 $ 1,125,000 Line No. Description Total Costs
Common to All Customers
Base Extra Capacity Customer
Base Max. Day Max. Hour Meters Cust/Bill.
($) ($) ($) ($) ($) ($)
Recycled Water Utility
Operating Expenses
1 1522 System Maintenance
2 Water Purchase 8,962,100 8,962,100 0 0 0 0
3 Customer Billing & Meter Reading 3,700 0 0 0 0 3,700
4 Meters 623,000 0 0 0 623,000 0
5 All Other 283,400 119,000 83,400 81,000 0 0
6 1525 South Bay Water Recycling System 1,014,600 596,800 417,800 0 0 0 7 Transfers (115,600) (102,800) (5,300) (900) (6,600) 0 8 Total O&M Expenses $ 10,771,200 $ 9,575,100 $ 495,900 $ 80,100 $ 616,400 $ 3,700 Less Other Revenue
9 Miscellaneous Revenues 1,135,100 1,009,000 52,300 8,400 65,000 400 10 Other Adjustments 546,000 485,400 25,100 4,100 31,200 200 11 Net Operating Expenses $ 9,090,100 $ 8,080,700 $ 418,500 $ 67,600 $ 520,200 $ 3,100 Line No. Description Total Costs
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 3-5

3.2.3 Allocation of Capital Investments
In allocating the capital investment for TY 2026, the existing fixed assets (which serve as a proxy for the current capital investments) are allocated directly to cost components to the extent possible. The allocation of costs in this manner provides a basis for annual investment in water and recycled water system facilities. Plan capital costs can be allocated using the distribution of total net system investment across the functional cost components. Table 3-5 and Table 3-6 show the total allocation of existing system investment serving water and recycled water customers. The total net system investment of $59.5 M shown on Line 11 for the Water Utility and $1.1M on Line 9 for the Recycled Water Utility represents the Test Year original cost less accumulated depreciation of the system in service. The total net system investment reflects the Water and Recycled Water Utilities fixed asset listing ending June 30, 2024. This value represents the original cost (book value) of the assets.

Table 3-5 Allocation of Capital Costs (Water)
Table 3-6 Allocation of Capital Costs (Recycled Water)

3.3 Units of Service
To properly recognize the cost of service, each customer class receives its share of base, maximum day, peak hour, and customer costs. Following the allocation of costs, the total cost responsibility for each customer class is developed using unit costs of service for each cost function and subsequently assigning those costs to the customer classes based on the respective service requirements of each. The number of units of service required by each customer class provides a means for the proportionate distribution of costs previously allocated to respective cost categories.

Common to All Customers
Base Extra Capacity Customer Fire Cross
Base Max. Day Max. Hour Meters Cust/Bill. Protection Connection ($) ($) ($) ($) ($) ($) ($) ($)
Water Utility
Plant Assets
1 Water Production 18,406,300 14,909,100 0 0 3,313,100 0 184,100 0 2 Pumping 2,705,900 1,778,900 899,900 0 0 0 27,100 0
3 Treatment 1,745,100 1,147,300 580,300 0 0 0 17,500 0
4 Transmission & Distribution 27,911,800 15,245,500 7,735,200 4,652,000 0 0 279,100 0 5 Meters & Services 6,409,400 0 0 0 6,409,400 0 0 0
6 Fire Hydrants 572,500 0 0 0 0 0 572,500 0
7 General Plant 1,727,300 989,500 275,600 139,100 290,800 0 32,300 0 8 Total Plant Assets $ 59,478,300 $ 34,070,300 $ 9,491,000 $ 4,791,100 $ 10,013,300 $ 0 $ 1,112,600 $ 0 Less Other Revenue
9 Miscellaneous Revenues 0 0 0 0 0 0 0 0
10 Other Adjustments 0 0 0 0 0 0 0 0
11 Net Capital Expenses $ 59,478,300 $ 34,070,300 $ 9,491,000 $ 4,791,100 $ 10,013,300 $ 0 $ 1,112,600 $ 0 Line No. Description Total Costs
Common to All Customers
Base Extra Capacity Customer
Base Max. Day Max. Hour Meters Cust/Bill.
($) ($) ($) ($) ($) ($)
Recycled Water Utility
Plant Assets
1 Water Production 0 0 0 0 0 0
2 Pumping 0 0 0 0 0 0
3 Treatment 0 0 0 0 0 0
4 Transmission & Distribution 1,047,400 440,000 308,100 299,300 0 0 5 Meters 0 0 0 0 0 0
6 Total Plant Assets $ 1,047,400 $ 440,000 $ 308,100 $ 299,300 $ 0 $ 0 Less Other Revenue
7 Miscellaneous Revenues 0 0 0 0 0 0
8 Other Adjustments 0 0 0 0 0 0
9 Net Capital Expenses $ 1,047,400 $ 440,000 $ 308,100 $ 299,300 $ 0 $ 0 Line No. Description Total Costs
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 3-6
Table 3-7 summarizes the estimated TY 2026 units of service for the various customers. Base costs vary with the volume of water consumed and distributed to the customers on that basis. Extra Capacity costs are those associated with meeting peak demand rates of water use and distributed to the customers based on the respective class capacity requirements more than average rates of use. Black & Veatch followed the capacity factor methodology outlined in Appendix A of the AWWA M1 Manual to derive peak consumption information from the monthly consumption records in the City’s Customer Information System which helps provide the basis for estimating maximum day and peak hour ratios. The number of bills for each customer serves as the basis for distributing customer billing requirements. Customer meter requirements are allocated on an equivalent meter’s basis for each customer. The estimated number of equivalent meters for each customer relies on the total number of meters serving respective classes and the hydraulic capacity ratio of the meters to the 5/8 x 3/4-inch meter. The equivalent meter ratios adopted in this analysis are consistent with the AWWA M1 Manual. Private fire-protection costs allocations use equivalent fire hydrants.

3.4 Cost of Service Allocations
The Study applies the unit costs of service to each customer class’s respective service requirements to determine the cost of service for each customer class. The total unit costs of service applied to the respective requirements for each customer class results in the total cost of service for each customer class.

3.4.1 Units Costs of Service
The TY 2026 unit cost of service for each functional cost component is simply the total cost divided by the applicable units of service, as shown in Table 3-8 and Table 3-10. On Line 4, the total costs represent the cost that rates need to recover, as demonstrated in Table 3-1, Line 16 for the Water Utility, and Table 3-2, Line 11 for the Recycled Water Utility. The net O&M cost includes O&M (including water purchase) less revenue from other sources and adjustments. The total capital cost includes debt service payments and transfers to the Construction Fund. Line 6 represents the unit costs for the entire water and recycled water systems regardless of customer classes. After that, the unit costs are used to allocate the costs to the specific customer classes.

3.4.2 Distribution of Costs of Service to Customer Classes Applying the unit costs to the units for each customer class produces the customer class costs. This process is illustrated in Table 3-9 and Table 3-11, in which unit costs are applied to the customer class units of service for TY 2026. The costs attributable to each customer class reflect the functional cost components described in Section 3.1. Each customer class places a burden on the system in different ways, and thus the allocation of the units is representative of this burden.

An example of the application of unit costs is shown below for illustrative purposes.

Base Component
Unit Cost (Table 3-8, Line 6) $ 7.31 per HCF
General Customer Consumption (Table 3-9, Line 1) 6,871,457 HCF Total Allocated Cost $ 50,240,500
Please note that the numbers within the tables are rounded, yet the calculations are done based on non-rounded values; therefore, results might vary.

City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 3-1
Table 3-7 Units of Service (Water and Recycled Water)
Table 3-8 Units Cost of Service (Water)
Consumption Maximum Day Maximum Day Fire Cross
Annual Avg. Day Factor Total Extra Factor Total Extra Meters Cust/Bills Protection Connection Column Reference (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) Units of Measure (HCF) (HCF/day) (HCF/day) (HCF/day) (HCF/day) (HCF/day) (EMs) (bills) (EHs) (EMs) Water Utility
1 General Customer 6,871,457 18,826 166% 31,251 12,425 249% 46,877 15,626 45,530 315,666 0 0 2 Subtotal 6,871,457 18,826 31,251 12,425 46,877 15,626 45,530 315,666 Fire Service
3 Public Fire 0 0 556 556 4,445 3,890 0 0 3,437 0
4 Private Fire 0 0 287 287 2,293 2,006 0 15,445 1,773 0 5 Subtotal 0 0 842 842 6,738 5,896 0 15,445 5,210 0
Cross Connection
6 Cross Connection 36,446 0 8,765
7 Subtotal 0 0 0 0 0 0 0 36,446 0 8,765
8 Total Water System 6,871,457 18,826 32,093 13,267 53,614 21,521 45,530 367,557 5,210 8,765 Recycled Water Utility
9 General Customer 1,665,011 4,562 130% 5,930 1,369 195% 8,895 2,965 2,563 3,503 0 0 10 Subtotal 1,665,011 4,562 5,930 1,369 8,895 2,965 2,563 3,503 0 0 Line No. Description
Common to All Customers
Base Extra Capacity Customer Fire Cross
Base Max. Day Max. Hour Meters Cust/Bill. Protection Connection ($) ($) ($) ($) ($) ($) ($)
Water Utility
1 Net Operating Expense 68,184,500 47,376,500 4,372,500 2,322,800 9,347,700 1,325,300 2,314,700 1,125,000 2 Debt Service 0 0 0 0 0 0 0 0
3 Capital Costs 5,000,000 2,864,000 797,900 402,800 841,800 0 93,500 0 4 Total Cost of Service $ 73,184,500 $ 50,240,500 $ 5,170,400 $ 2,725,600 $ 10,189,500 $ 1,325,300 $ 2,408,200 $ 1,125,000 5 Units of Service (Total) 6,871,457 13,267 21,521 45,530 367,557 5,210 8,765 HCF HCF/Day HCF/Day Eq. Meters Bills Eq. Hydrants Eq. Meters 6 Cost per Unit $ 7.31 $ 389.71 $ 126.65 $ 223.80 $ 3.61 $ 462.25 $ 128.36 per HCF per HCF/Day per HCF/Day per Eq. Meter per Bill per Eq. Hydrant per Eq. Meter Line No. Description Total Costs
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 3-2
Table 3-9 Distribution of Costs to Customer Classes (Water) Common to All Customers
Base Extra Capacity Customer Fire Cross
Base Max. Day Max. Hour Meters Cust/Bill. Protection Connection ($) ($) ($) ($) ($) ($) ($)
Water Utility
General Customer
1 Units 6,871,457 12,425 15,626 45,530 315,666 0 0
2 Allocation of costs of service 68,389,300 50,240,500 4,842,200 1,978,900 10,189,500 1,138,200 0 0 Public Fire
3 Units 0 556 3,890 0 0 3,437 0
4 Allocation of costs of service 2,297,900 0 216,500 492,600 0 0 1,588,800 0 Private Fire
5 Units 0 287 2,006 0 15,445 1,773 0
6 Allocation of costs of service 1,240,900 0 111,700 254,100 0 55,700 819,400 0 Cross Connection
7 Units 0 0 0 0 36,446 0 8,765
8 Allocation of costs of service 1,256,400 0 0 0 0 131,400 0 1,125,000 7 TOTAL COSTS OF SERVICE $ 73,184,500 $ 50,240,500 $ 5,170,400 $ 2,725,600 $ 10,189,500 $ 1,325,300 $ 2,408,200 $ 1,125,000 Line No. Description Total Costs
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 3-3
Table 3-10 Units Cost of Service (Recycled Water)
Table 3-11 Distribution of Costs to Customer Classes (Recycled Water) Common to All Customers
Base Extra Capacity Customer
Base Max. Day Max. Hour Meters Cust/Bill.
($) ($) ($) ($) ($) ($)
Recycled Water Utility
1 Net Operating Expense 9,090,100 8,080,700 418,500 67,600 520,200 3,100 2 Debt Service 0 0 0 0 0 0
3 Capital Costs 50,000 21,000 14,700 14,300 0 0
4 Total Cost of Service $ 9,140,100 $ 8,101,700 $ 433,200 $ 81,900 $ 520,200 $ 3,100 5 Units of Service (Total) 1,665,011 1,369 2,965 2,563 3,503 HCF HCF/Day HCF/Day Eq. Meters Bills
6 Cost per Unit $ 4.87 $ 316.55 $ 27.62 $ 202.93 $ 0.88 per HCF per HCF/Day per HCF/Day per Eq. Meter per Bill
Line No. Description Total Costs
Common to All Customers
Base Extra Capacity Customer
Base Max. Day Max. Hour Meters Cust/Bill.
($) ($) ($) ($) ($) ($)
Recycled Water Utility
General Customer
1 Units 1,665,011 1,369 2,965 2,563 3,503
2 Allocation of costs of service 9,140,100 8,101,700 433,200 81,900 520,200 3,100 3 TOTAL COSTS OF SERVICE $ 9,140,100 $ 8,101,700 $ 433,200 $ 81,900 $ 520,200 $ 3,100 Line No. Description Total Costs
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Rate Design 4-1

4.0 Rate Design
The initial consideration in the derivation of rate schedules for water and recycled water service is establishing equitable charges to the customers commensurate with the cost of providing that service.

While the cost-of-service allocations to customer classes should not be construed as literal or exact determinations, they offer a guide to the necessity for, and the extent of, rate adjustments. Practical considerations sometimes modify rate adjustments by considering additional factors such as the extent of bill impacts, existing contracts, and historical local policies and practices.

4.1 Existing Rates
The existing rates of the Water and Recycled Water Utilities consist of a fixed component in the form of a minimum monthly service charge and a variable component in the form of a consumption charge. The minimum monthly service charge is based on meter size and applied when consumption does not exceed the consumption allowance. The consumption charge is based on units of consumption (1 unit = 1 HCF = 748 gallons). The City has separate fixed charges for fire services and cross-connections. Table 2-3, presented earlier in this report, summarizes the existing water and recycled water rates.

4.2 Proposed Rates
The cost-of-service analysis described in the preceding sections of this report provides a basis for the design of water and recycled water rates.

4.2.1 Monthly Service Charge
Black & Veatch used meter ratios based on maximum operating capacities by meter size as shown in AWWA M1, Table B-1, which recognizes that as meter size increases, so does the capacity. For example, customers with a 4” meter expects to be able to use more water (at a higher flow capacity) than customers with a ¾” meter. Consequently, the City’s water system must maintain assets sized accordingly and capable of providing customers the level of service expected from their meter connection when the tap turns on. The minimum monthly service charge recovers a portion of the costs associated with wholesale water purchase, meter maintenance and services, meter reading, bill issuance, and maintenance and capacity costs associated with public fire protection regardless of the level of water consumed.

Table 4-1 demonstrates the water cost elements incorporated into the minimum monthly service charge for FY 2026. Table 4-2 shows the Water Utility three-year fixed service charge rate schedule.

Table 4-1 Costs within the Minimum Monthly Service Charge for FY 2026 (Water) Meter & Public Fire Protection Billing
Meter Mtr Unit FP Unit Meter Adjusted Adjusted Total Service Size Cost Cost Ratio Unit Cost Unit Cost Bill Ratio Unit Cost Charge per EM per EM $ per Bill $ $/Month
5/8" x 3/4" 18.65 4.21 1.00 22.86 3.61 1.00 3.61 26.46
1" 18.65 4.21 1.67 38.09 3.61 1.00 3.61 41.70
1-1/2" 18.65 4.21 3.33 76.19 3.61 1.00 3.61 79.79
2" 18.65 4.21 5.33 121.90 3.61 1.00 3.61 125.50
3" 18.65 4.21 10.67 243.79 3.61 1.00 3.61 247.40
4" 18.65 4.21 16.67 380.93 3.61 1.00 3.61 384.53
6" 18.65 4.21 33.33 761.86 3.61 1.00 3.61 765.46
8" 18.65 4.21 53.33 1,218.97 3.61 1.00 3.61 1,222.58
10" 18.65 4.21 80.00 1,828.46 3.61 1.00 3.61 1,832.07
12" 18.65 4.21 112.50 2,571.27 3.61 1.00 3.61 2,574.88
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Rate Design 4-2
Table 4-2 Proposed Minimum Monthly Service Charge (Water) Table 4-3 demonstrates the recycled water cost elements incorporated into the minimum monthly service charge for FY 2026. Table 4-4 shows the Recycled Water Utility three-year fixed service charge rate schedule.

Table 4-3 Costs within the Minimum Monthly Service Charge for FY 2025 (Recycled Water) Table 4-4 Proposed Minimum Monthly Service Charge (Recycled Water) Proposed
Customer Class FY 2026 FY 2027 FY 2028
Minimum Monthly Meter Rates ($/Month) $/month $/month $/month 5/8" x 3/4" 26.46 28.50 29.60
1" 41.70 45.10 46.87
1-1/2" 79.79 86.61 90.05
2" 125.50 136.42 141.87
3" 247.40 269.23 280.05
4" 384.53 418.65 435.49
6" 765.46 833.71 867.30
8" 1,222.58 1,331.77 1,385.46
10" 1,832.07 1,995.86 2,076.34
12" 2,574.88 2,805.22 2,918.35
Meter Services Billing
Meter Mtr Unit Meter Adjusted Adjusted Total Service
Size Cost Ratio Unit Cost Unit Cost Bill Ratio Unit Cost Charge per EM $ per Bill $ $/Month
5/8" x 3/4" 16.91 1.00 16.91 0.88 1.00 0.88 17.80
1" 16.91 1.67 28.19 0.88 1.00 0.88 29.07
1-1/2" 16.91 3.33 56.37 0.88 1.00 0.88 57.26
2" 16.91 5.33 90.19 0.88 1.00 0.88 91.08
3" 16.91 10.67 180.39 0.88 1.00 0.88 181.27
4" 16.91 16.67 281.85 0.88 1.00 0.88 282.74
6" 16.91 33.33 563.71 0.88 1.00 0.88 564.59
8" 16.91 53.33 901.93 0.88 1.00 0.88 902.82
10" 16.91 80.00 1,352.90 0.88 1.00 0.88 1,353.78
12" 16.91 112.50 1,902.51 0.88 1.00 0.88 1,903.40
Proposed
Customer Class FY 2026 FY 2027 FY 2028
Minimum Monthly Meter Rates ($/Month) $/month $/month $/month 5/8" x 3/4" 17.80 20.42 23.57
1" 29.07 33.41 38.62
1-1/2" 57.26 65.89 76.23
2" 91.08 104.87 121.37
3" 181.27 208.80 241.72
4" 282.74 325.72 377.13
6" 564.59 650.51 753.24
8" 902.82 1,040.26 1,204.58
10" 1,353.78 1,559.93 1,806.37
12" 1,903.40 2,193.27 2,539.80
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Rate Design 4-3

4.2.2 Fire Service
The fire service charge includes costs of issuing bills and maintenance and capacity costs associated with private fire protection. The fire service charge increases as pipeline diameter size increases. The Water Utility provides fire service to approximately 1,287 private fire service accounts. These customers have a water line connection to the water system specifically for fire protection. The Water Utility must design, operate, and maintain a water system that can meet peak fire demand requirements to meet fire protection demands. The Water Utility charges these accounts a fire service charge based on the diameter of the line that connects their fire protection system to the water system. Table 4-5 demonstrates the costs incorporated into the fire service charge, and Table 4-6 shows the three-year rate schedule based on unit costs in future years.

