Agenda packet — Shasta Lake City Council, May 21, 2024

CITY COUNCIL MEETING AGENDA May 21, 2024

CITY OF SHASTA LAKE

CITY COUNCIL

MEETING AGENDA
May 21, 2024
6:00 P.M.

Shasta Lake City Council Chambers
4488 Red Bluff Street  Shasta Lake, CA 96019
Mayor: Janice Powell
Vice Mayor: Tena Eisenbeisz
Council Members: Justin Jones, Pamelyn Morgan, Greg Watkins

OTHER WAYS TO PARTICIPATE IN THE MEETING
• Watch a livestream of the meeting online or view the recording any time after the meeting concludes at the following: cityofshastalake.org/meetings • Submit public comment electronically before the meeting to:
[email protected]. Public comment by email will be read into the record during consideration of the item the comment addresses. Each public comment will be limited to three minutes of reading. Include the item number you are commenting on in the subject line of the email. Once the vote has taken place on an item, no additional public comments will beaccepted.
• Submit public comment by mail addressed to City Clerk, City of Shasta Lake, PO Box 777, Shasta Lake, CA 96019. Mailed comments must be received one day prior to the meeting to be included.

1.0 CALL TO ORDER – REGULAR MEETING:

1.1 Call to order (please place electronic devices on silent)

1.2 Statement for the record of Council Members present or absent

1.3 Pledge of Allegiance

1.4 Invocation

2.0 AWARDS & RECOGNITIONS:

2.1 None

3.0 PRESENTATIONS:

3.1 None

4.0 COMMISSION, COMMITTEE, AND OUTSIDE AGENCY REPORTS:
1 CITY COUNCIL MEETING AGENDA May 21, 2024

5.0 PUBLIC COMMENT:

This time is set aside for citizens to address the City Council on matters listed on the Consent Agenda as well as other items not included on the Regular Agenda. If your comments concern an item noted on the regular agenda, please address the Council when that item is open for public comment. Each speaker is allocated three (3) minutes to speak. Speakers may not cede their time. Comments should be limited to matters within the jurisdiction of the City. Council discussion or action cannot be taken on items not listed on the agenda other than to receive comments. Speaker forms are available from the City Clerk, 4477 Main Street, Shasta Lake, on the City’s website, or at the back of the meeting hall. If you have documents to present to members of Council, please provide a minimum of seven copies. Pursuant to The Brown Act, the City Council cannot take action on Public Comment Items.

6.0 CONSENT AGENDA:

The items listed under the Consent Agenda are considered routine business and will be voted on together by one motion unless a Council Member requests a specific item to be removed and discussed separately.

6.1 Minutes of the Special Meeting of May 7, 2024. (pg. 5)

6.2 Minutes of the Regular Meeting of May 7, 2024. (pg. 6)

6.3 Payrolls: (pg. 11)
PE 5/11/2024 PD 5/17/2024 $161,363.96

6.4 Checks, E-payments, and wires: (pg. 12)
4/11/2024 $257,349.76
4/18/2024 $1,937,039.04
4/25/2024 $443,710.33

6.5 Monthly Report of Investment Transactions: (pg. 25) LAIF:

April $15,052,278.53

Chandler:

April $35,092,201.44

6.6 Discussion and possible action to approve a Resolution accepting the project as complete and authorize the filing of a Notice of Completion (NOC) for the Bizz Johnson Park Improvements Project – Bid No. 2023-11. (pg. 29) 2 CITY COUNCIL MEETING AGENDA May 21, 2024

6.7 Discussion and possible action for an amendment to Resolution(s) CC-2024-19 and CC-2022-115 authorizing the City Manager to execute and submit grant applications for the Summit City Septic-to-Sewer project & zinc discharge mitigation project. (pg. 33)

7.0 PUBLIC HEARINGS:

7.1 Public Hearing to approve the Engineer’s Report(s) and the Levy and Collection for both the Landscaping and Lighting District (LLD) and Drainage Maintenance District (DMD) for the Deer Creek Manor Subdivision: (pg. 39) Discussion and Possible Action to Approve the Following:

1. Resolution for Deer Creek Manor Landscaping and Lighting District (LLD) Approving the Engineer’s Report and Levy and Collection of Assessments for Fiscal Year 2024-25

2. Resolution for Deer Creek Manor Drainage Maintenance District (DMD) Approving the Engineer’s Report Levy and Collection of Assessments for Fiscal Year 2024-25

7.2 Discussion and possible action on the first reading of an Ordinance to adopt and implement new Water Utility rates starting July 1, 2024. (pg. 91)

8.0 REGULAR AGENDA:

8.1 Discussion and possible action to allocate $25,000 for revenue guarantee supporting Redding to Denver air service. (pg. 175)

9.0 STAFF COMMENTS:

10.0 CITY COUNCIL COMMENTS AND REPORTS:

This is the time set aside for Council Members, who may so desire, to give brief comments or reports concerning City matters. The City Council may not enter into discussion on matters reported. Statements made by individual Council Members should not be interpreted as a statement of the City Council. The City Council only takes action by majority vote. • Brief reports by members of the Council regarding correspondence, events and/or meetings attended, and upcoming meetings/events.
• Suggestions/motions for future agenda items.
• In compliance with Assembly Bill 1234, Council will report on attendance at conferences/meetings/events where expenses are reimbursed by the City.