Table 4-5 Costs within the Fire Service Charge for FY 2026 Table 4-6 Proposed Fire Service Charge

4.2.3 Cross Connection
The cross-connection charge includes costs of issuing bills and maintenance and replacement costs associated with backflow devices. The cross-connection charge increases as pipeline diameter size increases. The Water Utility provides backflow services to approximately 3,037 accounts. These customers have a backflow device that prevents possible contaminated water from entering the water system. The Water Utility maintains and replaces the devices accordingly to ensure that the devices are working properly. The Water Utility charges the accounts a cross-connection charge based on the diameter of the line that connects their service to the water system. Table 4-7 demonstrates the costs incorporated into the cross-connection charge, and Table 4-8 shows the three-year rate schedule.

Private Fire Protection Total
Meter Unit Meter Adjusted Service
Size Cost Ratio Unit Cost Charge
per EH $/Month
2" 58.33 0.06 3.50 3.50
4" 58.33 0.34 19.83 19.83
6" 58.33 1.00 58.33 58.33
8" 58.33 2.13 124.25 124.25
10" 58.33 3.83 223.42 223.42
12" 58.33 6.19 361.08 361.08
Proposed
Customer Class FY 2026 FY 2027 FY 2028
Fire Service ($/Month) $/month $/month $/month
2" 3.50 3.65 3.81
4" 19.83 20.70 21.57
6" 58.33 60.89 63.45
8" 124.25 129.70 135.15
10" 223.42 233.23 243.02
12" 361.08 376.94 392.76
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Rate Design 4-4
Table 4-7 Costs within the Cross-Connection Charge for FY 2026 Table 4-8 Proposed Cross Connection Charge

4.2.4 Consumption Charge
This consumption charge is designed to recover costs associated with the base and extra capacity demands. These costs include fixed and variable costs incurred by the water and recycled water system while providing the average annual usage and peaking demands. While most of the costs are fixed, such as personnel and direct and indirect charges, variable costs represent most of the costs through water production and water purchase. Table 4-9 shows the three-year rate schedule for both the Water and Recycled Water Utilities. For the Recycled Water Utility, the industrial process is part of general customers.

Table 4-9 Proposed Consumption Charges

4.3 Typical Monthly Costs under Proposed Charges
Table 4-10 and Table 4-11 compare typical monthly costs under existing rates and the proposed schedule of water and recycled water user rates derived in this study.

Cross Connection Total
Meter Unit Meter Adjusted Service
Size Cost Ratio Unit Cost Charge
per EM $/Month
1" 11.95 0.63 7.47 7.47
2" 11.95 1.00 11.95 11.95
3" 11.95 2.00 23.89 23.89
4" 11.95 3.13 37.33 37.33
6" 11.95 6.25 74.66 74.66
8" 11.95 10.00 119.46 119.46
10" 11.95 15.00 179.19 179.19
Proposed
Customer Class FY 2026 FY 2027 FY 2028
Cross Connection ($/Month) $/month $/month $/month
1" 7.47 7.52 7.76
2" 11.95 12.03 12.42
3" 23.89 24.06 24.83
4" 37.33 37.59 38.80
6" 74.66 75.17 77.60
8" 119.46 120.28 124.16
10" 179.19 180.41 186.24
Proposed
Customer Class FY 2026 FY 2027 FY 2028
Consumption Charges ($/HCF)
General Customer 9.89 10.49 11.13
Recycled Water Utility
General Customers 5.43 6.24 7.18
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Rate Design 4-5
Table 4-10 Typical Monthly Bill (Water)
Table 4-11 Typical Monthly Bill (Recycled Water)

4.4 Neighboring Water Utilities
Presented in Figure 4-1 are the proposed rates compared to rates of neighboring cities for a single-family residential customer with a 5/8” x ¾” meter consuming 12 units of water. Based on the comparison, the City is currently one of the lowest water providers in the area. With the proposed rate increases, the City remains the lowest water provider of the surveyed communities. All surveyed community rates are current as of May 2025.

Typical FY 2025 FY 2026
Monthly Existing Proposed
Customer Class Usage Rates Rates
(HCF) ($) ($)
Water Utility
General Customer 0 $23.42 $26.46
3 $23.42 $26.46
5 $44.50 $49.46
10 $89.00 $98.93
12 $106.80 $118.71
20 $178.00 $197.86
30 $267.00 $296.78
40 $356.00 $395.71
50 $445.00 $494.64
Typical FY 2025 FY 2026
Monthly Existing Proposed
Customer Class Usage Rates Rates
(HCF) ($) ($)
Recycled Water Utility
General Customer 0 $17.44 $17.80
3 $17.44 $17.80
5 $25.30 $27.14
10 $50.60 $54.28
12 $60.72 $65.13
20 $101.20 $108.56
30 $151.80 $162.84
40 $202.40 $217.12
50 $253.00 $271.39
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Rate Design 4-6
Figure 4-1 Comparison to Neighboring Water Utilities
$250.00
Water Rate Sewer Rate Combined
$200.00
$150.00
$100.00
II 11 I. 1.
$50.00
$0.00 I I I
Santa SJWC Mountain View San Jose Sunnyvale Milpitas Palo Alto Clara (Muni) Water Rate 12 $91.69 $118.68 $136.31 $129.01 $145.73 $139.14 $166.89 HCF Sewer Rate $72.70 $57.55 $50.42 $57 75 $50.42 $69.46 $67.1 1 Combined $164.39 $176.23 $186.73 $186.76 $196.15 $208.90 $234.00 ' All rates are proposed for FY25-26
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Sewer Utility 5-1
Sewer Utility

5.0 Revenue and Revenue Requirements
To meet the costs associated with providing sewer services to its customers, the Sewer Utility derives revenue from a variety of sources, including sewer user charges (rates), outlet charges, conveyance fees, connection charges, interest earned from the investment of available funds, engineering fees, and other miscellaneous revenues. The Sewer Utility is constantly looking for other sources of revenue, such as loans, bonds, and grants. Black & Veatch has projected the level of future revenue generated in the Study through an analysis of historical and future system growth in terms of the number of EDUs, bills, and contributed sewage flow. This section also projects the expenses, or revenue requirements, necessary to operate and maintain the system, invest in capital improvements, make debt service payments, and cover other sewer system expenses.

5.1 Customer and Water Consumption Projections

5.1.1 Customer Classes
The Sewer Utility’s customers include both residential and non-residential customers. The City has the following customer classes:
 Residential: Single-family residential and multi-family residential.  Non-Residential: Amusement Parks; Auto Dealers & Service Stations; Churches; Electric & Electronic Equipment; Food & Kindred Products; Hospitals & Convalescent Homes; Industrial Chemical; Industrial Water Treatment; Laundries; Machinery Manufacturers; Metal Plating; Motels & Hotels; Paper; Repair Shops & Car Washes; Restaurants; Schools & Colleges; and Commercial/Industrial/Miscellaneous (catch-all for remainder of non-residential customers).  Major Users: Major Users customer class is composed of major commercial and industrial users who are identified based on the following:1
● Have a sewage discharge of at least 25,000 gallons per day; or ● Have a daily discharge that is intermittent or irregular in strength, amount, or nature.

5.1.2 Equivalent Dwelling Units
The City provides sewer services to over 26,785 customers. All customers generating sewage flow connect to the sewer system. Since the City bills residential customers based on EDUs, a review of historical EDUs patterns for customers, and anticipated growth within the City, the projected total number of EDUs is expected to grow at 0.2% annually over the Study period. An EDU represents a single-family residential customer equivalent with a flow of 245 gallons per day and strengths of 250 mg/L of Biological Oxygen Demand (BOD), 250 mg/L of Total Suspended Solids (TSS), and 35 mg/L of Ammonia (NH3).

Table 5-1 summarizes the projected number of EDUs for the Sewer Utility. 1 City Website, Schedule S-16 Monthly Sewer Service Charges, <http://www.santaclaraca.gov/government/departments/watersewer-utilities/water-sewer-and-recycled-water-rates/sewer-rates> City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 5-2
Table 5-1 EDUs

5.1.3 Minimum Bills
The City bills non-residential customers primarily on contributed sewage flow and imposes a minimum bill on those whose flow charges do not exceed the included volume allowance within the monthly service charge. The City refers to these bills as minimum monthly service bills. Therefore, a review of historical minimum bills patterns for non-residential customers and anticipated growth within the City, the projected total number of minimum bills is expected to increase 2.5% annually over the Study period.

Table 5-2 summarizes the projected number of minimum monthly service bills for the Sewer Utility.

Table 5-2 Minimum Monthly Service Bills

5.1.4 Contributed Sewage Flow
The City charges all its non-residential customers based on contributed sewage flow, which is determined by multiplying water consumption by a return factor. In determining the projected sewage flow, Black & Veatch analyzed historical sewage flow patterns in conjunction with a projected estimate of future water consumption. In conjunction with water consumption, contributed sewage flow has fluctuated based on drought conditions in the state. In addition, the City’s Water Shortage Contingency Plan remains in effect, and customers have made conservation a way of life. Therefore, the City projects that sewage flow will increase 2.5% annually over the Study period.

Fiscal Year Ending June 30,
FY 2026 FY 2027 FY 2028
(EDUs) (EDUs) (EDUs)
1 Single Family 261,459 262,113 262,768
2 Multi Family 336,890 337,732 338,576
3 Total 598,349 599,845 601,344
Line No. Description
Fiscal Year Ending June 30,
FY 2026 FY 2027 FY 2028
(Bills) (Bills) (Bills)
1 Amusement Parks 116 119 122
2 Auto Dealers & Service Station 409 419 429
3 Churches 292 299 306
4 Commercial/Industrial/Miscellaneous 10,969 11,243 11,524 5 Electric & Electronic Equip. 473 485 497
6 Food and Kindred Products 36 37 38
7 Hospitals & Convalescent Homes 347 356 365
8 Industrial Chemical 40 41 42
9 Laundries 155 159 163
10 Machinery Manufacturers 791 811 831
11 Metal Plating 99 101 104
12 Motels & Hotels 66 68 70
13 Paper 13 13 13
14 Repair Shops & Car Washes 491 503 516
15 Restaurants 282 289 296
16 Schools & Colleges 580 595 610
17 Total 15,159 15,538 15,926
Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 5-3
Table 5-3 shows the projected sewage flow generated for the Study period. The City contributed sewage flow in units of HCF for non-residential customers.

Table 5-3 Contributed Sewage Flow

5.1.5 Major Users
The City charges major commercial and industrial sewer customers based on contributed sewage flow and strength loadings. Major users are identified individually, as each customer places different burdens on the sewer system. In the 2023, the City’s last major user customer left the City, therefore there are no major users for the duration of the Study period.

5.2 Revenue under Existing Rates
Sewer user rates serve as the primary source of revenue for the Sewer Utility. Therefore, the level of future rate revenue is important in developing a long-range financial plan. Rate revenue is determined by multiplying the projected system growth in terms of the number of EDUs, minimum monthly service bills, contributed sewage flow, and major user flow and loadings by the applicable rates to determine sewer rate revenue.

Table 5-4 shows the Sewer Utility’s current schedule of charges. It is important to note that the minimum monthly service charge applies to non-residential customers that do not exceed the base amount.

Therefore, the minimum monthly service charge serves as a baseline cost that the City needs to recover.

The City maintains a separate schedule of rates based on the customer classes identified in Section 5.1.

Fiscal Year Ending June 30,
FY 2026 FY 2027 FY 2028
(HCF) (HCF) (HCF)
1 Amusement Parks 74,820 76,691 78,608
2 Auto Dealers & Service Station 32,816 33,636 34,477
3 Churches 13,777 14,121 14,474
4 Commercial/Industrial/Miscellaneous 1,342,064 1,375,616 1,410,006 5 Electric & Electronic Equip. 450,931 462,204 473,759
6 Food and Kindred Products 17,656 18,097 18,550
7 Hospitals & Convalescent Homes 95,334 97,717 100,160
8 Industrial Chemical 15,943 16,341 16,749
9 Laundries 24,552 25,166 25,795
10 Machinery Manufacturers 37,081 38,008 38,958
11 Metal Plating 6,204 6,359 6,518
12 Motels & Hotels 99,626 102,117 104,670
13 Paper 27 28 29
14 Repair Shops & Car Washes 13,556 13,895 14,242
15 Restaurants 70,062 71,814 73,609
16 Schools & Colleges 46,602 47,767 48,961
17 Total (HCF) 2,341,051 2,399,577 2,459,565
18 Total (AF) 5,374 5,509 5,646
Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 5-4
Table 5-4 Existing Sewer Rates
Table 5-5 summarizes projected sewer rate revenue under existing rates. As shown, the revenue generated stays relatively flat over the Study period in conjunction with the number of EDUs, minimum bills, billed sewage flow, and major user volume and loadings. The projected Sewer Utility revenues increase from $47.4M in FY 2026 to $48.4M in FY 2028.
(Section left intentionally blank)

Existing Existing
FY 2025 FY 2025
Residential ($/EDU) Major Commercial and Industrial Users Single Family 52.37 Annual Capital Cost Recovery
Multi-Family 49.31 Volume (per MGD) 1,306,599
BOD [2] (per 1,000 lbs/day) 124,262
Non-Residential* ($/HCF) SS [3] (per 1,000 lbs/day) 114,880 Amusement Parks 6.93 NH3 [4] (per 1,000 lbs/day) 538,093 Auto Dealers & Service Station 7.80
Churches 6.12 Operating and Maintenance Cost Recovery
Com/Ind/Misc 6.61 Volume (per MG) 3,671.11
Electric & Electronic Equip. 6.18 BOD [2] (per 1,000 lbs) 561.28 Food and Kindred Products 15.74 SS [3] (per 1,000 lbs) 651.81 Hospitals & Convalescent Homes 7.60 NH3 [4] (per 1,000 lbs) 4,980.00 Industrial Chemical 11.58
Laundries 6.80
Machinery Manufacturers 9.33
Metal Plating 5.05
Motels & Hotels 8.09
Paper 4.44
Repair Shops & Car Washes 5.90
Restaurants 16.01
Schools & Colleges 7.31
*In no case shall the minimum charge be less than $52.37 per month.

Description Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 5-5
Table 5-5 Projected Revenue under Existing Rates

5.3 Other Revenue
Other operating sources include charges for revenue from other agencies served by Santa Clara, sewer lateral video inspections, sewer clean-out installations, interest on investments, and other miscellaneous revenues. In total, other operating revenues represent an average of 2.1% of the Sewer Utility’s total revenue. The City anticipates that these revenues will remain relatively constant for the duration of the Study period.

5.4 Operating and Maintenance Expenses
Table 5-6 summarizes the Sewer Utility’s projected O&M expenses for the Study Period. These expenses include costs related to salaries and benefits, materials and supplies, contract and professional services, RWF costs, indirect and direct costs, and routine capital outlay. The City anticipates that all O&M expenditures, excluding Water Pollution Control Plant costs, will increase on average by 4.2% annually from the FY 2026.

The Sewer Utility receives treatment services from the RWF operated and maintained by the City of San Jose. While the City has an ownership stake in the RWF, the City must still pay for O&M associated with operating the facility. Based on the City of San Jose estimates, the City expects RWF O&M costs to increase by approximately 3% annually over the Study period.

Fiscal Year Ending June 30,
FY 2026 FY 2027 FY 2028
($) ($) ($)
1 Single Family 13,706,500 13,740,800 13,775,100
2 Multi-Family 16,454,000 16,495,100 16,536,300
3 Amusement Parks 519,600 532,600 545,900
4 Auto Dealers & Service Station 274,700 281,600 288,700 5 Churches 98,600 101,100 103,600
6 Com/Ind/Misc 9,355,400 9,589,300 9,829,000
7 Electric & Electronic Equip. 2,784,700 2,854,400 2,925,700 8 Food and Kindred Products 277,200 284,100 291,200
9 Hospitals & Convalescent Homes 735,600 754,100 772,900 10 Industrial Chemical 184,900 189,500 194,300
11 Laundries 173,400 177,700 182,200
12 Machinery Manufacturers 383,700 393,300 403,100
13 Metal Plating 36,100 37,000 38,000
14 Motels & Hotels 801,700 821,700 842,300
15 Paper 800 800 800
16 Repair Shops & Car Washes 104,700 107,300 110,000
17 Restaurants 1,125,600 1,153,800 1,182,600
18 Schools & Colleges 367,500 376,700 386,100
19 Major Users - Customer 1 0 0 0
20 Total $ 47,384,700 $ 47,890,900 $ 48,407,800
Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 5-6
Table 5-6 O&M Expenses
As shown in Table 5-6, the Sewer Utility’s O&M expenses increase from $40.3M in FY 2026 to $43.1M in FY 2028.

5.5 Debt Service Requirements
Table 5-7 represents the Sewer Utility’s existing and proposed debt service obligations. This table shows the combined principal and interest requirements on the existing debt over the Study period. It is common practice for utilities to debt finance large capital improvement projects, such as in the case of Trimble Road sewer trunk line replacement in Santa Clara. By financing the cost of the projects, the City can fund large projects immediately and spread the payment over a specified time frame, thereby helping to offset the impact on ratepayers.

Table 5-7 Long-Term Debt Service

5.6 Capital Improvement Program
The Sewer Utility annually develops a five-year Capital Improvement Plan to identify sewer system needs, including ongoing assessments, maintenance, and renewal and replacement requirements.

Table 5-8 summarizes the Sewer Utility’s CIP for FY 2026 through FY 2028. The Sewer Utility is projecting $55.9M in CIP over the Study period, including capital and replacement projects. The City has posted the CIP Budget on its website for complete details associated with each CIP project.

Fiscal Year Ending June 30,
FY 2026 FY 2027 FY 2028
($) ($) ($)
1 Salaries 3,444,500 3,651,100 3,786,100
2 Benefits 2,101,200 2,132,400 2,223,700
3 Materials/Services/Supplies 615,800 628,000 640,400
4 Interfund Services 5,725,600 5,984,700 6,261,600
5 Resource & Production 28,459,146 29,312,800 30,192,200 6 Capital Outlay 0 0 0
7 Total $ 40,346,246 $ 41,709,000 $ 43,104,000
Line No. Description
Fiscal Year Ending June 30,
FY 2026 FY 2027 FY 2028
($) ($) ($)
1 Existing Short and Long-Term Loan 3,296,800 3,298,300 3,297,800 2 Proposed Short-Term and Rev Bonds 0 810,300 1,126,500 3 Total $ 3,296,800 $ 4,108,600 $ 4,424,300
Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 5-7
Table 5-8 Capital Improvement Projects

5.6.1 Capital Improvement Financing Plan
The City funds annual expenditures for the CIP from a combination of available funds on hand, outlet charges, conveyance fees, debt financing, connection charges, developer contributions, and revenues derived from user rates. As shown in Table 5-9, the average annual CIP expenditure is $18.6M for the Sewer Utility. The planned average annual CIP contribution from the Sewer Utility Operating Fund is $15.3M annually over the Study period.

Table 5-9 Construction Fund Financing Plan
Fiscal Year Ending June 30,
FY 2026 FY 2027 FY 2028
($) ($) ($)
1 1908 SJ-SC Regional Wastewater Facility 8,289,300 9,615,000 27,269,200 2 1909 Sanitary Sewer Capacity
Improvements 0 0 0
3 1911 Sanitary Sewer System Condition
Assessment 1,035,400 1,072,000 1,109,900
4 1912 Sanitary Sewer System Improvements 2,070,700 2,143,900 2,219,800 5 1919 Sanitary Sewer Hydraulic Modeling As
Needed Support 160,100 169,600 179,600
6 PW Paving Project Support 517,700 0 0
7 Total $ 12,073,200 $ 13,000,500 $ 30,778,500
Line No. Description
Fiscal Year Ending June 30,
FY 2026 FY 2027 FY 2028
Source of Funds
1 Sanitary Outlet Charge 0 0 0
2 Sewer Conveyance Fee 0 0 0
3 Intra Transfer In - Debt Financing 0 15,000,000 0
4 Intra Transfer In - Customer Service Charge 15,000,000 15,500,000 15,500,000 5 Refund from San Jose/Cupertino 0 0 0
6 Total Sources $ 15,000,000 $ 30,500,000 $ 15,500,000
Use of Funds
7 Improvements Projects 12,073,200 13,000,500 30,778,500 8 Infrastructure Reserve 1,475,225 4,676,325 (790,750)
9 Total Uses $ 13,548,425 $ 17,676,825 $ 29,987,750
10 Net Annual Cash Balance 1,451,575 12,823,175 (14,487,750) 11 Beginning Unrestricted Fund Balance 5,842,709 7,294,284 20,117,459 12 Net Cumulative Fund Balance $ 7,294,284 $ 20,117,459 $ 5,629,709 13 Construction + Infrastructure Reserves $ 13,562,709 $ 31,062,209 $ 15,783,709 14 Minimum Reserves $ 6,268,425 $ 10,944,750 $ 10,154,000 Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 5-8

5.7 Transfers
The Sewer Utility will perform transfers over the Study period from the Operating Fund and other funds and reserves. The other funds consist of the Operating Reserve, Rate Stabilization Reserve, Pension Stabilization Reserve and Construction Fund. See Section 5.8 for further explanation on Rate Stabilization Reserve. The Construction Fund transfers represent money to cover planned CIP project expenditures. All these transfers do not represent direct operating expenses for the enterprise. Therefore Black & Veatch includes these costs as “below-the-line” cash flow items and not included as O&M expenses. Table 5-10, Lines 19 to 23 for the Sewer Utility reflect these associated amounts.

5.8 Reserves
A utility typically establishes reserves for several reasons, such as covering shortfalls in operating revenues, maintaining strong bond ratings, covering day-to-day operating costs, and easing the burden on ratepayers associated with large rate increases. Per the reserve policy, the Sewer Utility will maintain the following four reserves:
 Operating Reserve represents working capital maintained by the Operating Fund to cover day-today expenses and maintain enough funds to cover accounts receivables if there are supplier issues, periods of lower-than-expected sewer revenues, or unforeseen cost increases. The reserve will maintain a minimum balance of 90 days of operating expenses once fully funded.  Construction Reserve represents funds used for unforeseen and unbudgeted capital costs. Once fully funded, this reserve will maintain a minimum balance of 12-months of the following year’s planned City CIP and 6-months of the following year’s planned RWF CIP.  Rate Stabilization Reserve represents funds used to absorb revenue shortfalls due to short-term decreases in sewer sales. This reserve is designed to stabilize sewer rate revenue and avoid wide swings in rates charged to customers over time. The reserve will maintain a minimum balance of 10% of sewer rate revenue when fully funded.
 Pension Stabilization Reserve represents funds used to pay for the unfunded pension liabilities and the increase in the City’s share of pension costs due to factors such as higher CalPERS rates and negotiated pay increases. The reserve target is $1.2M for the Sewer Utility by FY 2030.

Appropriate reserve levels help the Sewer Utility maintain liquidity and demonstrate to the rating agencies that the City’s financial policies and practices are focused on maintaining a balanced financial position.

5.9 Projected Operating Results
The revenue requirements of the Sewer Utility consist of O&M expenses, debt service, capital expenditures, and reserve requirements.

It is important to examine the cash flow projections under the status quo scenario to fully understand the current condition of the Sewer Utility and the need for revenue adjustments. As shown in Figure 5-1, the status quo conditions would project that the Sewer Utility would operate from an annual deficit position, thus tapping into its reserves. In this scenario, the Sewer Utility would not impose any revenue increases over the Study Period and continue to incur O&M expenses, pay for the execution of the planned CIP, and transfer to reserves.

City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 5-9
Figure 5-1 Status Quo Operating Cash Flow
The Sewer Utility will fall into a deficit position if the City does not implement the revenue increases, as shown in Figure 5-1. The revenue increases represent the overall total revenue adjustment needed to meet revenue requirements. The revenue adjustment does not represent adjustments to the individual rates but reflects the overall level of revenue needed to meet the Sewer Utility’s obligations.

The suggested revenue increases help the Sewer Utility meet the following goals:
 Meet budgeted operating obligations in the three FYs.  Meet planned capital investments in the three FYs.
 Maintain an operating reserve of 90 days of operating expenses.  Maintain construction and infrastructure reserve to the average of the next two-year’s CIP for City and RWF projects.
 Continue to fund the rate stabilization reserve to reach its goal of 10% of rate revenues.  Continue transfers for the pension stabilization reserve to meet the FY 2030 goal.

Shown in Table 5-10 is a summary of the proposed Operating Fund for the Study Period. The Operating Fund consists of 1) Revenue and 2) Revenue Requirements.

Revenue
 Line 1 is the revenue under existing rates.
 Lines 2 through 4 are the additional revenue generated from the required annual revenue increases. The additional revenue generated is a direct reflection of the number of months the increase is effective for, and therefore amount might calculate at less than that stated amount.  Line 6 is the total revenue generated from user charges.  Line 12 represents other operating revenues.
 Line 13 represents total revenues for the enterprise. $70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000
s20,ooo,ooo
Sl0,000,000
so
-Sl0,000,000
-s20,ooo,ooo
-$30,000,000
-$40,000,000
2026
Sewer Utility - Operating Fund
2027 2028
- O&M - Debt Service - Capital Projects - Rat:eStabililat:ion ~ Re1 enue -.-cash Balance City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 5-10
Revenue Requirements
 Line 15 represents O&M expenses. The O&M expenses include RWF costs.  Line 18 represents debt service payments.
 Line 24 represents transfers. The transfers include money to the reserves and other funds.  Line 25 represents total revenue requirements.

Line 28 represents the net cumulative cash balance (unrestricted) within the Operating Fund. The net unrestricted cash balance plus the operating reserve intends to match, to the extent possible, Line 30.

The cash balance reserve is required to ensure the Operation Fund can continue in the event of a supplier interruption, market price fluctuations of critical equipment or supplies or an abrupt drop in account receivables. The reserve target minimum is 90 days of O&M expenses. Line 31 represents the debt service coverage. The operating cash flow is set up to achieve a debt service coverage of 1.25x requirement in all years. The lending financial institution sets the debt service coverage ratio via a rate covenant that will also obligate the City to increase revenues as needed to meet the minimum debt service coverage requirement.
(Section left intentionally blank)
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 5-11
Table 5-10 Operating Fund (Sewer)

Fiscal Year Ending June 30,
FY 2026 FY 2027 FY 2028
Revenue
Rate Revenue
1 Revenue from Existing Rates 47,384,700 47,890,900 48,407,800 Year
Months
Effective Rate Adj
2 2026 12 8.00% 3,790,800 3,831,300 3,872,600
3 2027 12 10.50% 5,430,800 5,489,400
4 2028 12 10.00% 5,777,000
5 Increased Revenue Due to Adjustments 3,790,800 9,262,100 15,139,000 6 Subtotal Rate Revenue $ 51,175,500 $ 57,153,000 $ 63,546,800 Other Operating Revenue
7 System Administration (Interest Income) 651,500 663,600 676,000 8 System Maintenance 20,000 20,000 20,000
9 Operations 560,000 560,000 560,000
10 SJ SC Water Pollution Control Plant 0 0 0
11 Storm Pump Maintenance 0 0 0
12 Subtotal Other Operating Revenue $ 1,231,500 $ 1,243,600 $ 1,256,000 13 Total Revenue $ 52,407,000 $ 58,396,600 $ 64,802,800 Revenue Requirements
Operating & Maintenance
14 O&M Expenses 40,346,200 41,709,000 43,104,000
15 Subtotal O&M $ 40,346,200 $ 41,709,000 $ 43,104,000
Debt Service
16 Existing Loans/Bonds 3,296,800 3,298,300 3,297,800
17 Proposed Loans/Bonds 0 810,300 1,126,500
18 Total Debt Service $ 3,296,800 $ 4,108,600 $ 4,424,300 Transfers
19 Transfer to Other Fund 6,900 47,100 47,100
20 Transfer to Rate Stabilization Reserve 602,400 600,100 0 21 Transfer to Pension Stabilization Reserve 78,200 78,200 78,200 22 Transfer to Operating Reserve 1,600,100 336,000 344,000 23 Transfer to Sewer Construction Fund 15,000,000 15,500,000 15,500,000 24 Total Transfers $ 17,287,600 $ 16,561,400 $ 15,969,300 25 Total Revenue Requirements $ 60,930,600 $ 62,379,000 $ 63,497,600 26 Net Annual Cash Balance (8,523,600) (3,982,400) 1,305,200 27 Beginning Fund Balance 12,700,928 4,177,328 194,928
28 Net Cumulative Fund Balance $ 4,177,328 $ 194,928 $ 1,500,128 29 Unrestricted + Operating Reserve $ 14,125,728 $ 10,479,328 $ 12,128,528 30 Minimum Operating Reserves (90 Days) $ 9,948,400 $ 10,284,400 $ 10,628,400 31 Debt Service Coverage (Min 1.25) 3.66 4.06 4.90
Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 5-12
Figure 5-2 presents the proposed Operating Fund.

Figure 5-2 Sewer Operating Cash Flow
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
$0
2026
Sewer Utility- Operating Fund
2027 2028
- O&M - Debt Service - Capital Projects - Rate Stabilization ~ Revenue ~ Cash Balance City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 6-1

6.0 Cost of Service Analysis
The cost-of-service analysis requires that the utility recover needed revenues from rates for sewer service, which are allocated to customer classes according to the service rendered. An equitable rate structure allocates the capture of revenue requirements to customer classes based on contributed sewage volume, strengths, number of customer connections, and other relevant factors.

In analyzing the Sewer Utility’s cost of service for allocation to its customer classes, Black & Veatch selected the annual revenue requirements for FY 2026 as the Test Year requirements to demonstrate the development of cost-of-service sewer rates. Table 6-1 summarizes the total costs of service that need to be recovered from sewer user rates. The table represents TY 2026.

Table 6-1 Cost of Service Revenue from Rates

To derive the net revenue requirement recovered through rates, it is necessary to deduct revenues from other sources as shown in Line 10 which corresponds with Table 5-11, Line 12. Shown in Line 4 is the total revenue requirement that corresponds with Table 5-11, Line 25. Line 11 represents the net annual cash balance during the TY. If the enterprise is drawing down funds already in the Operating Fund, this number is positive. The number will be negative if the enterprise is replacing funds. In the case of the Sewer Utility, the $8.5M figure indicates that the forecast is projecting a negative cash balance for the year.

6.1 Functional Cost Components
The first step in conducting a cost-of-service analysis involves analyzing the cost of providing sewer service by system function to properly allocate the costs to the various customer classes and, subsequently, design rates. As a basis for allocating costs of service among customer classes, costs are Operating Capital Total
Expense Cost Cost
($) ($) ($)
Revenue Requirements
1 O&M Expense 40,346,200 0 40,346,200
2 Debt Service Requirements 0 3,296,800 3,296,800
3 Transfers 2,287,600 15,000,000 17,287,600
4 Subtotal $ 42,633,800 $ 18,296,800 $ 60,930,600
Less Revenue Requirements Met from Other Sources
5 System Administration 651,500 0 651,500
6 System Maintenance 20,000 0 20,000
7 Operations 560,000 0 560,000
8 SJ SC Water Pollution Control Plant 0 0 0
9 Storm Pump Maintenance 0 0 0
10 Subtotal $ 1,231,500 $ 0 $ 1,231,500
Adjustments
11 Adjustment for Annual Cash Balance 8,523,600 0 8,523,600 12 Subtotal $ 8,523,600 $ 0 $ 8,523,600
13 Cost of Service to be Recovered from Rates $ 32,878,700 $ 18,296,800 $ 51,175,500 Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 6-2
separated into the following four basic functional cost components: (1) Base; (2) Strength; (3) Customer; and (4) Direct Assignment, described as follows:
 Base costs represent operating and capital costs of the system associated with collection. The collection costs vary directly with the quantity of sewage flow.  Strength costs represent those operating and capital costs associated with treatment. The treatment costs are specifically related to strength parameters such as Biological Oxygen Demand, Total Suspended Solids, and Ammonia.
 Customer costs are those expenditures that tend to vary in proportion to the number of customers connected to the system. These include meter reading, billing, collecting, accounting, maintenance, and capital costs associated with meters and services.  Directly assigned costs are specifically identified as those incurred to serve specific customers.

The Sewer Utility has no directly assigned categories.

6.2 Allocation to Cost Components
The next step of the cost-of-service process involves allocating each cost element to functional cost components based on the parameter or parameters having the most significant influence on the magnitude of that element of cost. O&M expense items are allocated directly to appropriate cost components. A detailed allocation of related capital investment is used as a proxy for allocating capital and replacement costs. The separation of costs into functional components provides a means for distributing such costs to the various classes of customers based on their respective responsibilities for each type of service.

6.2.1 Volume and Strength Allocations
The sewer system consists of various facilities designed and operated to fulfill a given function. For the system to provide adequate service to its customers, it must be capable of meeting not only the annual volume requirements but also the strength loading demands placed on the system. Because not all customers and types of customers exert volume and strength loading demands similarly, the capacities of the various facilities must be designed to accommodate the demands of all classes of customers.

Each sewer service facility within the system has an underlying volume demand exerted by all customers for whom the base cost component applies. For those facilities designed solely to meet volume demand, 100% of the costs go to the base cost component. For facilities designed to meet strength loading demands, the percentage of the costs is allocated to the different strength cost components based on their specific function.

6.2.2 Allocation of Operating and Maintenance Expenses
The Sewer Utility books operating costs by functional categories. Therefore, Black & Veatch used the factors noted in Section 5.1 to allocate the operating expenses to the cost components. In allocating O&M expenses for TY 2026, the costs are directly allocated to the cost components to the extent possible. The allocation of Administration and Transfer cost elements is based on the average of all other costs. Table 6-2 represents the allocation of O&M to the cost components. Revenues are subtracted from other sources as shown in Table 6-1, Lines 10, and any drawdown of the cash balance is deducted and normalized for partial rate adjustments as shown in Line 13 to determine the net O&M costs.

City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 6-3
Table 6-2 Allocation of O&M Expenditures

6.2.3 Allocation of Capital Investments
In allocating the capital investment for TY 2026, the existing fixed assets (which serve as a proxy for the current capital investments) are allocated directly to cost components to the extent possible. Plan capital costs can be allocated using the distribution of total net system investment across the functional cost components. The allocation of costs in this manner provides a basis for annual investment in sewer system facilities. Table 6-3 shows the total allocation of existing system investment serving sewer customers for the TY 2026. The total net system investment of $1.3M shown on Line 7 represents the Test Year original cost less accumulated depreciation of the system in service. The total net system investment reflects the Sewer Utility’s fixed asset listing ending June 30, 2024. This value represents the original cost (book value) of the assets.

Table 6-3 Allocation of Capital Costs

6.3 Units of Service
To properly recognize the cost of service, each customer class receives its share of base, strength, and customer costs. Following the allocation of costs, the total cost responsibility for each customer class is developed using unit costs of service for each cost function and subsequently assigning those costs to the customer classes based on the respective service requirements of each. The number of units of service required by each customer class provides a means for the proportionate distribution of costs previously allocated to respective cost categories.

Line Total Common to All Customers
No. Description Cost Volume BOD TSS NH3 Customer
($) ($) ($) ($) ($) ($)
Operation & Maintenance
1 1511 System Administration 5,893,300 2,691,000 1,033,800 1,044,500 1,059,600 64,400 2 1512 System Maintenance 2,613,100 2,613,100 0 0 0 0
3 1514 Operations 2,107,900 2,107,900 0 0 0 0
4 1515 SJ SC Water Pollution Control Plant
5 Treatment 27,901,000 9,556,400 6,043,600 6,106,400 6,194,600 0 6 Customer Billing & Meter Reading 376,300 0 0 0 0 376,300 7 All Other 1,271,100 1,271,100 0 0 0 0
8 1516 Storm Pump Maintenance 183,500 183,500 0 0 0 0
9 Transfers 680,600 310,800 119,400 120,600 122,400 7,400 10 Total O&M Expenses $ 41,026,800 $ 18,733,800 $ 7,196,800 $ 7,271,500 $ 7,376,600 $ 448,100 Less Other Revenue
11 Miscellaneous Revenues 1,231,500 562,300 216,000 218,300 221,400 13,500 12 Other Adjustments 8,523,600 3,892,100 1,495,200 1,510,700 1,532,500 93,100 13 Net Operating Expenses $ 31,271,700 $ 14,279,400 $ 5,485,600 $ 5,542,500 $ 5,622,700 $ 341,500 Line Total Common to All Customers
No. Description Cost Volume BOD TSS NH3 Customer
($) ($) ($) ($) ($) ($)
Plant Assets
1 Collection 956,600 956,600 0 0 0 0
2 Lift Station 275,800 275,800 0 0 0 0
3 General Plant 101,100 101,100 0 0 0 0
4 Total Plant Assets $ 1,333,500 $ 1,333,500 $ 0 $ 0 $ 0 $ 0 Less Other Revenue
5 Miscellaneous Revenues 0 0 0 0 0 0
6 Other Adjustments 0 0 0 0 0 0
7 Net Operating Expenses $ 1,333,500 $ 1,333,500 $ 0 $ 0 $ 0 $ 0 --------
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 6-4
Table 6-4 summarizes the estimated Test Year units of service for the various customer classes. Base costs vary with the volume of sewage flow produced and distributed to customer classes on that basis.

Black & Veatch derived sewage flow information from the monthly water consumption records in the City’s CIS multiplied by a return factor. Strength costs are those associated with pollutant characteristics, and the Study allocated these costs to customer classes based on loadings. The pollutant loadings for each customer class come from recommendations of the State Water Resources Control Board, Revenue Program Guidelines, Appendix G, and the City of San Jose. The City’s commercial and industrial class consists of 17 distinct types of businesses such as retail, offices, restaurants, and hospitals. Since sampling is not an immediate possibility, the City has relied on industry standards used by the State of California. The number of bills for each customer class serves as the basis for distributing customer billing requirements.

6.4 Cost of Service Allocations
Unit costs of service are applied to each customer class’s respective service requirements to determine the cost of service for each customer class. The total unit costs of service applied to the respective requirements for each customer class results in the total cost of service for each customer class.

6.4.1 Units Costs of Service
The TY 2026 unit cost of service for each functional cost component is simply the total cost divided by the applicable units of service, as shown in Table 6-5. The capital costs on Line 3 and 4 are associated with City projects and RWF projects. These costs have been separated to determine the collection and treatment costs independently. On Line 5, the total costs represent the cost that rates need to recover, as demonstrated in Table 6-1, Line 14. The net O&M cost includes O&M (including the RWF) less revenue from other sources and adjustments. The total capital cost includes debt service payments and transfers to the Construction Fund. Line 6 represents the unit costs for the entire sewer system regardless of customer classes. After that, these unit costs are applied in allocating the costs to the specific customer classes.

6.4.2 Distribution of Costs of Service to Customer Classes Applying the unit costs to the units for each customer class produces the customer class costs. This process is illustrated in Table 6-6, in which the study applies the unit costs to the customer class units of service. The costs attributable to each customer class are based on the functional cost components described in Section 6.1. Each customer class places a burden on the system in different ways, and thus the allocation of the units is representative of this burden.

An example of the application of unit costs is shown below for illustrative purposes.

Vol Component
Unit Cost (Table 6-5, Line 7) $ 5.32 per HCF
Amusement Park Consumption (Table 6-6, Line 6) 74,820 HCF Total Allocated Cost $ 398,400
Please note that the numbers within the tables are rounded, yet the calculations are done based on non-rounded values; therefore, results might vary.