ADJOURNMENT:

Meetings are broadcast on the Wednesday following the meeting at 6:00 PM and the following Friday at 2:00 PM on Charter Channel 181. Videos of meetings are also available through the City website: www.cityofshastalake.org In Compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please call (530) 275-7407. Notification 48 hours prior to the meeting is requested to enable the City to make reasonable arrangements to ensure accessibility to this meeting (28 CFR 35.102-35.104 ADA Title II). 3 4

CITY OF SHASTA LAKE

CITY COUNCIL MEETING MINUTES

MINUTES OF THE SPECIAL MEETING
HELD TUESDAY, MAY 7, 2024, AT THE
CITY COUNCIL CHAMBERS, 4488 RED BLUFF ST, SHASTA LAKE, CALIFORNIA

1.0 CALL TO ORDER – REGULAR MEETING:

1.1 Vice Mayor Powell convened the special meeting at 5:00 PM

1.2 Council Members present: Eisenbeisz, Jones, Morgan, Powell, Watkins

2.0 CLOSED SESSION
PUBLIC COMMENT for agendized items only, the City Council will allocate up to a maximum of three minutes per speaker for each agenda item.

There was no public comment.

The City Council recessed to Closed Session to discuss the following item(s).

Reportable action, if any, will be announced at the next regular meeting.

2.1 Pursuant to California Government Code Section 54957.6, Conference with Labor Negotiators.

Agency Designated Representatives: City Manager Jessaca Lugo; Electric Department Management, James Takehara; Public Works, Will Bond; Finance and Personnel Staff: Wendy Howard, Jason Peterson, and Kristi Davis; Employee Organizations: IBEW, and Teamsters.

Motion/Vote:

No action was taken on this item.

ADJOURNMENT:

Mayor Powell adjourned the closed session meeting at 5:28 PM. _________________________________
CHARITY TATLOW, Deputy City Clerk
5 CITY OF SHASTA LAKE

CITY COUNCIL MEETING MINUTES

MINUTES OF THE REGULAR MEETING
HELD TUESDAY, MAY 7, 2024, AT THE
CITY COUNCIL CHAMBERS, 4488 RED BLUFF ST, SHASTA LAKE, CALIFORNIA

1.0 CALL TO ORDER – REGULAR MEETING:

1.1 Mayor Powell convened the regular meeting at 6:00 PM

1.2 Council Members present: Eisenbeisz, Jones, Morgan, Powell, Watkins

1.3 Pledge of Allegiance was led by Mayor Powell

1.4 Invocation

1.5 Mayor Powell announced that the City Council had a Special Closed Session Meeting at 5:00 pm and there was no action taken.

2.0 AWARDS & RECOGNITIONS:

2.1 Proclamation: Community Action Month, was presented to Melissa Nave, Program Manager Economic Mobility Health and Human Services Agency, County of Shasta.

3.0 PRESENTATIONS:

3.1 2024 Streets Presentation - Will Bond, City Engineer

4.0 COMMISSION, COMMITTEE, AND OUTSIDE AGENCY REPORTS:

4.1 Ann Morningstar gave report(s) for the Shasta Lake Fire Protection District, and Shasta Mosquito Vector.

5.0 PUBLIC COMMENT:

Joseph Fairfield, City of Shasta Lake resident
Kay Kobe, Shasta Lake Business Owner
Kristie Mathews, City of Shasta Lake resident
Pam Morgan, City of Shasta Lake resident
Dolores Lucero, City of Shasta Lake resident
Justin Jones, City of Shasta Lake resident
Jim Mark, City of Shasta Lake resident

6.0 CONSENT AGENDA:

6.1 Minutes of the Special Meeting of April 16, 2024.

6.2 Minutes of the Regular Meeting of April 16, 2024.
6 6.3 Payrolls: (pg. 9)
PE 4/13/2024 PD 4/19/2024 $158,577.98
PE 4/27/2024 PD 5/03/2024 $160,430.76

6.4 Monthly Report of Investment Transactions:

LAIF:

March $14,882,477.94

Chandler:

March $35,017,440.42

6.5 Resolution CC-2024-24 accepting the Quarterly Cash and Investment report for the period ending March 31, 2024.

6.6 Resolution CC-2024-25 finding that Mountain Properties, Inc., has complied in good faith with the terms and conditions of the Development Agreement (Agreement) between the City of Shasta Lake and Mountain Properties, Inc. (Developer), relative to the development known as Mountain Properties Subdivision (SD 04-01).

6.7 Resolution CC-2024-26 approving the annual Wildfire Mitigation Plan, effective June 1, 2024.

6.8 Resolution CC-2024-27 authorizing the City Manager to execute the Wildland Fire Protection Agreement with the California Department of Forestry and Fire Protection and the Shasta Lake Fire Protection District for July 1, 2024 through June 30, 2025.

6.9 Resolution CC-2024-28 adopting a list of projects for fiscal year 2024-2025 funded by SB1: The Road Repair and Accountability Act of 2017.

6.10 Resolutions for Deer Creek Manor Subdivision Assessment Districts. a) Resolution CC-2024-29 Initiating Proceedings for the Levy and Collection of Assessments Commencing in fiscal Year 2024-25 of the Deer Creek Manor Landscaping and Lighting District and ordering the preparation of an Engineer’s Report in connection herewith.
b) Resolution CC-2024-30 Preliminarily Approving the Engineer’s Report Regarding Deer Creek Manor Landscaping and Lighting District and the Levy and Collection of Assessments Commencing with fiscal year 2024-25. c) Resolution CC-2024-31 Declaring the City’s Intention to Order the Levy and Collection of Assessments Commencing in fiscal year 2024-25 of the Deer Creek Manor Landscaping and Lighting District and Appointing a Time and Place for the Public Hearing Protests.
7 d) Resolution CC-2024-32 Initiating Proceedings for the Levy and Collection of Assessments Commencing in fiscal year 2024-25 of the Deer Creek Manor Drainage Maintenance District and ordering the preparation of an Engineer’s Report in connection herewith.
e) Resolution CC-2024-33 Preliminarily Approving the Engineer’s Report Regarding the Deer Creek Manor Drainage Maintenance District and the Levy and Collection of Assessments Commencing with Fiscal Year 2024-

25. f) Resolution CC-2024-34 Declaring its Intention to Order the Levy and Collection of Assessments Commencing in Fiscal Year 2024-25 of the Deer Creek Manor Drainage Maintenance District and Appointing a Time and Place for the Public Hearing Protests

6.11 Resolution CC-2024-35 authorizing supplemental appropriations for the purchase of a bucket truck for the Electric Department.