City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 6-1
Table 6-4 Units of Service

Line Contributed Contributed BOD Loadings TSS Loadings NH3 Loadings No. Description Units Volume Factor Loading Factor Loading Factor Loading Bills Units of Measure (EDUs/M Bills) (HCF) (mg/L) (lbs) (mg/L) (lbs) (mg/L) (lbs) (bills) 1 Single Family 265,174 1,405,334 250 2,191,900 250 2,191,900 35 306,900 259,125 2 Multi-Family 336,902 1,700,349 250 2,652,000 250 2,652,000 35 371,300 29,011 3 Amusement Parks 116 74,820 130 60,700 80 37,300 11 5,100 275 4 Auto Dealers & Service Station 409 32,816 180 36,900 280 57,300 11 2,300 752 5 Churches 292 13,777 130 11,200 80 6,900 11 900 616
6 Com/Ind/Misc 10,982 1,342,091 130 1,088,500 80 669,800 11 92,100 22,061 7 Electric & Electronic Equip. 473 450,931 30 84,400 15 42,200 15 42,200 1,603 8 Food and Kindred Products 36 17,656 1,120 123,400 690 76,000 0 0 174 9 Hospitals & Convalescent Homes 347 95,334 230 136,800 85 50,600 15 8,900 828 10 Industrial Chemical 40 15,943 360 35,800 720 71,600 0 0 114 11 Laundries 155 24,552 150 23,000 110 16,800 5 800 371 12 Machinery Manufacturers 791 37,081 290 67,100 550 127,200 0 0 1,741 13 Metal Plating 99 6,204 10 400 60 2,300 1 0 203
14 Motels & Hotels 66 99,626 310 192,700 121 75,200 7 4,400 538 15 Paper 0 0 1,250 0 560 0 10 0 40
16 Repair Shops & Car Washes 491 13,556 180 15,200 280 23,700 0 0 683 17 Restaurants 282 70,062 1,250 546,400 560 244,800 10 4,400 2,118 18 Schools & Colleges 580 46,602 130 37,800 100 29,100 30 8,700 1,147 19 Major Users - Customer 1 0 0 0 0 0
20 Total 5,446,734 7,304,200 6,374,700 848,000 321,400
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 6-1
Table 6-5 Units Cost of Service
Table 6-6 Distribution of Costs to Customer Classes

Line Total Common to All Customers
No. Description Cost Volume BOD TSS NH3 Customer
1 Net Operating Expense 32,878,700 15,886,400 5,485,600 5,542,500 5,622,700 341,500 2 Debt Service 3,296,800 1,129,200 714,100 721,500 732,000 0 3 Capital Costs (City) 4,701,200 4,701,200 0 0 0 0
4 Capital Costs (SJSC) 10,298,800 7,286,400 1,544,300 1,000,500 467,600 0 5 Total Cost of Service $ 51,175,500 $ 29,003,200 $ 7,744,000 $ 7,264,500 $ 6,822,300 $ 341,500 6 Units of Service 5,446,734 7,304,200 6,374,700 848,000 321,400 HCF lbs lbs lbs bills
7 Cost per Unit $ 5.32 $ 1.06 $ 1.14 $ 8.05 $ 1.06
per HCF per lbs per lbs per lbs per bill
Line Total Common to All Customers
No. Description Cost Volume BOD TSS NH3 Customer
1 Cost per Unit $ 5.32 $ 1.06 $ 1.14 $ 8.05 $ 1.06
per HCF per lbs per lbs per lbs per bill
Single Family
2 Units 1,405,334 2,191,900 2,191,900 306,900 259,125
3 Allocation of costs of service 15,049,200 7,483,100 2,323,900 2,497,700 2,469,100 275,400 Multi-Family
4 Units 1,700,349 2,652,000 2,652,000 371,300 29,011
5 Allocation of costs of service 17,906,100 9,054,200 2,811,700 3,022,200 2,987,200 30,800 Amusement Parks
6 Units 74,820 60,700 37,300 5,100 275
7 Allocation of costs of service 546,600 398,400 64,400 42,500 41,000 300 Auto Dealers & Service Station
8 Units 32,816 36,900 57,300 2,300 752
9 Allocation of costs of service 298,400 174,700 39,100 65,300 18,500 800 Churches
10 Units 13,777 11,200 6,900 900 616
11 Allocation of costs of service 101,100 73,400 11,900 7,900 7,200 700 Com/Ind/Misc
12 Units 1,342,091 1,088,500 669,800 92,100 22,061
13 Allocation of costs of service 9,828,200 7,146,500 1,154,000 763,300 741,000 23,400 Electric & Electronic Equip.
14 Units 450,931 84,400 42,200 42,200 1,603
15 Allocation of costs of service 2,880,000 2,401,200 89,500 48,100 339,500 1,700 Food and Kindred Products
16 Units 17,656 123,400 76,000 0 174
17 Allocation of costs of service 311,600 94,000 130,800 86,600 0 200 Hospitals & Convalescent Homes
18 Units 95,334 136,800 50,600 8,900 828
19 Allocation of costs of service 782,800 507,600 145,000 57,700 71,600 900 - - --------
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 6-2
Table 6-6 Distribution of Costs to Customer Classes (Con’t)

Line Total Common to All Customers
No. Description Cost Volume BOD TSS NH3 Customer
1 Cost per Unit $ 5.32 $ 1.06 $ 1.14 $ 8.05 $ 1.06
per HCF per lbs per lbs per lbs per bill
Industrial Chemical
20 Units 15,943 35,800 71,600 0 114
21 Allocation of costs of service 204,600 84,900 38,000 81,600 0 100 Laundries
22 Units 24,552 23,000 16,800 800 371
23 Allocation of costs of service 181,000 130,700 24,400 19,100 6,400 400 Machinery Manufacturers
24 Units 37,081 67,100 127,200 0 1,741
25 Allocation of costs of service 415,400 197,500 71,100 145,000 0 1,800 Metal Plating
26 Units 6,204 400 2,300 0 203
27 Allocation of costs of service 36,200 33,000 400 2,600 0 200 Motels & Hotels
28 Units 99,626 192,700 75,200 4,400 538
29 Allocation of costs of service 856,500 530,500 204,300 85,700 35,400 600 Repair Shops & Car Washes
30 Units 13,556 15,200 23,700 0 683
31 Allocation of costs of service 116,000 72,200 16,100 27,000 0 700 Restaurants
32 Units 70,062 546,400 244,800 4,400 2,118
33 Allocation of costs of service 1,269,100 373,100 579,300 279,000 35,400 2,300 Schools & Colleges
34 Units 46,602 37,800 29,100 8,700 1,147
35 Allocation of costs of service 392,700 248,200 40,100 33,200 70,000 1,200 36 TOTAL COSTS OF SERVICE $ 51,175,500 $ 29,003,200 $ 7,744,000 $ 7,264,500 $ 6,822,300 $ 341,500 ---------
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Rate Design 7-1

7.0 Rate Design
The initial consideration in the derivation of rate schedules for sewer service is establishing equitable charges to the customers commensurate with the cost of providing that service. While the cost-of-service allocations to customer classes should not be construed as literal or exact determinations, they offer a guide to the necessity for, and the extent of, rate adjustments. Practical considerations sometimes modify rate adjustments by considering additional factors such as the extent of bill impacts, existing contracts, and historical local policies and practices.

7.1 Existing Rates
The Sewer Utility’s existing rates consist of a fixed component in the form of a monthly service charge and a variable component in the form of a consumption charge. The monthly service charge is a flat fee based on EDUs and is applied to residential customers. The monthly service charge also is a minimum for non-residential customers and applies when the consumption charge is less than the monthly service charge. Non-residential customers also have a consumption charge based on units of water consumption (1 unit = 1 HCF = 748 gallons) multiplied by a return factor. The City has separate charges for major users consisting of O&M and capital components. Table 5-5, presented earlier in this report, summarizes the current sewer rates.

7.2 Proposed Rates
The costs of service analysis described in the preceding sections of this report provide a basis for designing sewer rates.

7.2.1 Monthly Service Charge
The monthly service charge is designed to recover residential costs associated with contributed sewage flow, strength loadings, billing, collecting, accounting, and maintenance and capital costs. The charge is a flat monthly fee based on EDUs. An EDU is defined in Section 5.1. In FY 2023, the multi-family rate was separated from single-family and became a stand-alone customer class.

The monthly service charge also serves as the minimum monthly service charge for non-residential customers. The minimum service charge will recover non-residential costs associated with volume, strength, meter reading, billing, collecting, accounting, and maintenance and capital costs. The minimum monthly service charge incorporates an allowance for sewage flow. Once a customer exceeds the allowance, the minimum monthly service charge goes away.

Table 7-1 shows the forecasted proposed three-year monthly service charge rate schedule.

Table 7-1 Proposed Monthly Service Charge

Line Proposed
No. Customer Class FY 2026 FY 2027 FY 2028
Monthly Service Charge ($/EDU) $/month $/month $/month
1 Single Family 57.56 64.49 71.88
2 Multi-Family 53.15 59.51 66.28
Minimum Commercial Bill Charge ($/Month) $/month $/month $/month 3 All Customers 57.56 64.49 71.88
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Rate Design 7-2

7.2.2 Consumption Charge
The consumption charges are designed to recover the remainder of the cost component costs not recovered through the monthly service charge for non-residential customers. Table 7-2 shows the forecasted proposed three-year rate schedule for the Sewer Utility. Starting FY 2026, the Paper category is being removed. All customers that were classified as Paper are now under Commercial/Industrial/Misc.

Table 7-2 Proposed Consumption Charges

7.2.3 Major Users
The major commercial and industrial user charge is designed to recover the costs associated with O&M and capital for major users. Major users are classified based on requirements in Section 5.1. These customers are monitored monthly for volume and strength loadings. Major users are charged the unit charges identified in Table 6-5, Line 7. Note that the major user charges are specifically identified O&M and capital components. Charges for all other customers incorporate these charges, but the City has combined them into a single rate for simplicity. Table 7-3 shows the three-year rate schedule based on unit costs in future years. The City does not have any major users left within the City; therefore, these rates will be for any future customer.

Line Proposed
No. Customer Class FY 2026 FY 2027 FY 2028
Commodity Charge ($/HCF) $/HCF $/HCF $/HCF
1 Amusement Parks 7.22 7.76 8.31
2 Auto Dealers & Service Station 8.38 9.08 9.82
3 Churches 6.12 6.56 6.96
4 Com/Ind/Misc 6.85 7.35 7.85
5 Electric & Electronic Equip. 6.33 6.74 7.15
6 Food and Kindred Products 17.53 19.53 21.62
7 Hospitals & Convalescent Homes 8.00 8.65 9.33
8 Industrial Chemical 12.69 14.00 15.36
9 Laundries 7.01 7.52 8.04
10 Machinery Manufacturers 9.98 10.93 11.91
11 Metal Plating 4.92 5.19 5.39
12 Motels & Hotels 8.56 9.28 10.04
Paper 0.00 0.00 0.00
13 Repair Shops & Car Washes 6.47 6.96 7.44
14 Restaurants 17.88 19.93 22.07
15 Schools & Colleges 7.71 8.32 8.97
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Rate Design 7-3
Table 7-3 Proposed Major User Charges

7.3 Typical Monthly Costs under Proposed Charges
Table 7-4 compares typical monthly costs under existing rates and the proposed schedule of sewer user rates derived in this study for residential and non-residential customers.

Table 7-4 Typical Monthly Bill

7.4 Neighboring Sewer Utilities
Presented in Figure 7-1 is the proposed rates compared to rates of neighboring jurisdictions, for a singlefamily residential customer. Based on the comparison, the City is currently a medium cost sewer provider in the area. With the proposed rate increases, the City remains one of the medium sewer providers of the surveyed communities. All surveyed community rates are best estimates as of May 2025.

Line Proposed
No. Customer Class FY 2026 FY 2027 FY 2028
Major Commercial and Industrial Users
Operating and Maintenance Cost Recovery
1 Volume ($/MG) 3,982.86 4,256.22 4,821.20
2 BOD ($/1,000 lbs) 751.02 869.93 986.80
3 SS ($/1,000 lbs) 869.45 1,007.10 1,142.39
4 NH3 ($/1,000 lbs) 6,630.54 7,680.17 8,710.77
Annual Capital Cost Recovery
5 Volume ($/MGD) 1,175,044 1,210,456 1,143,407
6 BOD ($/1,000 lbs/day) 112,855 124,559 139,957
7 SS ($/1,000 lbs/day) 98,598 106,931 118,008
8 NH3 ($/1,000 lbs/day) 516,337 541,495 576,299
Typical FY 2025 FY 2026
Monthly Existing Proposed
Customer Class Usage Rates Rates
(HCF) ($) ($)
Residential $52.37 $57.56
Commercial 0 $52.37 $57.56
10 $73.57 $77.83
20 $147.15 $155.66
30 $220.72 $233.49
40 $294.30 $311.32
50 $367.87 $389.15
100 $735.75 $778.29
250 $1,839.37 $1,945.73
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Rate Design 7-4
Figure 7-1 Comparison to Neighboring Sewer Utilities

$250.00
Water Rate Sewer Rate Combined
$200.00
$150.00
$100.00
II 11 I. 1.
$50.00
$0.00 I I I
Santa SJWC Mountain View San Jose Sunnyvale Milpitas Palo Alto Clara (Muni) Water Rate 12 $91.69 $118.68 $136.31 $129.01 $145.73 $139.14 $166.89 HCF Sewer Rate $72.70 $5755 $5042 $57 75 $5042 $6946 $6711
Combined $164.39 $176.23 $186.73 $186.76 $196.15 $208.90 $234.00 •An rates are proposed for FY25-26
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Appendix A – Ten-Year Financial Plan 7-1 Appendix A – Ten-Year Financial Plan
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Appendix A – Ten-Year Financial Plan 7-1 Water Utility