Motion/Vote:

Councilmembers had additional questions regarding some of the Consent Agenda items.

Councilman Watkins requested item 6.6 be acted on separately, as he will need to recuse himself from the vote.

Item 6.6 was acted on separately. By motion made/seconded (Morgan/Eisenbeisz), and carried, the item was approved.

Councilman Watkins abstained from the vote.

Motion/Vote:

By motion made/seconded (Morgan/Jones), and carried, the remaining items on the Consent Agenda were approved.

7.0 PUBLIC HEARINGS:

7.1 None

8.0 REGULAR AGENDA:

8.1 Resolution CC-2024-36 authorizing the submission of a grant application to the Active Transportation Program for Cycle 7, and grant the City Manager signatory authority.

There was no public comments on this item.
8 Motion/Vote:

By motion made/seconded (Eisenbeisz/Morgan), and carried, the item passed unanimously.

8.2 Resolution CC-2024-37 dedicating an area at the Civic Center Campus for a multi use sports court, with uses to include, but not limited to, basketball and roller derby.

Public Comment:

Cheryle Yednak, City of Shasta Lake resident
Motion/Vote:

By motion made/seconded (Eisenbeisz/Morgan), and carried, the item passed unanimously.

9.0 STAFF COMMENTS:

Jessaca Lugo, City Manager, notified the council and public on the new Shasta County Public Warning System, and how to register for alerts.

10.0 CITY COUNCIL COMMENTS AND REPORTS:

ADJOURNMENT:

With no further business, Mayor Powell adjourned the meeting at 7:53 pm. _________________________________
CHARITY TATLOW, Deputy City Clerk
9 10
5/15/2024 8:06:26 AM Page 6 of 6
Payroll Check Register
City of Shasta Lake Report Summary
Pay Period: 4/28/2024-5/11/2024
Packet: PYPKT00543 - PE 5.11.2024
Payroll Set: City of Shasta Lake - 01
Type
4 Count
0 6,659.70

0.00 Regular Checks
Manual Checks
0 0.00
0 0.00
Amount
78 154,704.26
Total 82 161,363.96
Reversals
Voided Checks
Direct Deposits
11 12
13 14
15 16
17 18
19 20
21 22
23 24
Report and Recommendations 6.5 Reviewed and Approved

City Manager

AGENDA ITEM
City Council
TO: Mayor and City Council Members
FROM: Wendy Howard, Finance Director
Jason Peterson, Finance Manager

DATE: May 21, 2024
SUBJECT: INFORMATION ITEMS – Monthly Reports of Investment for the Periods Ending April 30, 2024
FILE NO.:

RECOMMENDATION:

Staff recommends that the City Council receive and file the Cash and Investment Report for April 2024.

BACKGROUND:

Pursuant to the City of Shasta Lake’s Adopted Investment Policy and Government Code Section 53607, the Finance Director will submit a report of investment transactions to the City Council monthly.

Staff requests the City Council or the public to submit questions regarding the reports prior to the City Council Meeting to permit time to research the question.

FISCAL IMPACTS:

There will be no fiscal impact as a result of this information item.

ATTACHMENTS:

LAIF Statement
Chandler Investment Summary Report
External Link: Monthly Investment Reports (Full Report) DISTRIBUTION:

City Council
City Attorney
25 Local Agency Investment Fund
P.O. Box 942809
Sacramento, CA 94209-0001
(916) 653-3001
May 03, 2024
LAIF Home
PMIA Average Monthly Yields

CITY OF SHASTA LAKE

FINANCE DIRECTOR
4477 MAIN STREET
SHASTA LAKE, CA 96019
Account Number: 98-45-868
April 2024 Statement
Tran Type Definitions
Effective
Date
Transaction
Date
Tran
Type Confirm
Number
Web
Confirm
Number Authorized Caller Amount
4/15/2024 4/12/2024 QRD 1752090 N/A SYSTEM 169,800.59
Account Summary
Total Deposit: 169,800.59 Beginning Balance: 14,882,477.94 Total Withdrawal: 0.00 Ending Balance: 15,052,278.53
26 MONTHLY ACCOUNT STATEMENT
City of Shasta Lake | Account #10203 | As of April 30, 2024 CHANDLER ASSET MANAGEMENT | chandlerasset.com
Information contained herein is confidential. We urge you to compare this statement to the one you receive from your qualified custodian. Please see Important Disclosures at the end of the statement.

Chandler Team:

For questions about your account, please call (800) 317-4747, or contact [email protected]
Custodian:

PORTFOLIO SUMMARY
Portfolio Characteristics
Sector Allocation
Performance Review
Account Summary
Maturity Distribution
Top Issuers
Credit Quality
Total Rate of Return 1M 3M YTD 1YR 2YRS 3YRS 5YRS 10YRS Since Inception (01/01/14)
City of Shasta Lake (0.27%) (0.16%) 0.26% 3.20% 2.27% 0.47% 1.39% 1.37% 1.38% Benchmark Return* (0.32%) (0.40%) (0.02%) 2.40% 1.66% (0.04%) 1.05% 1.03% 1.02% Average Modified Duration 1.67
Average Coupon 2.78%
Average Purchase YTM 3.10%
Average Market YTM 5.25%
Average Quality AA
Average Final Maturity 1.98
Average Life 1.86
Beg. Values as of
04/01/2024
End Values as of
04/30/2024
Market Value 34,468,852.83 34,360,178.36
Accrued Interest 173,309.53 188,536.56
Total Market Value 34,642,162.37 34,548,714.92
Income Earned 58,500.76 120,025.55
Cont/WD (120.00) (100.00)
Par 35,263,437.61 35,329,758.09
Book Value 35,017,440.42 35,092,201.44
Cost Value 34,891,477.16 34,958,177.84
United States 39.08%
Federal Home Loan Banks 11.49%
FHLMC 6.00%
Farm Credit System 2.75%
American Express Company 2.11%
JPMorgan Chase & Co. 2.07%
Bank of America Credit Card Trust 1.66%
FNMA 1.64%
*Periods over 1 year are annualized.