Fiscal Year Ending June 30,
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 ($) ($) ($) ($) ($) ($) ($) ($) ($) ($)
Revenue
Rate Revenue
1 Revenue from Existing Rates 65,932,000 67,462,000 69,030,300 69,198,400 69,367,200 69,536,400 69,705,900 69,875,800 70,046,100 70,217,100 2 Increased Revenue Due to Adjustments 7,252,500 11,913,800 17,064,000 21,852,200 27,382,100 33,267,800 39,532,200 46,198,800 53,293,200 60,841,600 3 Subtotal Rate Revenue $ 73,184,500 $ 79,375,800 $ 86,094,300 $ 91,050,600 $ 96,749,300 $ 102,804,200 $ 109,238,100 $ 116,074,600 $ 123,339,300 $ 131,058,700 Other Operating Revenue
4 Solar System Maintenance 88,000 88,000 88,000 88,000 88,000 88,000 88,000 88,000 88,000 88,000 5 Water System Maintenance 1,135,600 1,135,600 1,135,600 1,135,600 1,135,600 1,135,600 1,135,600 1,135,600 1,135,600 1,135,600 6 Water Construction 0 0 0 0 0 0 0 0 0 0
7 Water System Operations 0 0 0 0 0 0 0 0 0 0
8 Administration Design 1,484,000 1,492,200 1,500,500 1,509,000 1,517,700 1,526,500 1,535,500 1,544,700 1,554,100 1,563,700 9 Water Quality 0 0 0 0 0 0 0 0 0 0
10 Water Resources 0 0 0 0 0 0 0 0 0 0
11 Subtotal Other Operating Revenue $ 2,707,600 $ 2,715,800 $ 2,724,100 $ 2,732,600 $ 2,741,300 $ 2,750,100 $ 2,759,100 $ 2,768,300 $ 2,777,700 $ 2,787,300 12 Total Revenue $ 75,892,100 $ 82,091,600 $ 88,818,400 $ 93,783,200 $ 99,490,600 $ 105,554,300 $ 111,997,200 $ 118,842,900 $ 126,117,000 $ 133,846,000 Revenue Requirements
Operating & Maintenance
13 O&M Expenses 66,429,900 71,973,500 77,984,000 83,506,400 89,369,500 95,719,000 102,551,100 110,037,600 118,001,300 124,538,900 14 Subtotal O&M $ 66,429,900 $ 71,973,500 $ 77,984,000 $ 83,506,400 $ 89,369,500 $ 95,719,000 $ 102,551,100 $ 110,037,600 $ 118,001,300 $ 124,538,900 Debt Service
15 Existing Loans/Bonds 0 0 0 0 0 0 0 0 0 0
16 Proposed Loans/Bonds 0 0 0 0 0 0 0 0 0 0
17 Total Debt Service $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Transfers
18 Transfer to Other Funds 346,500 154,500 292,400 154,200 154,200 154,200 154,200 154,200 154,200 154,200 19 Transfer to Rate Stabilization Reserve 0 351,100 888,700 564,300 520,800 500,000 800,000 600,000 600,000 600,000 21 Transfer to Operating Reserve 8,944,400 1,366,900 1,482,000 1,361,700 1,445,700 1,565,600 1,684,700 1,846,000 1,963,600 1,612,000 22 Transfer to Water Construction Fund 5,000,000 7,000,000 7,000,000 5,000,000 5,000,000 5,000,000 6,000,000 6,000,000 6,000,000 6,000,000 23 Total Transfers $ 14,290,900 $ 8,872,500 $ 9,663,100 $ 7,080,200 $ 7,120,700 $ 7,219,800 $ 8,638,900 $ 8,600,200 $ 8,717,800 $ 8,366,200 24 Total Revenue Requirements $ 80,720,800 $ 80,846,000 $ 87,647,100 $ 90,586,600 $ 96,490,200 $ 102,938,800 $ 111,190,000 $ 118,637,800 $ 126,719,100 $ 132,905,100 25 Net Annual Cash Balance (4,828,700) 1,245,600 1,171,300 3,196,600 3,000,400 2,615,500 807,200 205,100 (602,100) 940,900 26 Beginning Fund Balance 4,933,700 105,000 1,350,600 2,521,900 5,718,500 8,718,900 11,334,400 12,141,600 12,346,700 11,744,600 27 Net Cumulative Fund Balance $ 105,000 $ 1,350,600 $ 2,521,900 $ 5,718,500 $ 8,718,900 $ 11,334,400 $ 12,141,600 $ 12,346,700 $ 11,744,600 $ 12,685,500 28 Unrestricted + Operating Reserve $ 16,485,000 $ 19,097,500 $ 21,750,800 $ 26,309,100 $ 30,755,200 $ 34,936,300 $ 37,428,200 $ 39,479,300 $ 40,840,800 $ 43,393,700 29 Minimum Operating Reserves (90 Days) $ 16,380,000 $ 17,746,900 $ 19,228,900 $ 20,590,600 $ 22,036,300 $ 23,601,900 $ 25,286,600 $ 27,132,600 $ 29,096,200 $ 30,708,200 Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Appendix A – Ten-Year Financial Plan 7-2 Recycled Water Utility
Fiscal Year Ending June 30,
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 ($) ($) ($) ($) ($) ($) ($) ($) ($) ($)
Revenue
Rate Revenue
1 Revenue from Existing Rates 8,234,300 8,316,700 8,399,700 8,483,600 8,568,400 8,653,900 8,740,500 8,827,900 8,916,100 9,005,200 2 Increased Revenue Due to Adjustments 905,800 2,299,500 3,930,900 5,589,100 7,492,600 9,676,300 11,439,400 12,572,900 13,779,100 15,063,000 3 Subtotal Rate Revenue $ 9,140,100 $ 10,616,200 $ 12,330,600 $ 14,072,700 $ 16,061,000 $ 18,330,200 $ 20,179,900 $ 21,400,800 $ 22,695,200 $ 24,068,200 Other Operating Revenue
4 System Maintenance 100,500 102,500 104,600 106,700 108,800 111,000 113,200 115,500 117,800 120,200 5 South Bay Water Recycling System Maintena 1,034,600 1,073,800 1,114,100 1,163,600 1,202,900 1,243,700 1,274,100 1,320,400 1,355,500 1,394,000 6 Subtotal Other Operating Revenue $ 1,135,100 $ 1,176,300 $ 1,218,700 $ 1,270,300 $ 1,311,700 $ 1,354,700 $ 1,387,300 $ 1,435,900 $ 1,473,300 $ 1,514,200 Transfers From
7 RW Capital Fund 0 0 0 0 0 0 0 0 0 0
8 Subtotal Transfers From $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - 9 Total Revenue $ 10,275,200 $ 11,792,500 $ 13,549,300 $ 15,343,000 $ 17,372,700 $ 19,684,900 $ 21,567,200 $ 22,836,700 $ 24,168,500 $ 25,582,400 Revenue Requirements
Operating & Maintenance
10 O&M Expenses 10,886,800 12,025,500 13,286,000 14,696,100 16,241,600 17,955,400 19,781,000 21,821,600 24,024,300 25,835,000 11 Subtotal O&M 10,886,800 12,025,500 13,286,000 14,696,100 16,241,600 17,955,400 19,781,000 21,821,600 24,024,300 25,835,000 Debt Service
12 Existing Loans/Bonds 0 0 0 0 0 0 0 0 0 0
13 Proposed Loans/Bonds 0 0 0 0 0 0 0 0 0 0
14 Total Debt Service 0 0 0 0 0 0 0 0 0 0
Transfers
15 Transfer to Rate Stabilization Fund 0 0 0 0 681,200 194,900 101,700 200,000 200,000 200,000 16 Transfer to Operating Reserve Fund (115,600) 280,800 310,800 347,700 381,100 422,600 450,100 503,200 543,100 446,500 17 Transfer to Recycled Water Const Fund 50,000 100,000 100,000 100,000 200,000 200,000 200,000 200,000 200,000 200,000 18 Total Transfers (65,600) 380,800 410,800 447,700 1,262,300 817,500 751,800 903,200 943,100 846,500 19 Total Revenue Requirements $ 10,821,200 $ 12,406,300 $ 13,696,800 $ 15,143,800 $ 17,503,900 $ 18,772,900 $ 20,532,800 $ 22,724,800 $ 24,967,400 $ 26,681,500 20 Net Annual Cash Balance (546,000) (613,800) (147,500) 199,200 (131,200) 912,000 1,034,400 111,900 (798,900) (1,099,100) 21 Beginning Fund Balance 1,590,200 1,044,200 430,400 282,900 482,100 350,900 1,262,900 2,297,300 2,409,200 1,610,300 22 Net Cumulative Fund Balance $ 1,044,200 $ 430,400 $ 282,900 $ 482,100 $ 350,900 $ 1,262,900 $ 2,297,300 $ 2,409,200 $ 1,610,300 $ 511,200 23 Unrestricted + Operating Reserve $ 3,728,600 $ 3,395,600 $ 3,558,900 $ 4,105,800 $ 4,355,700 $ 5,690,300 $ 7,174,800 $ 7,789,900 $ 7,534,100 $ 6,881,500 24 Minimum Operating Reserves (90 Days) $ 2,684,400 $ 2,965,200 $ 3,276,000 $ 3,623,700 $ 4,004,800 $ 4,427,400 $ 4,877,500 $ 5,380,700 $ 5,923,800 $ 6,370,300 Line No. Description
I I ______________ ,
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Appendix A – Ten-Year Financial Plan 7-3 Sewer Utility
Fiscal Year Ending June 30,
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Revenue
Rate Revenue
1 Revenue from Existing Rates 47,384,700 47,890,900 48,407,800 48,528,600 48,649,900 48,771,400 48,893,300 49,015,300 49,138,100 49,260,500 2 Increased Revenue Due to Adjustments 3,790,800 9,262,100 15,139,000 17,088,000 19,104,100 19,151,800 19,199,700 19,247,500 19,295,800 19,343,800 3 Subtotal Rate Revenue $ 51,175,500 $ 57,153,000 $ 63,546,800 $ 65,616,600 $ 67,754,000 $ 67,923,200 $ 68,093,000 $ 68,262,800 $ 68,433,900 $ 68,604,300 Other Operating Revenue
4 System Administration (Interest Income) 651,500 663,600 676,000 688,600 701,500 714,600 728,000 741,600 755,500 769,700 5 System Maintenance 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 6 Operations 560,000 560,000 560,000 560,000 560,000 560,000 560,000 560,000 560,000 560,000 7 SJ SC Water Pollution Control Plant 0 0 0 0 0 0 0 0 0 0 8 Storm Pump Maintenance 0 0 0 0 0 0 0 0 0 0
9 Subtotal Other Operating Revenue $ 1,231,500 $ 1,243,600 $ 1,256,000 $ 1,268,600 $ 1,281,500 $ 1,294,600 $ 1,308,000 $ 1,321,600 $ 1,335,500 $ 1,349,700 10 Total Revenue $ 52,407,000 $ 58,396,600 $ 64,802,800 $ 66,885,200 $ 69,035,500 $ 69,217,800 $ 69,401,000 $ 69,584,400 $ 69,769,400 $ 69,954,000 Revenue Requirements
Operating & Maintenance
11 O&M Expenses 40,346,200 41,709,000 43,104,000 44,612,700 46,095,800 47,574,400 49,051,000 50,651,900 52,285,000 53,992,400 12 Subtotal O&M $ 40,346,200 $ 41,709,000 $ 43,104,000 $ 44,612,700 $ 46,095,800 $ 47,574,400 $ 49,051,000 $ 50,651,900 $ 52,285,000 $ 53,992,400 Debt Service
13 Existing Loans/Bonds 3,296,800 3,298,300 3,297,800 3,300,300 3,300,500 3,298,500 2,361,800 2,360,100 2,360,800 2,358,800 14 Proposed Loans/Bonds 0 810,300 1,126,500 2,002,700 2,628,500 2,628,500 2,628,500 2,628,500 2,628,500 2,628,500 15 Total Debt Service $ 3,296,800 $ 4,108,600 $ 4,424,300 $ 5,303,000 $ 5,929,000 $ 5,927,000 $ 4,990,300 $ 4,988,600 $ 4,989,300 $ 4,987,300 Transfers
16 Transfer to Other Fund 6,900 47,100 47,100 47,100 47,100 47,100 47,100 47,100 47,100 47,100 17 Transfer to Rate Stabilization Reserve 602,400 600,100 0 500,000 500,000 500,000 0 0 0 0 18 Transfer to Pension Stabilization Reserve 78,200 78,200 78,200 78,200 78,200 78,200 78,200 78,200 78,200 78,200 19 Transfer to Operating Reserve 1,600,100 336,000 344,000 372,000 365,700 364,600 364,100 394,700 402,700 421,000 20 Transfer to Sewer Construction Fund 15,000,000 15,500,000 15,500,000 15,500,000 15,500,000 9,000,000 9,000,000 9,000,000 9,000,000 9,000,000 21 Total Transfers $ 17,287,600 $ 16,561,400 $ 15,969,300 $ 16,497,300 $ 16,491,000 $ 9,989,900 $ 9,489,400 $ 9,520,000 $ 9,528,000 $ 9,546,300 22 Total Revenue Requirements $ 60,930,600 $ 62,379,000 $ 63,497,600 $ 66,413,000 $ 68,515,800 $ 63,491,300 $ 63,530,700 $ 65,160,500 $ 66,802,300 $ 68,526,000 23 Net Annual Cash Balance (8,523,600) (3,982,400) 1,305,200 472,200 519,700 5,726,500 5,870,300 4,423,900 2,967,100 1,428,000 24 Beginning Fund Balance 12,700,928 4,177,328 194,928 1,500,128 1,972,328 2,492,028 8,218,528 14,088,828 18,512,728 21,479,828 25 Net Cumulative Fund Balance $ 4,177,328 $ 194,928 $ 1,500,128 $ 1,972,328 $ 2,492,028 $ 8,218,528 $ 14,088,828 $ 18,512,728 $ 21,479,828 $ 22,907,828 26 Unrestricted + Operating Reserve 14,125,728 10,479,328 12,128,528 12,972,728 13,858,128 19,949,228 26,183,628 31,002,228 34,372,028 36,221,028 27 Minimum Operating Reserves (90 Days) 9,948,400 10,284,400 10,628,400 11,000,400 11,366,100 11,730,700 12,094,800 12,489,500 12,892,200 13,313,200 28 Debt Service Coverage (Min 1.25) 3.66 4.06 4.90 4.20 3.87 3.65 4.08 3.80 3.50 3.20 __
Line No. Description
! _______________ _
City of Santa Clara
Agenda Report
1500 Warburton Avenue
Santa Clara, CA 95050
santaclaraca.gov
@SantaClaraCity
25-642 Agenda Date: 6/10/2025

REPORT TO COUNCIL

SUBJECT
Report on City Vacancies and Recruitment Efforts, Pursuant to Assembly Bill (AB) 2561

COUNCIL PILLAR
Enhance Community Engagement and Transparency

BACKGROUND
Effective January 1, 2025, Assembly Bill 2561 (“AB 2561”) added Government Code section 3502.3 to the Meyers-Milias-Brown Act (“MMBA”) - the body of law that governs collective bargaining and labor relations at the local government level. GC 3502.3 requires public agencies to address and report on staffing vacancies and recruitment and retention efforts before their governing board at least once per fiscal year and prior to adoption of the final budget. Public agencies are required to identify any challenges or recruitment obstacles in the hiring process.

Whenever the vacancy rate reached or exceeds 20% of the total number of authorized full-time positions within a single bargaining group, the new law requires local government agencies to provide additional information on the number of job vacancies within the bargaining unit; the total number of applicants for the vacant positions within the bargaining unit the average number of days to complete the hiring process from when a position is posted; and opportunities to improve compensation and other working conditions.

DISCUSSION
The City of Santa Clara has ten (10) bargaining units totaling approximately 1,166.25 Full Time Equivalents, or FTE’s. This excludes the 9.0 elected official FTE’s, 2.0 Council Appointee FTE’s, and approximately 720 as-needed (or temporary part-time) employees. As positions are added to the budget or become vacant, the City prioritizes recruitments to fill vacancies.

Classified Positions
The City of Santa Clara’s classified positions are governed by the Civil Service Rules and Regulations pursuant to the City Charter. Classified positions make up approximately 82% of the FTE’s within the workforce and are generally considered non-exempt hourly positions.

The Civil Service Rules and Regulations are applicable to the Classified Service and are interpreted uniformly and cover appointment, promotion, and discipline for the following bargaining units: the Santa Clara Firefighters IAFF Local 1171 (Unit 1), the Police Officers’ Association (Unit 2), the International Brotherhood of Electrical Workers Local 1245 (Unit 3), the Engineers of the City of Santa Clara (Unit 4), the City of Santa Clara Employees Association (Units 5/7/8), the American City of Santa Clara Page 1 of 9 Printed on 6/6/2025
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25-642 Agenda Date: 6/10/2025
Federation of State County and Municipal Employees Local 101 (Unit 6), and the Public Safety NonSworn Employees Association (Unit 10).

The City’s Civil Service Commission is organized pursuant to City Charter Sections 1010 and 1011 and is charged with ensuring that qualified persons are appointed to the service of the City. The Civil Service Commission consists of 5 members and are scheduled to meet 1 time per month to review items brought before the Commission. The Civil Service Commission is the approving body for items that fall under the purview of the Commission, including but not limited to: approving classified class specifications, setting or modifying the weighting plan for classified positions, abolishing eligible lists, approving probation extension requests, hearing appeals to the classified recruitment process, and serving as the Board of Review in disciplinary hearings. In addition to the approval process by the Civil Service Commission, items such as the creation, revision, or deletion of classified class specifications must also be agendized for City Council review.

The classified recruitment process pursuant to the City’s Civil Service Rules and Regulations consists of multiple steps to ensure appointment is based on merit and fitness. The hiring process involves administering an announced examination and applicant ranking which is included on an eligible list for consideration by the hiring City Department. To ensure selection and consideration is based on merit and fitness, the Civil Service Rules and Regulations ensures a number of assessments, including but not limited to: any the following: confirming applicant(s) meet the minimum qualifications of the classification, consideration of whether applicants possess additional desirable qualifications, confirming applicant(s) possess required certificates or licenses, screening supplemental responses to the questions on the job announcement, written examination, performance examination, oral board interview(s), and City Department interview(s).

Once an eligible list is established, the eligible list is active for different durations, including 6 months for entry level Police Officers, 1 year for non-sworn positions, and 2 years for sworn-promotional positions in the Police Department. As positions become vacant for classified positions and if there is an active eligible list, Departments must refer to an existing eligible list for the classification, including conducting interviews. If candidates on the eligible list are determined as not viable for the position (including a candidate declining the interview or position with the department that has the vacancy), the City will need to wait until the eligible list expires or bring the request forward to the Civil Service Commission to abolish the list, unless it meets the threshold for an administrative abolishment (by requiring less than 5 names on the eligible list); accordingly, the department with the vacant position is precluded from hiring for such position outside of the eligible list. Only once the list has expired or is approved to be abolished (which the Civil Service Commission might not approve), a recruitment for the position may begin again; otherwise it remains vacant.

Given the steps in the classified recruitment process to ensure selection and hiring is done based on merit and fitness under the Civil Service Rules and Regulations, a recruitment may take on average anywhere from 3 to 6 months from posting the job to extending an offer to an applicant. In some instances, the recruitment process may take longer if it is a specialized position and the applicant pool is small or not competitive, or requires a more intensive background process (typically required for positions in the Police Department), or requires additional steps in the recruitment process (such as written examination or performance examination).

It is worth noting that any changes made to the City’s Civil Services Rules and Regulations, including revisions to the recruitment process, may be subject to meet and confer with the impacted bargaining City of Santa Clara Page 2 of 9 Printed on 6/6/2025
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25-642 Agenda Date: 6/10/2025
units.

Unclassified Positions
Unclassified positions are not governed by the Civil Service Rules and Regulations. These positions are considered at-will and the recruitment and hiring process does not include all of the steps required in the recruitment process for classified positions. Depending on the unclassified position recruitment, the classification may not require all of the assessment points in the classified position examination process. For example, in unclassified recruitments, there may only be an oral board interview. Additionally, when conducting recruitments for unclassified positions, the appointing authority has the discretion to determine the steps or phases of assessment and or to make a direct appointment into these positions. Bargaining units that are NOT covered under the Civil Service Rules include the Unclassified Miscellaneous Management (Unit 9), Unclassified Police Management (Unit 9A), and Unclassified Fire Management (Unit 9B).

Recruitment Activity
Since the beginning of the fiscal year (July 1, 2024 - June 9, 2025), the City filled approximately 142.0 positions as outlined in Table 1. This number is comprised of new hires and re-hires. In addition, the City has also hired/rehired approximately 194 As-needed positions.

As shown in the chart below, of the 142 positions filled, 80, or 56% of the recruitment for full time positions, were new hires. The Table below shows, the City promoted approximately 62 employees in full-time positions since the beginning of the fiscal year, which is almost equivalent to the total number of new hires/rehires. The City places an emphasis on developing, retaining and promoting internal employees as demonstrated by the 7.6% turnover rate. The promotion of an employee into an existing vacant position thus creates a vacancy in their former position, requiring the City, under the Civil Service Rules and Regulations, to conduct a new recruitment for the vacated position.

Although the City has demonstrated the ability to develop internal employees and retain them within the organization, it does not contribute to the reduction of the Citywide vacancy rate.

Table 1: Summary of Recruitment Activity from July 1, 2024 - June 9, 2025 Bargaining Unit New
Hires/Rehires
Promotions Total
Santa Clara Firefighters (Unit 1) 5 0 5
Police Officers’ Association (Unit 2) 7 16 23
International Brotherhood of Electrical
Workers (Unit 3)
4 2 6
Engineers of the City of Santa Clara (Unit
4)
1 1 2
City of Santa Clara Employees
Association (Unit 578)
26 12 38
American Federation of State County and
Municipal Employees (Unit 6)
8 7 15
Unclassified Misc. Management (Unit 9) 20 22 42
Unclassified Police Management (Unit
9A)
0 2 2
Unclassified Fire Management (Unit 9B) 0 0 0
Public Safety Non-Sworn Employees
Association (Unit 10)
9 0 9
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25-642 Agenda Date: 6/10/2025
City of Santa Clara Employees
Association (Unit 578)
26 12 38
American Federation of State County and
Municipal Employees (Unit 6)
8 7 15
Unclassified Misc. Management (Unit 9) 20 22 42
Unclassified Police Management (Unit
9A)
0 2 2
Unclassified Fire Management (Unit 9B) 0 0 0
Public Safety Non-Sworn Employees
Association (Unit 10)
9 0 9
Total 80 62 142
Vacancy Rate
Table 2 below displays the current vacancy rate by bargaining unit. The Citywide vacancy rate is approximately 14.19%. At the start of FY 2024/25 the Citywide vacancy rate was approximately 12%.

During FY 2024/25, Council approved the addition of 18.25 FTE’s. For the FY 2025/26 budget, the City is proposing to add an additional 21.0 FTE’s, totaling approximately 39.25 new vacant positions that must be recruited for in addition to those vacancies which previously existed.

The City’s Human Resources Department (HR) is consistently working on recruitments in order to outpace attrition (separations by resignation, termination or retirements), keep up with the pace of the newly added positions in the workforce, and also fill as-needed positions which requires additional recruitment resources and staff time.

Table 2: Vacancy Rate by Bargaining Unit as of June 2025 Bargaining Unit Budgeted
FTE
Filled FTE Vacant FTE Approximate
Vacancy Rate
Santa Clara Firefighters (Unit
1)
144 136 8 5.56%
Police Officers’ Association
(Unit 2)
147 133 14 9.52%
International Brotherhood of
Electrical Workers (Unit 3)
89 73 16 17.97%
Engineers of the City of Santa
Clara (Unit 4)
50 35 15 30.00%
City of Santa Clara
Employees Association (Unit
578)
328.25 281.75 46.5 14.16%
American Federation of State
County and Municipal
Employees (Unit 6)
134 113 21 15.67%
Unclassified Misc.

Management (Unit 9)
188 159 29 15.42%
Unclassified Police
Management (Unit 9A)
5 5 0 0.00%
Unclassified Fire
Management (Unit 9B)
11 9 2 18.18%
Public Safety Non-Sworn
Employees Association (Unit
10)
70 56 14 20.00%
Ttl 116625 100075 1655 1419%
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Employees (Unit 6)
Unclassified Misc.

Management (Unit 9)
188 159 29 15.42%
Unclassified Police
Management (Unit 9A)
5 5 0 0.00%
Unclassified Fire
Management (Unit 9B)
11 9 2 18.18%
Public Safety Non-Sworn
Employees Association (Unit
10)
70 56 14 20.00%
Total 1,166.25 1,000.75 165.5 14.19%
Two Bargaining Units with Vacancy Rates of at Least 20% Engineers of the City of Santa Clara (Unit 4):

As outlined in Table 2 above, the Engineers of the City of Santa Clara (Unit 4) have an approximate

30.00% vacancy rate.

Of the 18.25 FTE’s added during the current FY 2024/25 referenced previously, Council approved the addition of 6.0 FTE’s within Unit 4. The addition of these positions added to existing vacancies and created a significant spike in the vacancy rate for this bargaining unit. These positions are currently in recruitment but have not yet been filled.