Benchmark: ICE BofA 1-3 Year US Treasury & Agency Index Secondary Benchmark:
*See Footnote
The credit quality is a weighted average calculation of the highest of S&P, Moody’s’ and Fitch 28 Report and Recommendations 6.6 Reviewed and Approved

City Manager

AGENDA ITEM
City Council
______________________________________________________________________ TO: Mayor and City Council Members
FROM: Will Bond, Public Works Director/City Engineer
DATE: May 21, 2024
SUBJECT: AUTHORIZATION TO FILE A NOTICE OF COMPLETION
FILE NO.: G-100-500-010
______________________________________________________________________

RECOMMENDATION
Staff requests that the City Council consider accepting the project as complete and authorize the filing of a Notice of Completion (NOC) for the Bizz Johnson Park Improvements Project – Bid No. 2023-11.

BACKGROUND
On November 7, 2023, the City Council approved resolution CC-2023-70 authorizing the City Manager to enter into a contract with McEntire Landscaping for the purposes of performing the above project.

Staff has determined that the work specified in the contract has been completed and is in substantial conformance with the Plans and Specifications. Therefore, staff recommends that the Council accept the Project and authorize the filing of a Notice of Completion at the Shasta County Recorder’s Office.

FISCAL IMPACTS:

Awarded construction contract: $ 364,700.00
Approved expenditure not to exceed: $ 400,000.00
Total project construction cost: $ 387,434.00
This project was funded through currently budgeted American Rescue Plan Act funds (270-110).

ATTACHMENTS
Resolution
29 DISTRIBUTION
City Council
30 RESOLUTION CC 2024-xx
___________________________________________________________________________

A RESOLUTION OF THE CITY OF SHASTA LAKE CITY COUNCIL TO ACCEPT THE

BIZZ JOHNSON PARK IMPROVEMENTS PROJECT AND AUTHORIZE THE FILING OF A

NOTICE OF COMPLETION
____________________________________________________________________________ WHEREAS, the City entered into a contract with McEntire Landscaping for the performance of the Bizz Johnson Park Improvements Project; and

WHEREAS,
McEntire Landscaping has completed the project to the satisfaction of City staff.

NOW, THEREFORE BE IT RESOLVED THAT the City of Shasta Lake City Council hereby accepts the Bizz Johnson Park Improvements Project (2023-11) as complete and authorizes staff to file a Notice of Completion with the Shasta County Recorder’s Office.

PASSED, APPROVED, AND ADOPTED this 21st day of May 2024, by the following vote:

AYES:

NOES:

ABSENT:
_____
JANICE POWELL, Mayor
ATTEST:
_______________________________
CHARITY TATLOW, Deputy City Clerk
31 32
Report and Recommendations 6.7 Reviewed and Approved

City Manager

AGENDA ITEM
City Council

TO: Mayor and City Council Members
FROM: Jessaca Lugo, City Manager
Wiliam Bond, Public Works Director/City Engineer

DATE: May 21, 2024
SUBJECT: AMENDMENT TO RESOLUTION(S) CC-2024-19 AND CC-2022- 115 AUTHORIZING THE CITY MANAGER TO EXECUTE AND

SUBMIT GRANT APPLICATIONS FOR SUMMIT CITY SEPTIC TO

SEWER PROJECT & ZINC DISCHARGE MITIGATION PROJECT
FILE NO.:

SUMMARY:

Staff recommends that City Council amend the existing authorizing resolutions previously approved by the City Council, by removing the name of the current City Manager.

BACKGROUND:

At the City Council meeting on December 22, 2022 (CC-2022-115), the City Council authorized the City Manager or designee to sign and file, for and behalf of the City of Shasta Lake, a Financial Assistance Application for a financing agreement with the State Water Resources Control Board, Division of Financial Assistance (SWRCB-DFA) for the planning, design, and construction of the Zinc Discharge Mitigation Project.

And at the City Council meeting on March 19, 2024 (CC-2024-19), the City Council authorized the City Manager or designee to sign and file, for and behalf of the City of Shasta Lake, a Financial Assistance Application for a financing agreement with the SWRCB-DFA for the planning, design, and construction of the Summit City Septic-toSewer Project.

SWRCB-DFA application instructions state “…to enter the title of the Authorized Representative, not a person’s name”. Therefore, staff is requesting a re-authorization of both authorizing resolutions and the City Manager’s name.

FISCAL IMPACTS:

None
33 ATTACHMENTS:

Resolution CC-2022-115 (amended and new)
Resolution CC-2024-19 (amended and new)
DISTRIBUTION:

City Council
Finance Department
34 AUTHORIZING RESOLUTION
RESOLUTION NO: CC-2022-115

A RESOLUTION OF THE CITY OF SHASTA LAKE CITY COUNCIL

AUTHORIZING THE CITY MANAGER EXECUTE AND SUBMIT GRANT AND LOAN

APPLICATIONS AND RELATED DOCUMENTS THROUGH THE STATE WATER RESOURCES

CONTROL BOARD CLEAN WATER STATE REVOLVING FUND
WHEREAS; it has been determined there is a need to seek financial assistance from the State of California Clean Water State Revolving Fund to mitigate excessive zinc discharges from the wastewater treatment plant.