There are currently 15 engineering positions vacant, and the City is conducting a recruitment for all vacant positions within the bargaining unit. Given the competitiveness of the market, particularly with private sector companies for engineering positions, there have been challenges filling these positions. The current recruitment timeline for Unit 4 positions typically range from 4 - 8 months to complete given the specialization that typically comes with these positions as well as the generally limited candidate pools. In some instances, such as for the Senior Engineer and Senior Electric Utility Engineer, these classifications have been regularly recruited for each year. As of May 31, 2025, the following classifications within Unit 4 are currently in recruitment: Associate Engineer (3.0 FTE’s), Senior Engineer (2.0 FTE’s), Electric Utility Engineer (6.0 FTE’s), and Senior Electric Utility Engineer (4.0 FTE’s).

The Associate Engineer recruitment yielded a total of 29 applications, of which 10 candidates were placed on the eligible list. One candidate is scheduled to start in June 2025. Offers were extended to 2 external candidates and those offers were declined. It should be noted that compensation was not the given reason for the declined offers, but one candidate declined due to a competing promotional opportunity in their current agency, and the second offer was declined due to the candidate looking for more work-life balance and schedule flexibility. The Department is currently evaluating other candidates on the eligible list.

The Senior Engineer recruitment was posted in May 2025 as a continuous recruitment. The City has received 37 applications. The oral board examination is scheduled for mid-June.

The Electric Utility Engineer recruitment was posted in February 2025 and the City has received 44 applications. There are currently 4 candidates on the eligible list. The Department will be promoting 1 employee (creating a vacancy in their former position). For the remaining positions, the Department is currently completing Department interviews and reference checks. The Department will continue to interview candidates as applications are received for the other vacancies.

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The Senior Electric Utility Engineer recruitment was posted in October 2024 as a continuous recruitment and the City has received 23 applications. There are currently 5 candidates on the eligible list. The Department will be promoting 1 employee (and thus creating a vacancy in their former position) and extending a conditional offer to a second candidate. As this is a continuous recruitment, the Department will continue to interview candidates as applications are received.

Public Safety Non-Sworn Employees Association (Unit 10):

The Public Safety Non-Sworn Employees Association (Unit 10) has an approximate 20.00% vacancy rate, equating to 14.0 vacant FTE’s. As of May 31, 2025, the following classifications within Unit 10 are currently in recruitment: Jail Service Officer (1.0 FTE), Police Records Specialist (4.0 FTE’s), Public Safety Dispatcher II (7.0 FTE’s), and Senior Public Safety Dispatcher (2.0 FTE’s).

The Jail Service Officer recruitment was posted in September 2024 and yielded a total of 94 applications, of which 4 candidates were placed on the eligible list. 1 candidate accepted the conditional offer and is in the final stages of the backgrounding process.

The Police Records Specialist recruitment was posted in March 2025 as a continuous recruitment and received 123 applications. There are currently 7 candidates on the eligible list and 4 candidates are in the pre-background process.

The Public Safety Dispatcher II has been posted regularly as a continuous recruitment. This position was posted as a new continuous recruitment in January 2025 and the City has received 47 applications. There are currently 5 candidates on the eligible list and in the pre-background stage of the process. The Department is continuing to test and interview applicants as applications are received.

The Senior Public Safety Dispatcher was posted in May 2025 and the City has received 1 application. The next step in the process will be an oral board interview and qualifying written assessment.

AB 2561 requires the agency to include any opportunities to improve compensation or other working conditions, which are subject to meet and confer, for bargaining units with a vacancy rate above 20%.

The City regularly considers employee and labor relations matters, and is currently in negotiations with both bargaining units on successor Memorandum of Agreements, or MOU’s.

At this time, given the status of negotiations concerning a successor MOU, Staff will not discuss opportunities to improve compensation and other working conditions in this forum as it would be more appropriate for such discussions to occur at the bargaining table between the City’s and bargaining unit’s designated representatives.

Recruitment Challenges and Efforts
As indicated above, classified positions make up approximately 82% of the FTE’s within the workforce and are generally considered non-exempt hourly positions. This means the vast majority of the City’s recruitments are for classified positions and the City must adhere to the Civil Service Rules and Regulations for these positions. The Civil Service Rules and Regulations created to ensure selection and hiring is based on merit and fitness, generally require the recruitment process timeline and assessment points could impact efforts to fill highly sought skills or experience, specialized positions, and positions which attract few or large amounts of applicants. There are a number of City of Santa Clara Page 6 of 9 Printed on 6/6/2025
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25-642 Agenda Date: 6/10/2025
factors to consider when reviewing recruitment challenges, and every position or classification in each bargaining unit requires individualized considerations and strategies. Some recruitments face challenges in retaining applicants through the assessment steps. Other recruitments face challenges in the length of time it takes to complete required background checks or pre-employment reviews.

Other recruitments face low applicant response to announcements of open positions. In a continuous effort to streamline the recruitment process, the City is consistently reviewing the Civil Service Rules and Regulations and making the determination if there are areas to improve or areas to expedite the process, while still adhering to the Civil Service Rules and Regulations.

As noted above, during the current fiscal year, the City promoted 62 employees. Although the City prides itself in the ability to promote and train employees, this does create a workload capacity issue by creating an additional vacancy in the promoted employee’s former position, which does not contribute to the reduction of the vacancy rate. The City is currently working to keep up with the demands of staffing through attrition and maintain staffing levels as new positions are added annually. All Departments are at full operating capacity and prioritizing or expediting the recruitment process due to competing priorities may be challenging and lead to further delays in the recruitment timeline. In particular, HR utilizes its management staff to conduct recruitments (in addition to their other designated duties) to assist the 3 full-time recruiters in order to fill vacant positions as quickly as possible, subject to the Civil Service Rules and Regulations, as well as using outside firms to also conduct recruitments on behalf of the City. Currently, there are approximately 54 classifications, impacting approximately 121 positions, that have so far been assigned for recruitment; for example, 1 Citywide classification may result in 1 recruitment for 5 vacant positions across multiple departments.

The City is working to address the workload capacity and several departments are undergoing an organizational assessment. Recommendations from the assessment will be reviewed to determine workload capacity and any recommendation to add more staffing to assist with capacity will be brought forward through the normal budget process.

There have also been challenges, not unique to the City, recruiting for specialized positions (such as Engineers or Dispatchers), where the competitiveness of the candidate pool is not strong or there have been a low number of applications received. In these instances, the City is exploring alternative advertising methods to reach a broader candidate pool. However, this problem is not unique to our agency, specifically for Dispatchers.

Many public sector agencies in California struggle to fill Dispatcher positions and have significantly high vacancy rates for Dispatchers. The City will continue the recruitment until a candidate who meets the desirable qualifications of the position is selected. Particularly for Dispatchers, the City has placed an emphasis to recruit at the lateral level in order to get qualified candidates who need minimal training.

Finally, there are additional delays and candidates may be screened out to more stringent backgrounding process, particularly in the Police Department backgrounding. Where possible, the Department does try to expedite the backgrounding process.

Although the City has challenges in recruiting, the City has expanded their recruitment and outreach efforts, including but not limited to:
§ The Human Resources Department has 3 full-time recruiters who are operating at full City of Santa Clara Page 7 of 9 Printed on 6/6/2025
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25-642 Agenda Date: 6/10/2025
recruitment capacity (approximately 10 to 15 assigned recruitments at any given time), in addition to other responsibilities of the position; HR management staff also conduct recruitments to alleviate the workload.
§ The City is continuously evaluating how to streamline the recruitment process in alignment with the Civil Service Rules and Regulations, as applicable. § The City has reviewed and made revisions to class specifications by updating minimum qualifications that may be outdated or inadvertently narrow candidate pools. It should be noted that revisions to class specifications are subject to meet and confer with the appropriate bargaining unit, and subject to approval by the Civil Service Commission, and City Council, prior to becoming effective.
§ The City also reassess the weighting plan/testing process with the Departments before recruitments begin and bring revised recommendations to the Civil Service Commission for approval in order to further expedite the process.

The City has focused on additional advertising efforts to broaden its reach to a larger candidate pool; these efforts include but are not limited to:
§ During the current fiscal year, the City attended nine (9) career fairs at local colleges and universities.
§ In addition to the City sponsored career fairs, the Fire Department, Police Department, and Silicon Valley Power expanded their recruitment efforts and attended other career fairs for their hard to fill positions (specifically for Engineers and Dispatchers). § In the upcoming fiscal year, the City is proposing to add “Attract,” a NeoGov module to assist with targeted advertising and proactive outreach to candidates. NeoGov is an online tracking and recruitment system primarily used by multiple public agencies, including the City. § The City is also partnering with Mission College for the Summer Internship Program to engage and encourage students to apply for a career with the City of Santa Clara. The City of Santa Clara and Mission College partnered to hold a City-only career fair for students and to recruit students for the internship program. The City is hiring 13 Mission College students to work during the summer.

For Public Safety Dispatchers, the City has offered lateral hiring incentives, retention bonuses, and proposed updates to the minimum qualifications to aide in the recruitment for this classification.

Additionally, the City has previously contracted with 6 recruiting firms who are retained to assist in filling executive level or hard to fill positions.

The City will continue to work on filling positions in an effort to lower the Citywide vacancy rate and retain employees. In addition, the City will continue to assess challenges or barriers to the recruitment process and consider alternate ways to expedite recruitments. The City will also continue to update outdated class specifications to ensure they are current and eliminate outdated requirements in an effort to expand candidate pools.

City of Santa Clara Page 8 of 9 Printed on 6/6/2025
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25-642 Agenda Date: 6/10/2025

ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(5) in that it is a governmental organizational or administrative activity that will not result in direct or indirect changes in the environment.

FISCAL IMPACT
This report is for information purposes.

COORDINATION
This report has been coordinated with the Finance Department and City Attorney’s Office.

PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email [email protected], or at the public information desk at any City of Santa Clara public library.

RECOMMENDATION
Note and File the Report on City Vacancies and Recruitment Efforts, Pursuant to Assembly Bill (AB) 2561
Reviewed by: Aracely Azevedo, Director of Human Resources Approved by: Jovan D. Grogan, City Manager

ATTACHMENTS

1. Civil Service Rules and Regulations
City of Santa Clara Page 9 of 9 Printed on 6/6/2025
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CITY OF SANTA CLARA
Civil Service Rules and Regulations
Adopted November 28, 2000
Sections 2.23, 4.3, 7.8
Amended March 27, 2001
Section 2.20
Amended April 16, 2002
Section 3.4
Amended June 29, 2004
Section 4.20
Amended December 14, 2004
Section 4.20
Amended June 7, 2005
Section 4.3
Amended January 23, 2007
Americans with Disabilities Act Update
Amended February 24, 2009

CIVIL SERVICE RULES & REGULATIONS

ALPHABETICAL INDEX
Page Number
Abolishing Eligible Lists -------------------------------------- 13 Absence Leave of ---------------------------------------------- 20 Administration -------------------------------------------------- 1 Allocation -------------------------------------------------------- 19 Alternate List---------------------------------------------------- 13 Anniversary Date ---------------------------------------------- 19 Announcement of Examinations --------------------------- 2 Appeal of Disqualification ------------------------------------ 4 Appearance Requirement ------------------------------------ 19 Applicability and Objectives --------------------------------- 1 Applicant --------------------------------------------------------- 19 Applications ----------------------------------------------------- 3 Applications Confidential ------------------------------------ 4 Applications Not to be Returned --------------------------- 3 Appointing Authority ------------------------------------------- 19 Appointment ----------------------------------------------------- 19 Appointment Original ------------------------------------------ 21 Appointment Permanent -------------------------------------- 15 Appointment Temporary --------------------------------------- 14 Appointments Report of----------------------------------------- 14 Appointments ----------------------------------------------------- 10 Approval Notice of ---------------------------------------------- 3 Availability of Civil Service Rules--------------------------- 1 Binding Force of Board's Decision ------------------------- 18 Board -------------------------------------------------------------- 19 Board’s Decision Binding Force of ------------------------- 18 Board’s Decision Non-Binding Force of ------------------ 19 Call for Interview and Failure to Appear-------------------- 14 Candidate ---------------------------------------------------------- 19 Certification ------------------------------------------------------- 19 Certification of Eligibles ----------------------------------------- 13 Charter ------------------------------------------------------------- 19 Choice of Eligibles ----------------------------------------------- 13 City ------------------------------------------------------------------- 19 City Council ------------------------------------------------------- 19 City Manager Responsibilities of the------------------------- 1 Civil Service Commission -------------------------------------- 1 Civil Service Rules Availability of ----------------------------- 1 Civil Service Rules – Provisions in Memorandum
of Understanding ----------------------------------------- 2 Class of Examinations ------------------------------------------- 7 - i -
Class or Classes of Positions --------------------------------- 20 Classification Plan ------------------------------------------------ 20 Classified Service ------------------------------------------------ 20 Classified Service------------------------------------------------- 1 Closed Promotional Examination ---------------------------- 20 Commission -------------------------------------------------------- 20 Continuous Employment ---------------------------------------- 20 Continuous Examinations --------------------------------------- 7 Convictions Disqualification for -------------------------------- 4 Current Status and Requisition Report----------------------- 13 Demotion ------------------------------------------------------------ 20 Demotion Voluntary------------------------------------------------ 15 Department --------------------------------------------------------- 20 Designated Secretary -------------------------------------------- 20 Director or Director of Human Resources ------------------- 20 Discipline Review Procedure for ------------------------------- 18 Disqualification ----------------------------------------------------- 3 Disqualification Appeal of --------------------------------------- 4 Disqualification for Convictions -------------------------------- 4 Disqualification Notice of Disqualification ------------------- 4 Duration of Lists --------------------------------------------------- 10 Eligibility for Promotion ------------------------------------------- 9 Eligible ---------------------------------------------------------------- 20 Eligible List ---------------------------------------------------------- 20 Eligible Lists Abolishing ------------------------------------------ 13 Eligible List Alternate---------------------------------------------- 13 Eligible List Removal from -------------------------------------- 14 Eligibles Certification of ------------------------------------------ 13 Eligibles Choice of ------------------------------------------------ 13 (Eligible) Lists Duration of --------------------------------------- 10 (Eligible) List Inactive --------------------------------------------- 13 Eligibles Notification of Eligibles ------------------------------- 14 Eligibles Order of -------------------------------------------------- 10 Employee ------------------------------------------------------------ 20 Employment Continuous------------------------------------------ 20 Examination --------------------------------------------------------- 20 Examination Closed Promotional ------------------------------ 20 Examination Notice of Results of ------------------------------ 8 Examination Open Competitive ------------------------------- 21 Examination Open Promotional -------------------------------- 21 Examination Oral ----------------------------------------------- 7 Examination Scores ------------------------------------------------ 8 Examinations Announcement of -------------------------------- 2 Examinations Class of --------------------------------------------- 7 Examinations Continuous ----------------------------------------- 7 Examinations Non-Competitive --------------------------------- 8 - ii -
Examinations Promotional----------------------------------------- 9 Examinations Protests of ------------------------------------------ 8 Examinations Review of ------------------------------------------- 9 Examinations Scheduling ----------------------------------------- 6 Failure to Appear Call for Interview and------------------------ 14 Fair Employment Practices --------------------------------------- 2 False Statements under Oath and Refusal to
Testify Forbidden ------------------------------------------- 19 Filing Time ------------------------------------------------------- 3 Fingerprinting ------------------------------------------------------- 5 Firefighter Preference Qualifications for Entry Level ------- 5 Flexibly Staffed Positions ----------------------------------------- 20 Flexibly Staffed Positions ---------------------------------------- 7 General Minimum Qualifications -------------------------------- 3 General Standards -------------------------------------------------- 2 Grievances Review Procedure for ------------------------------ 18 Identification --------------------------------------------------------- 8 Inactive List ----------------------------------------------------------- 13 Ineligible Applicants------------------------------------------------- 2 Inspection of Records----------------------------------------------- 14 Leave of Absence --------------------------------------------------- 20 List Re-Employment ------------------------------------------------ 22 Listing of Ties -------------------------------------------------------- 8 Lists Duration of ----------------------------------------------------- 10 Meanings of Words ------------------------------------------------- 22 Medical Action ------------------------------------------------------- 17 Memorandum of Understanding --------------------------------- 20 Minimum Qualifications General -------------------------------- 3 More Than One Preference Point Program ------------------- 6 Non-Binding Force of Board's Decision ----------------------- 19 Non-Competitive Examinations ---------------------------------- 8 Notice ------------------------------------------------------------------ 17 Notice of Approval ------------------------------------------------- 3 Notice of Disqualification ------------------------------------------ 4 Notice of Results of Examination ------------------------------- 8 Notice Public --------------------------------------------------------- 21 Notification of Eligibles -------------------------------------------- 14 Oath ------------------------------------------------------------------- 5 Oath False Statements under Oath and Refusal to
Testify Forbidden ------------------------------------------ 19 Office Records ------------------------------------------------------- 16 Officials and Employees to Assist ------------------------------- 7 Open Competitive Examination --------------------------------- 21 Open Promotional Examination ---------------------------------- 21 Oral Examination ------------------------------------------------ 7 Order of Eligibles ---------------------------------------------------- 10 - iii -
Organization ---------------------------------------------------------- 17 Original Appointment ----------------------------------------------- 21 Pay Reduction ------------------------------------------------------- 21 Permanent Appointment ------------------------------------------ 15 Permanent Employee ---------------------------------------------- 21 Permanent Employees Tenure of: Methods of
Separation ---------------------------------------------------- 16 Permanent Position ------------------------------------------------- 21 Physical Fitness ----------------------------------------------------- 5 Police Officer Preference Qualifications for Entry Level---- 5 Position ----------------------------------------------------------------- 21 Position Temporary ------------------------------------------------- 22 Positions Class or Classes of ----------------------------------- 20 Powers ---------------------------------------------------------------- 18 Preference Point Program More Than One ------------------ 6 Preference Points for Permanent City Employees---------- 6 Preference Qualifications for Entry Level Firefighter------- 5 Preference Qualifications for Entry Level Police Officer--- 5 Preference Qualifications for Veteran's ----------------------- 6 Preparation ----------------------------------------------------------- 6 Probationary Period ------------------------------------------------ 14 Probationary Period ------------------------------------------------ 21 Promotion ------------------------------------------------------------- 21 Promotional Examinations---------------------------------------- 9 Promulgation --------------------------------------------------------- 10 Protests of Examinations ----------------------------------------- 8 Public Notice --------------------------------------------------------- 21 Qualifications for Entry Level Firefighter
Preference -------------------------------------------------- 5 Qualifications for Entry Level Police
Officer Preference ------------------------------------------ 5 Qualifications for Veteran's Preference------------------------ 6 Qualified --------------------------------------------------------------- 21 Reclassification ------------------------------------------------------ 21 Reclassification ----------------------------------------------------- 9 Records Inspection of----------------------------------------------- 14 Recruitment Types of ---------------------------------------------- 2 Reduction in Force ------------------------------------------------- 16 Reduction in Force -------------------------------------------------- 21 Re-Employment List ------------------------------------------------ 22 Refusal to Testify Forbidden False Statements under
Oath and ----------------------------------------------------- 19 Rehabilitation -------------------------------------------------------- 10 Reinstatement ------------------------------------------------------- 22 Removal for Cause ------------------------------------------------- 16 Removal from Eligible List ---------------------------------------- 14 - iv -
- v -
Report of Appointment---------------------------------------------- 14 Requisition Report Status Current and------------------------- 13 Resignation ----------------------------------------------------------- 16 Resignation ----------------------------------------------------------- 22 Responsibilities of the City Manager----------------------------- 1 Review of Examinations -------------------------------------------- 9 Review Procedure for Discipline --------------------------------- 18 Review Procedure for Grievances ------------------------------- 18 Scheduling Examinations ----------------------------------------- 6 Separation ------------------------------------------------------------ 21 Separation Tenure of Permanent Employees: Methods
of ---------------------------------------------------------------- 16 Severability ------------------------------------------------------------ 1 Special Qualifications ---------------------------------------------- 4 Specification ---------------------------------------------------------- 22 State -------------------------------------------------------------------- 22 Status ------------------------------------------------------------------- 22 Status Current and Requisition Report------------------------- 13 Suspension ----------------------------------------------------------- 22 Temporary Appointment ------------------------------------------- 22 Temporary Appointment ------------------------------------------- 14 Temporary Position ------------------------------------------------- 22 Tenure of Permanent Employees: Methods of
Separation ---------------------------------------------------- 16 Termination ----------------------------------------------------------- 22 Ties Listing of -------------------------------------------------------- 8 Transfer --------------------------------------------------------------- 22 Transfers -------------------------------------------------------------- 13 Types of Recruitment----------------------------------------------- 2 Unclassified ---------------------------------------------------------- 22 Vacancy or Vacant Position -------------------------------------- 22 Voluntary Demotion ------------------------------------------------ 15 Waiver ----------------------------------------------------------------- 22 Waivers ---------------------------------------------------------------- 13 Year -------------------------------------------------------------------- 22

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CIVIL SERVICE RULES AND REGULATIONS

SECTION 1 - OBJECTIVES

1.1 APPLICABILITY AND OBJECTIVES: The Civil Service Rules and Regulations are applicable to the Classified Service and shall be interpreted uniformly so as to:

(a) Obtain and retain the best qualified persons for appointment to City service (b) Assure that appointments and promotions are made according to merit and fitness, to be ascertained, so far as practicable, by competitive examination; (c) Assure, through formal appeal provisions, that disciplinary actions are consistent and made in the best interest of the City.

1.2 CIVIL SERVICE COMMISSION: The Civil Service Commission consists of five (5) members.

Selection and duties are as prescribed by the City Charter, Sections 1010 and 1011.

1.3 CLASSIFIED SERVICE: Pursuant to the City Charter, Section 1011, the Classified Service consists of all positions in the City service except the following:

(a) All elective officers;
(b) All members of Boards and Commissions;
(c) City Manager, Assistant City Manager, Deputy City Manager, City Attorney, Assistant or Deputy City Attorney, City Auditor and City Clerk;
(d) Department Heads and Assistant Department Heads,
(e) Division Managers,
(f) Persons contracted for or employed in part-time positions regarded as "casual", "seasonal" or temporary;
(g) Persons contracted for or employed by an agency contracted by the City to render professional, scientific, technical or expert service of an occasional and exceptional character;
(h) Volunteers

1.4 ADMINISTRATION: The City Council shall adopt Civil Service Rules and Regulations governing the administration of the City Civil Service System.

1.5 RESPONSIBILITIES OF THE CITY MANAGER: The City Manager is the Appointing Authority and is responsible for the administration of these Rules and Regulations and shall, subject to the provisions of the City Charter and the Rules and Regulations, appoint and remove all members of the Classified Service.

1.6 AVAILABILITY OF CIVIL SERVICE RULES: A copy of the Civil Service Rules and Regulations will be given to all Civil Service employees and to all newly hired classified employees at the beginning of their probationary period. Each employee is to sign a statement that he/she has received a copy. A current copy of the Civil Service Rules and Regulations will be maintained in each department and made available to all employees upon request.

1.7 SEVERABILITY: If any section, subsection, sentence, clause or phrase of these rules is for any reason held illegal, invalid or unconstitutional by decisions of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions hereof. The City Council hereby declares that it would have passed this chapter and each section, subsection, sentence, clause and phrase hereof, irrespective of the fact that any one or more section, subsection, Civil Service Rules and Regulations (continued)
clause or phrase be declared illegal, invalid or unconstitutional. All existing Civil Service Rules currently or previously in effect are hereby rescinded and repealed.

1.8 CIVIL SERVICE RULES – PROVISIONS IN MEMORANDUM OF UNDERSTANDING To the extent provisions in a Memorandum of Understanding are entered into by the City and recognized employee organization conflict with provisions of the Civil Service rules set forth in the Santa Clara Municipal Code, the Memorandum of Understanding shall prevail.

SECTION 2 -RECRUITMENT

2.1 GENERAL STANDARDS: Applicants for employment shall meet such standards of education, experience, knowledge, skills, and abilities as are required for acceptable performance of the essential duties of the position(s) to which appointments are to be made.

2.2 FAIR EMPLOYMENT PRACTICES: It is the policy of the City to provide equal employment opportunity for all employees and employment applicants based upon merit and job-related knowledge, skills and abilities. Unlawful discrimination based on race, sex, color, religion, religious creed, national origin, partisan politics or political opinions, ancestry, age, marital status, physical disability (including HIV and AIDS), mental disability, medical condition, sexual orientation, or union membership or non-membership, except where such are bona fide occupational qualification requirements of the job or would prevent the employee from performing the essential job duties, is prohibited. (Refer to 2.13 previous CSR&R)

2.3 INELIGIBLE APPLICANTS: The City retains the right:

(a) To refuse to place the relative of one employee under the direct supervision of that employee where such has the potential for creating adverse impact on supervision, safety, security, or morale.
(b) To refuse to place relatives in the same department, division, or facility where such has the potential for creating adverse impact on supervision, safety, security, or morale.

2.4 TYPES OF RECRUITMENT: There shall be three (3) types of recruitment processes. Each type of recruitment shall be so noted on the job announcement:
(a) Regular Recruitment: A regular recruitment is one which is conducted with a specified time during which applications will be accepted, e.g., with a specified open and final filing date.

Following the close of such a process, and providing enough qualified candidates have applied, an examination will be held of all qualified candidates who have applied between the open and final filing date.
(b) Continuous Recruitment: A continuous recruitment is one where applications will be accepted on a continuing or on-going basis, with examinations held periodically to update eligible lists.
(c) Open-Until-Filled Recruitment: An open-until-filled recruitment has a specific date when applications will be accepted, (e.g., a specific "open" date) but has no specific application final filing date. Examinations will be held when a sufficient number of qualified people have applied. This type of recruitment will close when a candidate is hired.

2.5 ANNOUNCEMENT OF EXAMINATIONS: Public announcements of all examinations shall be posted on the bulletin board located in the Human Resources Department for at least three (3) working days prior to the final filing date for applications on all positions and at least five (5) working days prior to the last day of filing applications on all closed promotional positions. Job announcements will be distributed to all City departments. Announcements may also be posted

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Civil Service Rules and Regulations (continued)
elsewhere. Copies may be mailed to interested applicants, and other forms of public notice may be used to attract qualified applicants. Announcements shall include at least:

(a) The class title;
(b) The compensation;
(c) A statement of duties and responsibilities;
(d) The place, manner, and last date to file applications; (e) The conditions of competition including minimum qualifications, knowledge, skills, and abilities, scope of the testing, relative weights assigned to parts of the examination, and any other special conditions;
(f) Such other information as will help applicants understand the nature of the employment and the procedure for participating in the examination.

2.6 APPLICATIONS: Official application forms shall be provided by the Human Resources Department and shall be completed by each applicant.

2.7 FILING TIME: Applications must be filed in the Human Resources Department on or before the final filing date and time specified in the examination announcement.

2.8 NOTICE OF APPROVAL: Each applicant approved for examination shall be so notified within a reasonable time prior to the examination date. Any written notice shall be mailed to the last applicant address on record with the Department of Human Resources.

2.9 GENERAL MINIMUM QUALIFICATIONS:
(a) Mental and physical ability, with or without reasonable accommodation, to perform the essential job duties of the position as determined by the Commission and as applied by the Director of Human Resources based on submitted evidence and/or examination in accordance with applicable state and federal laws.
(b) Minimum age, as established by the Director of Human Resources when not in conflict with the City Charter and applicable state and federal laws and regulations.

2.10 APPLICATIONS NOT TO BE RETURNED: Application materials will not be returned to the applicant.

2.11 DISQUALIFICATION: The Director of Human Resources during any step of the examination process may refuse to examine, reject an application during or after the examination of, disqualify, remove from an eligible list, or not certify any person who:

(a) Is found to lack any of the minimum requirements for the position applied; (b) Uses narcotics intoxicating liquors to the extent that job performance is or will be affected by such use;
(c) Has a physical or mental impairment that is shown to limit a major life activity and presents difficulty in performing any of the essential duties of the position, even with reasonable accommodation, for which he/she has applied;
(d) Has practiced or attempted to practice deception or fraud in the application, in declarations, or in securing eligibility or appointment;
(e) Has directly or indirectly obtained information regarding the content of an examination to which an applicant is not entitled;
(f) Has been dismissed previously for any cause mentioned herein from public or private employment or resigned to avoid such dismissal;
(g) Has failed to submit the application correctly or within the prescribed time limits;

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Civil Service Rules and Regulations (continued)
(h) If, after the application is submitted for the position of Police Officer, it is discovered during the testing (including the polygraph examination) and/or background investigation process, the applicant knowingly used (unless such use was pursuant to a written prescription) any of the controlled substances itemized in Chapter 2 of Division 10 of the California Health and Safety Code and/or committed a felony while employed as a sworn Police Officer for any agency;
(i) Is an applicant for a police officer or any communications dispatcher position and is unable to meet the "Job Dimensions" as required by California Commission on Peace Officer Standards and Training (POST).
(j) Has made a false or misleading statement of material fact in connection with any stage of the examination process;
(k) Has possession of unauthorized materials, devices or anything of use or assistance in any stage of the examination process;
(l) Has failed to report at the appropriately scheduled time for an examination or failed to submit the requested paperwork or documentation by prescribed deadline.

2.12. DISQUALIFICATION FOR CONVICTIONS: Conviction, including pleas of guilty and no lo contendere, of a felony may disqualify an applicant from employment by the City unless the Director of Human Resources determines that circumstances relating to the conviction are not such as to require disqualification. In making such determination, the Director of Human Resources shall consider the following factors:
(a) The employment classification to which the person is applying or being certified, including its sensitivity;
(b) The nature and seriousness of the conduct;
(c) The circumstances surrounding the conduct;
(d) The recency of the conduct;
(e) The age of the individual at the time of conduct;
(f) Contributing social or environmental conditions; and (g) The presence or absence of rehabilitation or efforts at rehabilitation.

2.13 NOTICE OF DISQUALIFICATION The Director of Human Resources will give written notice of disqualification to any applicant disqualified in a timely manner. Written notice of disqualification may be delivered, or mailed to the applicant at the address shown on the application for employment. Incomplete or deficient applications may be corrected by the applicant before the date of the examination.

2.14 APPEAL OF DISQUALIFICATION
(a) The applicant may appeal to the Commission any disqualification. Such appeal must be in writing and must be filed with the Commission within ten (10) calendar days following notice or mailing of notice by the Director of Human Resources. The written appeal must contain a statement that clearly identifies the basis for the appeal. The Commission shall hear and determine the appeal within ninety (90) days after filing. Determination of the Commission is final.
(b) The selection process will continue during the course of the appeal process. The appellant may continue in the selection process pending Commission decision, which shall be final.

2.15 APPLICATIONS CONFIDENTIAL: Any information on application for examination shall not be made public.

2.16 SPECIAL QUALIFICATIONS: Applicants for positions may be required to provide documentary evidence of education, training or experience.

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Civil Service Rules and Regulations (continued)

2.17 FINGERPRINTING: Applicants, before appointment, and employees, after appointment, may be required to be fingerprinted.

2.18 PHYSICAL FITNESS: Each applicant, or person eligible for appointment, may be required to furnish a medical certification from a licensed California physician; or the Commission may designate a licensed California Medical Examiner to determine whether such applicant or person is physically competent to perform the essential job duties of the position, with reasonable accommodation, for which he/she seeks appointment.

2.19 OATH: Each new employee shall take an oath or affirmation that he/she will uphold the Constitution of the United States and of the State of California and the ordinances of the City.

2.20 QUALIFICATIONS FOR ENTRY LEVEL FIREFIGHTER'S PREFERENCE: To be entitled to Volunteer/Reserve Firefighter's Preference, an applicant must, immediately preceding the date of the examination, file with his/her application a letter signed by the Fire Chief of the Santa Clara Fire Department. That letter must state that the applicant is:

(a) a current active Volunteer/Reserve Firefighter, and, if applicable (b) list the number of completed years of service that the Volunteer/Reserve satisfactorily served in the City Volunteer/Reserve Fire Department, and, if applicable (c) state that the applicant has attained status "certification" as outlined in the Fire Department Volunteer/Reserves By-Laws.

The letter from the Fire Chief must also specify the number of Volunteer/Reserve preference points to be awarded. A Volunteer/Reserve is entitled to a maximum five (5) preference points, which will be added to the written exam score, under the following conditions:
(a) The Volunteer/Reserve has achieved certified status; and/or (b) The Volunteer/Reserve is currently an active member in good standing in the Volunteer/Reserve Division with at least one (1) year of service.

A Volunteer/Reserve earns preference points according to the following formula:
(a) One point upon achieving certified status.
(b) One additional point for each full year of service provided that the individual remained a member in good standing for the entire year.

Under no circumstances is a Volunteer/Reserve eligible for more than five (5) preference points.

2.21 QUALIFICATION FOR ENTRY LEVEL POLICE OFFICER'S PREFERENCE: To be entitled to Reserve Police Officer's preference, an applicant must file with his/her application a letter signed by the Chief of the Police Department, stating that the applicant has satisfactorily completed the training program specified in the Police Administration procedures and that the applicant served satisfactorily in the City Police Reserves for a period of at least one (1) year immediately preceding the date of the examination. Each qualified applicant on the entry-level examination only, will be allowed additional credits as follows:

(a) Santa Clara Reserve Police Officers will be entitled to five (5) preference points which may be added to a passing score in the Police Officer's examination upon completion of the following:

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Civil Service Rules and Regulations (continued)
(1) Satisfactory completion of the basic Peace Officers' Standards of Training (POST) requirements for Reserve Officers;
(2) Satisfactory completion of in-service field training (FTO) program; (3) Recommendation of Chief of Police based on satisfactory service; and (4) Presently an active member of the Santa Clara Police Reserve Unit.

(b) In addition, Reserve Officers will be given an additional point for each of the following:
(1) Completion of two years of satisfactory service - 1 point (2) Completion of three years of satisfactory service - 1 point (3) Completion of four years of satisfactory service - 1 point (4) Completion of five years of satisfactory service - 1 point (5) Completion of six years of satisfactory service - 1 point Total Maximum points: Ten (10)

Each qualified reserve police officer applicant who receives a passing score on the examination will have additional points as outlined above added to his/her final score.

2.22 QUALIFICATIONS FOR VETERAN'S PREFERENCE: To be entitled to veteran's preference points on entry level positions an applicant must file with his/her application proof of his/her eligibility to qualify for veteran's preference points. Said proof of eligibility requirement may be satisfied by submitting to the City the original or certified copy of a discharge or other release, other than dishonorable, bad conduct, or as an undesirable, from the Armed Forces of the United States showing active military duty for at least eighteen (18) consecutive months. In the event that the discharge is attributable to a service-connected injury or illness, the eighteen (18) month active military duty requirement need not be fulfilled. Each qualified veteran applicant who receives a passing score on the examination shall have five (5) points added to his/her final score.

2.23 PREFERENCE POINTS FOR PERMANENT CITY EMPLOYEES: Appointment preference on open/promotional recruitments shall be extended to any City employee with permanent status. Current permanent employee candidates who receive a passing score on the examination will have an additional five (5) points added to his/her final score.

2.24 MORE THAN ONE PREFERENCE POINT PROGRAM: An applicant may use only one (1) preference point program and shall make his/her decision as to which preference point program he/she desires to utilize at the time he/she submits his/her application.

SECTION 3 - EXAMINATIONS

3.1 PREPARATION: The Director of Human Resources shall direct the preparation of all examinations of knowledge, skill, and ability as may be required for a valid and equitable determination of the fitness of applicants for the positions to which appointments are to be made. The Commission shall determine whether the examination shall consist of a written, oral, or performance, or psychological, investigative, physical tests, or any combination thereof, and shall indicate the procedure in the announcement. The City may contract for such service with competent public or private agencies regularly rendering such service. Examinations shall be job related, impartial, practical, and so constructed that they reveal the qualifications of the applicant for the class for which he/she is competing.

3.2 SCHEDULING EXAMINATIONS: The Director of Human Resources shall schedule and conduct all examinations as the current and anticipated needs of the service require. Scheduled

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Civil Service Rules and Regulations (continued)
examinations may be postponed or cancelled or the final filing date extended by the Director of Human Resources by notifying all persons affected and posting public notice.

3.3 CLASS OF EXAMINATIONS: Examinations may be announced as open/competitive, open/promotional or closed/promotional.

(a) Open/competitive examinations shall apply to entry level positions and be open to all qualified applicants on an equal basis.
(b) Open/promotional examinations shall be open to all qualified applicants. (c) Closed/promotional examinations shall be open to permanent City employees.

3.4 FLEXIBLY STAFFED POSITIONS: The Flexible Staffing policy allows for testing simultaneously for multiple levels within a classification series as well as the promotion of permanent City employees to higher levels within a classification series by methods other than a traditional competitive examination process. This policy is designed to place the City in a more competitive position to recruit and retain well-qualified employees, increase the capability of City department heads to effectively use the positions and employees in their department, and provide on-the-job training opportunities for employees in entry level classifications. At the recommendation of the Department Head, and with the approval of the Appointing Authority or Director of Human Resources, positions in a single series may be flexibly staffed:

(a) Flexibly staffed positions may be recruited and tested for at any or all levels and filled at any level within the series, as determined by the City. (b) One eligibility list is created based on examination results. (c) The level at which a candidate is hired is dependent upon the experience and/or education of the candidate and the approval of the Appointing Authority. (d) To be appointed to a higher level within a flexibly staffed classification without an additional examination, a permanent City employee must have passed probation in the current level, demonstrate proficiency to the City’s satisfaction, and meet all qualification requirements for the higher classification level as described in the class specification. (e) Appointments of permanent City employees to higher levels of a flexibly staffed classification are neither guaranteed nor implied and are subject to budgetary constraints and the City’s needs, as determined by the Appointing Authority.

3.5 ORAL EXAMINATION:

(a) An examination may include an oral examination for the purpose of appraising the personal fitness of candidates. Failure to report at the appropriately scheduled time for the examination shall eliminate a candidate from the examination. (b) Interview boards shall be assembled and appointed by the Director of Human Resources. (c) Interviewers shall mark on forms provided the degree to which, in their judgment, each candidate possesses the desired qualifications. The interviewers' remarks shall be translated into a numerical score.

3.6 OFFICIALS AND EMPLOYEES TO ASSIST: City officers and employees may be called upon to draw up, mark, or otherwise assist in examination procedures and it shall be deemed a part of the official duties of such persons to act in such capacity.

3.7 CONTINUOUS EXAMINATIONS:
(a) Continuous open examinations for a given class may be administered from time to time as applicants are available or as appointments are necessary. The names of all applicants who qualify in such examinations shall be placed on one eligible list in the order of final

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grades. Scores made on one examination may be integrated with the scores made on any subsequent examination.
(b) A candidate in a continuous examination may not take the same examination within the following six (6) months.
(c) A police officer candidate may repeat the physical ability portion of the examination after ninety (90) days of his/her last physical ability examination.

3.8 IDENTIFICATION: Written examinations shall be conducted so that no examination paper will disclose the name or identity of the candidate until the examination papers of all the candidates have been scored.