RESOLVED BY the City Council of the City of Shasta Lake (the "Entity"), AS FOLLOWS:

The City Manager, Jessaca Lugo (the "Authorized Representative") or designee is hereby authorized and directed to sign and file, for and on behalf of the Entity, a Financial Assistance Application for a financing agreement from the State Water Resources Control Board for the planning, design, and construction of the Zinc Discharge Mitigation Project (the "Project").

This Authorized Representative, or his/her designee, is designated to provide the assurances, certifications, and commitments required for the financial assistance application, including executing a financial assistance agreement from the State Water Resources Control Board and any amendments or changes thereto.

The Authorized Representative, or his/her designee, is designated to represent the Entity in carrying out the Entity's responsibilities under the financing agreement, including certifying disbursement requests on behalf of the Entity and compliance with applicable state and federal laws.

CERTIFICATION
I do hereby certify that the foregoing is a full, true, and correct copy of a resolution duly and regularly adopted at a meeting of the City of Shasta Lake City Council held on December 20, 2022 by the following vote:

AYES: JONES, MORGAN, POWELL, WATKINS
NOES: NONE
ABSENT: NONE
TO I . COATES, CMC

CITY CLERK

CITY OF SHA ST A LAKE
35 AUTHORIZING RESOLUTION/ORDINANCE
RESOLUTION NO: CC-2024-19
WHEREAS it has been determined there is a need to seek financial assistance from the State of California Clean Water State Revolving Fund to extend the City's collection system to address failing septic systems in the Summit City area.

RESOLVED BY the City Council of the City of Shasta Lake (the "Entity"), AS FOLLOWS:

Charity Tatlow, Deputy City Clerk
(Name, Signature, and Seal of the Clerk or Authorized ec rd Keeper of the Governing Board of the Agency) 36 AUTHORIZING RESOLUTION
RESOLUTION NO: CC-2022-115
________________________________________________________________________________

A RESOLUTION OF THE CITY OF SHASTA LAKE CITY COUNCIL

AUTHORIZING THE CITY MANAGER EXECUTE AND SUBMIT GRANT AND LOAN

APPLICATIONS AND RELATED DOCUMENTS THROUGH THE STATE WATER RESOURCES

CONTROL BOARD CLEAN WATER STATE REVOLVING FUND
________________________________________________________________________________ WHEREAS; it has been determined there is a need to seek financial assistance from the State of California Clean Water State Revolving Fund to mitigate excessive zinc discharges from the wastewater treatment plant.

RESOLVED BY the City Council of the City of Shasta Lake (the “Entity”), AS FOLLOWS:

The City Manager, (the “Authorized Representative”) or designee is hereby authorized and directed to sign and file, for and on behalf of the Entity, a Financial Assistance Application for a financing agreement from the State Water Resources Control Board for the planning, design, and construction of the Zinc Discharge Mitigation Project (the “Project”).

The Authorized Representative, or his/her designee, is designated to represent the Entity in carrying out the Entity’s responsibilities under the financing agreement, including certifying disbursement requests on behalf of the Entity and compliance with applicable state and federal laws.

AYES:

NOES:

ABSENT:

CHARITY TATLOW JANICE POWELL

DEPUTY CITY CLERK MAYOR

CITY OF SHASTA LAKE CITY OF SHASTA LAKE
37 AUTHORIZING RESOLUTION/ORDINANCE
RESOLUTION NO: CC-2024-19
WHEREAS it has been determined there is a need to seek financial assistance from the State of California Clean Water State Revolving Fund to extend the City’s collection system to address failing septic systems in the Summit City area.

RESOLVED BY the City Council of the City of Shasta Lake (the “Entity”), AS FOLLOWS:

The City Manager, (the “Authorized Representative”) or designee is hereby authorized and directed to sign and file, for and on behalf of the Entity, a Financial Assistance Application for a financing agreement from the State Water Resources Control Board for the planning, design, and construction of the Summit City Septic-to-Sewer Project (the “Project”).

Charity Tatlow, Deputy City Clerk
(Name, Signature, and Seal of the Clerk or Authorized Record Keeper of the Governing Board of the Agency) 38 Report and Recommendations 7.1 Reviewed and Approved _________________________
City Manager

AGENDA ITEM
City Council
___________________________________________________________________________ TO: Mayor and City Council Members
FROM: Wendy Howard, Finance Director
Jason Peterson, Finance & General Services Manager
DATE: May 21, 2024
SUBJECT: DEER CREEK MANOR SUBDIVISION ASSESSMENT DISTRICTS

PUBLIC HEARING
FILE NO.:
___________________________________________________________________________

RECOMMENDATION
Staff recommends City Council conduct a public hearing for both the Landscaping and Lighting District (LLD) and Drainage Maintenance District (DMD) for the Deer Creek Manor Subdivision:

For each District separately, consider adopting the attached resolutions:

1. Approve the Final Engineer’s Report.

2. Order the Levy and Collection of Assessments.

BACKGROUND
As a condition of approval of the Deer Creek Manor Subdivision, designated open space, neighborhood parks, and retention/detention facilities must be maintained by a homeowner’s association or other funding/maintenance mechanism acceptable to the City. The Developers opted to establish a Landscaping and Lighting District (LLD) and Drainage Maintenance District (DMD) for this purpose. On July 19, 2007, the Council adopted Resolutions legally establishing these districts.

Landscape and Lighting District
The District was formed pursuant to the provisions of the Landscaping and Lighting Act of 1972 (Section 22500 et seq. of the California Streets and Highways Code). The attached Engineer’s Report describes the District, the improvements, and the maximum amount for assessments to 39 be levied against the properties commencing in fiscal year 2024-25, and the proposed applied rate for the fiscal year 2024-25.

The District provides for the continued operation and maintenance of street lighting, medians, parkways, slopes, open spaces and drainage basins. The attached Engineer’s Report provides items that may be included.

The maximum amount of the per-parcel assessment for this District is $565.45. However, the applied rate for fiscal year 2024-25 is $255.00, the same as the prior year.

Drainage Maintenance District
This District was formed pursuant to the provisions of the Benefit Assessment Act of 1982 (Section 54703 et seq. of the California Government Code). The attached Engineer’s Report describes the District, the improvements, and the maximum amount for the assessments to be levied against properties commencing in fiscal year 2023-24.

The District provides for the continued operation and maintenance of drainage and flood control facilities. The attached Engineer’s Report provides items that may be included in this District.

The maximum amount of the per-parcel assessment for this District is $537.70 for the parcels.

The applied rate for fiscal year 2024-25 is $36.14, the same as the prior year.

Engineer’s Annual Levy Report
The Engineer’s Reports for the LLD and DMD are attached. The reports summarize the improvements, budgets, parcels, amounts to levy, and maximum allowable per parcel amounts of the assessments for fiscal year 2024-25.

FISCAL IMPACTS:

None
ATTACHMENTS:
• Resolution for Deer Creek Manor Landscaping and Lighting District (LLD) Approving the Engineer’s Report and Levy and Collection of Assessments for Fiscal Year 2024-25 • Engineer’s Reports on the Landscaping and Lighting District (LLD) • Landscaping and Lighting District Preliminary Assessment Roll • Resolution for Deer Creek Manor Drainage Maintenance District (DMD) Approving the Engineer’s Report Levy and Collection of Assessments for Fiscal Year 2024-25 • Engineer’s Reports on the Drainage Maintenance District (DMD) • Drainage and Maintenance District Preliminary Assessment Roll DISTRIBUTION:

City of Shasta Lake City Council
40 RESOLUTION NO. 2024-_____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SHASTA LAKE, COUNTY OF SHASTA, STATE OF CALIFORNIA APPROVING THE ENGINEER’S

REPORT FOR DEER CREEK MANOR LANDSCAPING AND LIGHTING DISTRICT

AND THE LEVY AND COLLECTION OF ASSESSMENTS WITHIN SUCH DISTRICT FOR FISCAL YEAR 2024/2025 AND CONFIRMING DIAGRAMS AND ASSESSMENTS PURSUANT TO THE PROVISIONS OF PART 2 OF DIVISION 15 OF THE

CALIFORNIA STREETS AND HIGHWAYS CODE AND AS PROVIDED BY ARTICLE

XIII D OF THE CALIFORNIA CONSTITUTION
WHEREAS, the City Council by its Resolution No. 2024-29 initiated proceedings, and by its Resolution No. 2024-31 declared its intention to levy annual assessments for and to amend the boundaries of the Deer Creek Manor Landscaping and Lighting District (hereinafter referred to as the "District"), and to levy and collect assessments against lots and parcels of land within such District pursuant to the provisions of the Landscaping and Lighting Act of 1972, Part 2 of Division 15 of the California Streets and Highways Code, commencing with Section 22500 (hereinafter referred to as the “Act”), to pay for the costs and expenses of operating, maintaining and servicing ornamental structures, landscaping and appurtenant facilities located within public places within the boundaries of the District; and
WHEREAS, the Engineer selected by the City Council has prepared and filed with the City Clerk, and the City Clerk has presented to the City Council, a report in connection with the annual levy of assessments against lots and parcels of land within the District, and the City Council did by previous resolution approve such report (hereinafter referred to as the “Engineer’s Report”); and
WHEREAS, the City Council desires to levy and collect assessments against lots and parcels of land within the District for the fiscal year commencing July 1, 2024 and ending June 30, 2025, to pay for the costs and expenses of operating, maintaining and servicing turf, ground cover, shrubs, trees, irrigation, lighting systems, entry monuments, walls, drainage systems, park facilities, and associated appurtenances, located in public places within the boundaries of the District; and
WHEREAS, a mailed ballot election in connection with the levy of assessments within the District was not required in accordance with Article XIII D of the California Constitution.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SHASTA LAKE DOES HEREBY FIND, DETERMINE, RESOLVE AND ORDER AS FOLLOWS:

Section 1. Following notice duly given, the City Council has held a full and fair public hearing regarding its Resolution No. 2024-______, the Engineer's Report prepared in connection with the District and the levy and collection of assessments, and considered all oral and written statements, protests and communications made or filed by interested persons.

Section 3. Based upon its review of the Engineer's Report, a copy of which has been presented to the City Council and which has been filed with the City Clerk, and other reports and information, the City Council hereby finds and determines with respect to the District included in the Engineer’s Report, that:
(i) the land within the District will be specially benefited by the operation, maintenance and servicing of turf, ground cover, shrubs, trees, irrigation, lighting systems, entry monuments, walls, drainage systems, park facilities, and associated appurtenances, located in public places within the boundaries of the District; and (ii) the District include all lands so specially benefited; and (iii) the net amount to be assessed upon the lots and parcels within the District in accordance with the assessment for the fiscal year commencing July 1, 2024 and ending June 30, 2025 is apportioned by a formula and method which fairly distributes the net amount among all assessable lots or parcels in proportion to the estimated special benefits to be received by each lot or parcel from the improvements; and (iv) only special benefits are assessed and no assessment is imposed on any parcel, which exceeds the reasonable cost of the proportional special benefit conferred on that parcel.

Section 4. The City Council hereby orders the proposed improvements to be made as set forth in the Engineer’s Report, which improvements are briefly described as follows: to ensure the ongoing maintenance, operation and servicing of local landscaping and street lighting improvements established or installed in connection with development of properties within the District. The improvements may consist of all or a portion of the public landscaped areas, street lighting and appurtenant facilities within and adjacent to the District. These improvements generally include, but are not limited to the materials, equipment, utilities, labor, contract services and incidental expenses necessary for the ongoing maintenance and operation of the landscaping and lighting improvements, amenities and appurtenant facilities within public properties, right-ofways or easements including street lighting and various landscaped parkways, medians, slopes, open space areas, detention basins and related amenities including, but not limited to plantings, trees, monuments or other ornamental features, fencing, sidewalks and other facilities or hardscapes constructed and installed as part of the development plans and agreements approved for the development of the lots and parcels within the District.