3.9 NON-COMPETITIVE EXAMINATIONS: Non-competitive examinations may be held to test fitness for reinstatement or re-employment in classifications previously held.

3.10 EXAMINATION SCORES:
(a) The Director of Human Resources shall establish for each test the basic requirements for the applicant to qualify for appointment. The basis of the final score shall be included on the job announcement.
(b) Unless otherwise provided in the examination announcement, candidates shall be required to attain a passing score in each part of the examination. (c) Failure to achieve a passing score in any part of the examination will exclude the candidate from remaining portions of the examination.
(d) In examinations composed of several tests which are graded independently, weights shall be assigned by the Commission to each test representing the relative value in ascertaining the fitness of the applicant.

3.11 LISTING OF TIES: If two (2) or more eligibles have the same total score on an eligible list, these eligibles shall be listed on the eligible list in alphabetical order.

3.12 NOTICE OF RESULTS OF EXAMINATION: As soon as the rating of an examination has been completed and the eligible list established, each candidate shall be notified in writing of the result of his/her examination and, if passed, of the final score and his/her relative position upon the eligible list.

3.13 PROTESTS OF EXAMINATIONS
Review of examinations, if permitted under the contract between the City and the written examination owner, for the purpose of contesting the validity of a question or the appropriateness of the answers provided may be granted by the Commission according to the following process.

(a) Candidate must have notified the Human Resources Department in writing of his/her intention to protest prior to 5:00 p.m. of the next work day following the examination. The questions must be sufficiently identified as to subject matter or number to be readily identifiable to the Human Resources Department and the nature of the inappropriateness must be specified.
(b) The Director of Human Resources shall review each protested question to determine whether the question is vague or if there is a problem with the answers and shall notify the protestant of the steps taken, if any, to rectify the problem. (c) Candidate may appeal the Director of Human Resources' action in resolving the protest about the examination by submitting an appeal to the Commission within five (5) calendar days following notification of the decision of the Director of Human Resources. The written

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appeal must contain a statement that clearly identifies what is being challenged and a statement explaining the basis of the challenge.
(d) The Commission may, after review of the candidate's request and the Director of Human Resources' response to the basis for appeal, permit the candidate to review those items on the examination and the candidate's answer sheet that the Commission feels are appropriate. Should the candidate wish to continue in the appeal process after review, he/she will have the opportunity to present to the Commission any supporting material that he/she feels will establish the appropriateness of the protest. (e) The testing process will continue during the course of the appeal process as though there were no appeal. The protesting candidate may continue in the testing process. Should the Commission uphold the appeal, the rating of the protesting candidate and all other similarly affected candidates, will be adjusted. Candidates who have been affected by such adjustment will then be reinstated to the testing process, if required, and be processed from the point at which they have been disqualified. No resulting change shall invalidate certifications or appointments already made.

3.14 REVIEW OF EXAMINATIONS: (Refer to Section 3.14.1, of current CSR&R, page 26) (a) Examinations are not viewed as training programs for the candidate and may not be reviewed for the purpose of education.
(b) The application and examination papers of a candidate are confidential records which shall not be removed from the Department of Human Resources, except as authorized by the Director of Human Resources.
(c) The copying of questions or answers from any paper made available for inspection is forbidden and shall result in cancellation of eligibility and disbarment from future examinations.
(d) No candidate shall have the right to inspect papers filled out by an interviewer or an examining board or examining persons in any oral or practical examination, nor examine any answers of any continuous or standardized examination. Nor shall any candidate have the right to inspect records which are exempt from disclosure under the provisions of the California Public Records Act.

3.15 PROMOTIONAL EXAMINATIONS:
(a) Vacancies in the classified service shall be filled, when practicable, by promotion of permanent employees.
(b) The method of examination, rules, and the method of certifying, shall be as provided for open examinations, except as otherwise provided.
(c) Promotional candidates who attain the required minimum qualifications and scores in an open promotional examination shall have five (5) preference points added to his/her final passing score on the eligibility list.

3.16 ELIGIBILITY FOR PROMOTION: A candidate for promotion must have permanent status with the City and must meet all prescribed standards for the class to which he/she seeks promotion.

3.17 RECLASSIFICATION: Reclassification of a position to a higher classification by the City when filled by a qualified incumbent at the time of reclassification shall provide for the promotion of a permanent employee to the reclassified position in the following manner:

(a) Examination shall be closed/promotional.
(b) If more than one (1) qualified permanent employee candidate should apply, an examination shall be administered.

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(c) If only one (1) qualified permanent City employee should apply, appointment may be made to the reclassified position without examination with the approval of the Appointing Authority.

SECTION 4 ELIGIBLE LISTS, APPOINTMENTS, PROBATION

AND TRANSFERS

4.1 ORDER OF ELIGIBLES: Candidates who qualify in an examination for a class shall have their names placed upon the eligible list in the order of their relative final scores.

4.2 PROMULGATION: An eligible list shall be in effect, posted in the order of placement in the Human Resources Office, from the date on which it is established by the Director of Human Resources.

4.3 DURATION OF LISTS: Eligible lists shall remain in force for a period of one (1) year. Eligible lists for sworn promotional positions in the police department shall remain in force for a period of two (2) years. The eligible list may be extended to two (2) years with approval of the Commission. The eligible list for entry level Police Officers shall remain in force for six (6) months. The Director of Human Resources may abolish an eligible list if the list contains less than five (5) names.

4.4 APPOINTMENTS: Appointments shall be made from lists of eligibles obtained in the following order:
(a) Re-employment lists of permanent or probationary employees laid off through lack of funds or work, or other cause not prejudicial to the service. The names of permanent or probationary employees laid off according to this procedure shall constitute a reemployment list in the inverse order of lay-off. (b) Re-employment lists of employees who have resigned in good standing for purposes other than to accept other employment and who, within one (1) year from the date of their resignation, request that they be placed on the list. Eligibility under this section shall not exceed one (1) year from the date of placement on said list. Certification for employment approved by the Appointing Authority shall be subject, also, to any of the following conditions the Appointing Authority may deem appropriate: (1) medical examination (2) technical knowledge examination (3) physical and/or performance examination (4) polygraph and/or psychological examination (5) a regular probationary period for the position (6) any other appropriate condition/examination.

Said employee may be reinstated at a salary level approved by the Appointing Authority but will be deemed to be a new employee as it relates to vacation, seniority or other benefits related to length of City service.

This may be appealed pursuant to Section 2.14.

(c) Eligible lists resulting from open promotional or closed promotional examination. (d) Eligible lists resulting from open, competitive examinations.

4.5 REHABILITATION: The City has a job rehabilitation (and/or retraining) program within the City or permanent City employees not able to return to their regularly assigned job classification and/or job assignment due to industrial or non-industrial injury or illness.

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The purpose of this program is to provide an employee holding permanent Civil Service status, who is prevented from returning to work for the City of Santa Clara in his/her regularly assigned job classification and/or job assignment because of injury or illness, an opportunity to participate in a City sponsored rehabilitation program under the following conditions:

(a) The employee must be permanently incapacitated from performing the essential functions of his/her current job classification and/or job assignment, with or without reasonable accommodation. Unless the disability and the need for reasonable accommodation are obvious, the limitation(s)/restriction(s) which permanently prevent the employee from continued employment in his/her job classification and/or job assignment must be supported by reasonable and appropriate medical/psychological documentation from an appropriate health care professional about the disability and its functional limitations. (b) The City, employee and rehabilitation counselor (if rehabilitation has been implemented through the workers' compensation process) will review other regular job classifications within the City to determine the potential for rehabilitation of the employee into a different City job classification and/or job assignment. In order to be considered an appropriate job classification for assignment under the program, the employee must be capable of meeting the minimum qualifications of the job, including education and experience requirements, and be expected to be capable of successfully performing the essential functions of the new job classification and/or job assignment, with or without reasonable accommodation, within one year of the beginning of the rehabilitation job assignment. (c) Once potential rehabilitation job classifications and/or job assignments have been identified, the City will determine if a vacancy exists (or will exist within 60 days) in one or more of the identified job classifications. The City sponsored rehabilitation program may be coordinated with a formal Workers' Compensation rehabilitation program. (d) The employee will be assigned to one of the job classifications and/or job assignments which has been determined by the City as an appropriate City sponsored rehabilitation job assignment. Failure on the part of the employee to accept the City sponsored rehabilitation job assignment within a reasonable period of time may terminate the employee's eligibility for further participation in the City sponsored rehabilitation program and the employee may be terminated or retired, if eligible, from City service. Once a City sponsored rehabilitation job assignment has been made, the following patterns will determine what conditions an employee must meet in order to be transitioned from the City sponsored rehabilitation job assignment to appointment as a regular employee in that job classification. 1(a) PROMOTION: If the identified job classification will result in a promotion, the employee will continue at his/her current salary or a salary which is 10% below the entry level salary into that job classification (whichever is higher). He/she will be allowed up to 12 calendar months from the date of appointment into the City sponsored rehabilitation program to meet the minimum qualifications, demonstrate satisfactory ability to perform the essential functions of the City sponsored rehabilitation job classification and/or job assignment with or without reasonable accommodation and become eligible for certification from a promotional eligible list (or if no promotional eligible list for the job classification exists, for certification from an open eligible list) for the job classification.
1(b) In the event the employee is unable to successfully complete the City sponsored rehabilitation program as specified above within the 12-month period, the City sponsored rehabilitation program will be terminated for that employee and the employee may be terminated or, if eligible, retired from City service. 1(c) Upon becoming eligible for certification from the promotional list (or open list, if appropriate) for the job classification, the department head will determine if the employee will be recommended to the appointing authority for promotion into the job classification. Following appointment to the job classification the employee will be

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required to complete the promotional probationary period specified for that job classification and will be placed at the salary level for the classification that is appropriate for any other promotion.
1(d) During the rehabilitation process the employee will be afforded up to four (4) opportunities to pass each Civil Service examination required for the job classification, with reasonable accommodation.
1(e) Following appointment to the job classification the employee will be required to complete the promotional probationary period specified for that job classification and will be placed at the salary level for the classification that is appropriate for any other promotion.
2(a) LATERAL TRANSFER: If the identified job classification is in a lateral job classification (a job classification that has the same maximum pay rate) the employee's salary will be reduced to 5% below his/her current salary during the rehabilitation program. He/she will be allowed up to twelve (12) calendar months to meet the minimum qualifications, demonstrate satisfactory ability to perform the essential functions of the job classification and/or job assignment and to become eligible for certification from a promotional eligible list (or if no promotional eligible list for the classification exists, for certification from an open eligible list) for the job classification.
2(b) In the event the employee is unable to successfully complete the City sponsored rehabilitation program as specified above within the 12-month period, the City sponsored rehabilitation program will be terminated for that employee and the employee may be terminated or retired, if eligible, from City Service. 2(c) Upon becoming eligible for certification from the promotional list (or open list, if appropriate) for the position, the department head will determine if the employee will be recommended to the appointing authority for transfer to the job classification and the employee will be restored to his/her former salary range. No probationary period will be required.
2(d) During the City sponsored rehabilitation process the employee will be afforded four (4) opportunities to pass each Civil Service examination required for the job classification.

3(a) DEMOTION: If the identified job classification is to a demotion (a job classification that has a lower maximum pay rate) the employee will be reduced to 5% below the salary he/she would be placed at in any other voluntary demotion during the rehabilitation program. He/she will be allowed up to twelve (12) calendar months to meet the minimum qualifications for the job classification and demonstrate satisfactory ability to perform the essential functions of the job classification and/or job assignment.
3(b) Upon meeting the minimum requirements for the job classification, the department head will determine if the employee will be recommended to the appointing authority for demotion to the job classification.
3(c) Following the demotion, the employee's salary will be restored to the level which would be in effect following any other voluntary demotion. No probationary period will be required. During the rehabilitation process the employee will be afforded four (4) opportunities to pass each Civil Service examination required for the job classification.
3(d) If an employee is unable to successfully complete the City sponsored rehabilitation program within the 12-month period of time, the City will have completed any obligation it may have to reasonably accommodate the injured or ill worker and may terminate or, if eligible, retire the employee from City service. However, the City

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may, at its sole discretion, approve a subsequent City sponsored rehabilitation program.
3(e) Nothing in this City sponsored rehabilitation program is intended to limit an employee's right to compete for, and accept appointment in, any other job classification that he/she is qualified for while taking part in the City sponsored rehabilitation program or after it has been completed.

4.6 TRANSFERS: As an alternative to appointment from any employment list, a position may be filled by transfer of an employee in the same or a comparable class, upon recommendation of the Director of the hiring Department and approval of the Appointing Authority.

4.7 ALTERNATE LIST: If a vacancy exists, the Director of Human Resources may certify names from the eligible list for a related class for which minimum qualifications and examinations are equivalent to or higher than those required for the class in which the vacancy exists.

4.8 ABOLISHING ELIGIBLE LISTS: Eligible lists may be abolished by the Director of Human Resources under the following conditions:
(a) If the list contains fewer than five (5) names.
(b) If at any time a class of positions is abolished the existing eligible list for that class may be abolished by the Director of Human Resources.
(c) Notice of abolishment of an eligible list shall be mailed to all eligibles whose names appear on the list, at time of recruitment to establish a new list.

4.9 INACTIVE LIST: The name of an eligible who is not available for immediate certification, may at his/her written request, be placed on an inactive list and may be restored to the active list from which it was removed upon his/her written request, provided the list is still in existence.

4.10 WAIVERS: An eligible may waive consideration of appointment for any reason after his/her name has been certified.

4.11 CURRENT STATUS AND REQUISITION REPORT: The Director of Human Resources shall inform the Commission the examinations that are to be scheduled for positions to be filled.

4.12 CERTIFICATION OF ELIGIBLES:
(a) Upon a requisition approved by the Appointing Authority, the Director of Human Resources shall certify names from the appropriate eligible list in the following manner:

(1) The ten (10) highest scores shall be certified for entry level examinations and the five (5) highest scores shall be certified for promotional examinations. In cases where identical scores require certification of more than ten (10) names, or five (5) names, all names with identical scores shall be certified.
(2) If there is more than one (1) vacancy in one (1) class in the same department, one (1) additional name shall be certified for each additional vacancy.

4.13 CHOICE OF ELIGIBLES: If one (1) or more of the persons certified waive or fail to respond to a written notice of certification within the time specified, the Director of Human Resources may certify an equal number of substitute names taken successively in the order of final scores from which the choice shall be made. If less than five (5) names are left for certification, the Appointing Authority may refuse to make a probationary appointment. Should the Appointing Authority desire to select a candidate for appointment other than those certified such appointment may be made from the eligible list, subject to prior approval of the Commission.

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4.14 NOTIFICATION OF ELIGIBLES: A written notice of certification shall be mailed to the most recent address appearing on the Human Resources Department records of persons certified for appointment. The notice of certification shall instruct eligibles to communicate with the Appointing Authority or his designee within five (5) working days following the date the notice was mailed. The notice shall contain reference to the ability to waive appointment pursuant to Section 4.10.

4.15 CALL FOR INTERVIEW AND FAILURE TO APPEAR: Eligibles whose names have been certified as available for appointment, as referenced above, may be given notice by mail or otherwise, to report for an interview. Failure to appear for such interview at the time specified in the notice shall be sufficient grounds for the removal of his/her name from the list of available eligibles and the removal of his/her name from the eligible list for that classification.

4.16 REMOVAL FROM ELIGIBLE LIST: An applicant may be removed from a given eligible list by the Director of Human Resources for any of the following reasons:

(a) Appointment to the classification for which the eligible list was originally established; (b) Request of the applicant for removal from the list; (c) Failure to contact the Appointing Authority within five (5) working days from the date of notice of an interview or offer of appointment;
(d) Failure to continue to meet any of the minimum standards, with or without reasonable accommodation, established for the position for which the eligible list was prepared; (e) Determination by the Director of Human Resources that the applicant has violated one or more of the provisions of Sections 2.12 and 2.13;
(f) An applicant may be restored to the list by the Director of Human Resources if he/she presents satisfactory reasons for placement on the list. Denial of the request may be appealed to the Commission.

4.17 REPORT OF APPOINTMENT: The Appointing Authority shall report to the Director of Human Resources and the City Clerk/Auditor the name or names of persons appointed and the date the service is to begin. If the person is required to file an official bond, the Appointing Authority shall notify the City Clerk/Auditor.

4.18 INSPECTION OF RECORDS: The Appointing Authority may inspect all the records of eligibles on file with the Director of Human Resources.

4.19 TEMPORARY APPOINTMENT:
(a) If there are urgent reasons for filling a position and there are insufficient eligibles upon an appropriate eligible list, a temporary appointment may be made by the Appointing Authority pending the establishment of an eligible list.
(b) No temporary appointment shall continue for more than thirty (30) calendar days after an appropriate eligible list has been established for the class unless extended by the Commission; such extension shall not exceed an additional thirty (30) calendar day period. (c) The period of temporary appointment shall not constitute eligibility for permanent appointment or a part of the probationary period.
(d) The appointee may be terminated, separated, or removed from the temporary appointment at any time. Such termination, separation, or removal must be approved by the City Manager and when so approved shall be final and without the right of appeal.

4.20 PROBATIONARY PERIOD: Probationary period is for the purpose of providing a work performance evaluation period prior to filling positions on a permanent appointment basis. The

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Appointing Authority shall make each probationary appointment from the certified eligible list.

During the probationary period, the Appointing Authority shall evaluate the job performance of each employee and determine whether the employee is fully qualified for permanent appointment.

(a) The probationary period is defined as follows:

Electric Utility Apprenticeships 36 months
Communications Dispatcher I 18 months
Communications Dispatcher II (entry level) 18 months
Community Service Officer I 18 months
Community Service Officer II (entry level) 18 months
Jail Service Officer 18 months
Police Records Specialist I 18 months
Police Records Specialist II (entry level) 18 months
Police Officer 18 months
All other original and promotional appointments 12 months (b) Any permanent employee who is an applicant for promotion may have their probationary period extended by the Commission to permit the acquisition of required licenses or certificates or completion of training. Regular classified employees may have their probationary period extended by the Commission for reasons of sickness or absence. (c) At any time during the time of the probationary period, an employee may be terminated by the Appointing Authority without cause and without the right of appeal. Notification of termination in writing shall be sent to the probationary employee. (d) When an individual takes this probationary appointment, if he/she is a City employee with permanent status in his/her former position, he/she maintains his/her right to that former position unless dismissed for cause. This means that if he/she elected to return to his/her former position, it could cause the termination of someone who subsequently filled that position. The right of the employee to return to the former position expires at the end of the current probationary period. Other appropriate openings would be made available to prevent discharge, but if none existed, termination of the displaced employee could necessarily result.
(e) A six (6) month probationary period shall apply for an employee who has been appointed to a position in the classified service if that employee has worked in an As Needed (temporary) employment status in that same classification, department and division for consecutive periods of employment for a total of 2080 hours immediately prior to appointment to the probationary status.

4.21 PERMANENT APPOINTMENT:
(a) If, after thorough evaluation during the probationary period, the Appointing Authority finds the probationer fully qualified for permanent status, he/she shall notify the Director of Human Resources prior to the expiration date of the probationary period. (b) Failure on the part of the Appointing Authority to certify for permanent appointment or separate said employee from the City service upon expiration of the probationary period shall automatically place said employee in permanent status.

4.22 VOLUNTARY DEMOTION: A demotion may be made upon the written request of an employee, with the approval of the Directors of Human Resources, and the hiring department, and the Appointing Authority.

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City Council and Authorities ConcurrentJune 10, 2025

City Council and Authorities Concurrent
June 10, 2025