Section 5. The City Council hereby confirms the diagrams and assessments set forth in the Engineer's Report. The maintenance, operation and servicing of the ornamental structures, landscaping and appurtenant facilities shall be performed pursuant to law. Commencing with fiscal year 2024/2025, the County Auditor of Shasta County shall enter on the County Assessment Roll opposite each lot or parcel of land the amount of the assessment, and such assessments shall then be collected at the same time and in the same manner as the County taxes are collected. After collection by the County, the net amount of the assessment after deduction of any compensation due the County for collection shall be paid to the City Treasurer. For fiscal year 2024/2025, the City’s representative is hereby authorized and directed to collect such assessments. 42 Section 6. The assessments are in compliance with the provisions of the Act and Article XIII D of the California Constitution, and the City Council has complied with all laws pertaining to the levy of annual assessments pursuant to the Act and Article XIII D of the California Constitution.

Section 7. The assessments are levied for the purpose of paying the costs and expenses of the improvements described in Section 4, above, for fiscal year 2024/2025.

Section 8. The City Treasurer shall deposit all money representing assessments collected for the Districts to the credit of a special fund known as "Improvement Fund, City of Shasta Lake Deer Creek Manor Landscaping and Lighting District” and such money shall be expended only for the maintenance, operation and servicing of the ornamental structures, landscaping and appurtenant facilities as described in Section 4 above.

Section 9. The adoption of this resolution constitutes the levy of assessments for the fiscal year commencing July 1, 2024 and ending June 30, 2025.

Section 10. A certified copy of the diagrams and assessments shall be filed in the office of the City Clerk and shall be open for public inspection. ******
I, Charity Tatlow, City Clerk of the City of Shasta Lake, do hereby certify that the foregoing resolution was duly passed and adopted at a regular meeting of the Shasta Lake City Council held on the _____ day of _______2024, by the following vote:

Ayes: Councilmembers
Noes: Councilmembers

Absent: Councilmembers
Abstain: Councilmembers
____________
Janice Powell, Mayor
City of Shasta Lake
______
Charity Tatlow, City Clerk
City of Shasta Lake
43 CLERK’S CERTIFICATION TO COUNTY AUDITOR

DEER CREEK MANOR LANDSCAPING AND LIGHTING DISTRICT
FOR FISCAL YEAR 2024/2025
(Pursuant to Landscaping and Lighting Act of 1972)
TO THE COUNTY AUDITOR OF THE COUNTY OF SHASTA:

I, Charity Tatlow, hereby certify that the attached document is a true copy of that certain Engineer’s Report, including assessment and assessment diagram, for Assessment District No. 93- 01, City of Shasta Lake, confirmed by the City Council of the City of Shasta Lake on the_____ day of ______, 2024, by its Resolution No. 2024-_____.

This document is certified, and is filed with you, pursuant to Section 22641 of the Streets and Highways Code.

Dated: _______________
______
Charity Tatlow, City Clerk
City of Shasta Lake
44 27368 Via Industria
Suite 200
Temecula, Ca 92590
T 951.587.3500 | 800.755.6864
F 951.587.3510
www.willdan.com/financial

City of Shasta Lake

Deer Creek Manor
Landscaping and Lighting District
2024/2025 ENGINEER’S ANNUAL LEVY REPORT
Intent Meeting: May 7, 2024
Public Hearing: May 21, 2024

45 AFFIDAVIT FOR THE ENGINEER’S REPORT

DEER CREEK MANOR LANDSCAPE AND

LIGHTING ASSESSMENT DISTRICT
Establishment of Annual Assessments for the:

City of Shasta Lake
County of Shasta, State of California
This Report describes the District including the improvements, budgets, parcels and assessments to be levied for Fiscal Year 2024/25 as they existed at the time of the passage of the Resolution of Intention. Reference is hereby made to the Shasta County Assessor’s maps for a detailed description of the lines and dimensions of parcels within the District. The undersigned respectfully submits the enclosed Report as directed by the City Council.

Dated this day of , 2024.

Willdan Financial Services
Assessment Engineer
On Behalf of the City of Shasta Lake
By:

Chonney Gano, Project Manager
District Administration Services
By:

Tyrone Peters
PE # C 81888
46 TABLE OF CONTENTS
INTRODUCTION .................................................................................................. 1 I. PLANS AND SPECIFICATIONS ..................................................................... 4 A. BENEFITING PROPERTIES WITHIN THE DISTRICT .......................... 4 B. IMPROVEMENTS AUTHORIZED BY THE 1972 ACT ........................... 4 C. DESCRIPTION OF IMPROVEMENTS ................................................... 5 General Description of the Improvements ................................................................ 5 Landscape Improvements ........................................................................................... 6 Public Lighting Improvements.................................................................................... 7 II. METHOD OF APPORTIONMENT .................................................................. 8 A. BENEFIT ANALYSIS ............................................................................. 8 B. ASSESSMENT METHODOLOGY .......................................................... 9 Equivalent Benefit Units .............................................................................................. 9 Assessment Calculations.......................................................................................... 10 C. ASSESSMENT RANGE FORMULA ..................................................... 11 III. DISTRICT BUDGET .................................................................................... 12 IV. DISTRICT DIAGRAM .................................................................................. 14 V. ASSESSMENT ROLL ................................................................................. 16 47 FY 2024/2025 Deer Creek Manor Landscape and Lighting District Page 1 of 16

INTRODUCTION
Pursuant to the provisions of the Landscaping and Lighting Act of 1972, being Part 2 of Division 15 of the California Streets and Highways Code (hereafter referred to as the “1972 Act”), and in compliance with the substantive and procedural requirements of the California State Constitution Article XIIID (hereafter referred to as the “California Constitution”), the City Council of the City of Shasta Lake, County of Shasta, State of California (hereafter referred to as “City”), formed and levied special benefit assessments for the district designated as:

City of Shasta Lake
Deer Creek Manor Landscaping and Lighting District
(hereafter referred to as the “District”), which includes all lots and parcels of land within the residential subdivisions known as Deer Creek Manor that have been determined to receive special benefits from the improvements and facilities installed and constructed in conjunction with the development of such residential properties within the City limits of Shasta Lake. This Engineer’s Report (hereafter referred to as the “Report”) has been prepared as required pursuant to Chapter 1 Article 4, commencing with Section 22565 of the 1972 Act.

The City Council formed the District to levy and collect annual assessments on the Shasta County (the “County”) tax rolls to provide ongoing funding for the costs and expenses required to service and maintain the landscaping and lighting improvements and appurtenant facilities that are associated with the orderly development of the properties within the District to their full potential, consistent with the development plans and applicable portions of the City General Plan. The improvements provided by the District and the assessments described herein, are made pursuant to the 1972 Act and the substantive and procedural provisions of the California Constitution.

This Report describes the District, the improvements, and the assessments levied against properties in connection with the special benefits that the properties will receive from the maintenance and servicing of the District improvements and facilities commencing in fiscal year 2024/2025. The assessments described herein will provide a funding source (annual assessments) for the continued operation and maintenance of the landscaping and lighting improvements and appurtenant facilities that are directly associated with the development and use of properties within the District including, but not limited to street lighting, medians, parkways, slopes, open spaces and detention basin.

While the cost of constructing these improvements are not part of the assessments, the budget described herein, represent an estimate of the direct expenditures, incidental expenses, and fund balances that will be necessary to ensure proper maintenance, servicing and long term funding needs to support the improvements that provides special benefits to properties within the District. The structure of the District (organization), the improvements, the method of apportionment, and assessments described herein are based on current property development plans for the Deer Creek Manor residential subdivision and specifications associated with that planned development; and by reference these plans and specifications are made part of this Report.
48 FY 2024/2025 Deer Creek Manor Landscape and Lighting District Page 2 of 16 The word “parcel”, for the purposes of this Report, refers to an individual property assigned its own Assessor’s Parcel Number (APN) by the County Assessor’s Office. The County Auditor-Controller uses Assessor’s Parcel Numbers and specific Fund Numbers to identify properties assessed on the tax roll for the special benefit assessments.

Each subsequent fiscal year, a Report shall be prepared and presented to the City Council describing any changes to the improvements, the services, the annual budget and assessments for that fiscal year, and the City Council shall hold a noticed public hearing regarding these matters prior to approving and ordering the levy of assessments for that fiscal year. If the annual budget for the District requires an assessment that exceeds the maximum assessment described herein (as approved by the property owners at the time of the District formation), the new or increased assessment must be confirmed through another property owner protest ballot proceeding before such an assessment may be imposed.

This Report consists of five (5) parts:

Part I
Plans and Specifications: A general description of the District, the improvements, and authorized services for parcels within the District will be assessed is provided in this section of the Report. The specific landscaping and lighting plans and associated facility specifications prepared in connection with the development of properties within the Deer Creek Manor subdivision (also known as the “Landscape Plans”) are on file in the offices of the City of Shasta Lake, and by reference these plans and specifications are made part of this Report. Based on these improvement plans and approved subdivision plans, it has been determined that the District will establish a single benefit zone encompassing all benefiting properties within the territory identified within the Boundary Map of the Deer Creek Manor Landscaping and Lighting District, attached and incorporated herein under Part IV of this Report. It should be noted that four (4) parcels within the Deer Creek Manor subdivision are not included within the District because they are accessed from Buckingham Drive and have no direct access or special benefit from the landscaping and lighting improvements provided by this District.

Part II
Method of Apportionment: A discussion of benefits the improvements and services provide to properties within the District and the method of calculating each property’s proportional special benefit and annual assessment. This section also identifies and outlines an Assessment Range Formula (Annual Inflation Adjustment) that provides for an annual adjustment to the maximum assessment rate that establishes limits on future assessments, but also provides for reasonable cost adjustments due to inflation without the added expense of additional property owner protest ballot proceedings.

Part III
District Budget: An annual cost to operate, maintain and service the landscaping and lighting improvements and amenities installed and constructed in connection with properties within the District. This budget includes direct maintenance costs and incidental expenses including, but not limited to, administration expenses and the collection of appropriate fund balances to establish the initial Maximum Assessment 49 FY 2024/2025 Deer Creek Manor Landscape and Lighting District Page 3 of 16 Rates approved by the property owners of record. The special benefit assessments are based on an estimate of the overall operation, maintenance and servicing costs minus any costs that are not assessed as special benefit. The assessments for each subsequent year shall be based on the estimated net annual cost for the City to operate, maintain and service the improvements for that fiscal year including the collection of funds in installments for periodic or long-term maintenance activities. The Maximum Assessment Rates (Rates per Equivalent Benefit Unit) identified in the budget of this Report establishes the initial Maximum Assessment Rates for the District in fiscal year 2024/2025 and shall be adjusted annually by the Assessment Range Formula described in the method of apportionment.

Part IV
District Diagram: A Diagram showing the exterior boundaries of the District is provided in this section of the Report and includes all parcels that will receive special benefits from the District improvements. Parcel identification, the lines and dimensions of each lot, parcel and subdivision of land within the District, are inclusive of all parcels as shown on the Shasta County Assessor's Parcel Maps as they existed at the time of the passage of the Resolution of Intention, and shall include all subsequent subdivisions, lot line adjustments or parcel changes therein. Said parcels of land are consistent with and identified by the following Shasta County Assessor's Parcel Maps: Book 075, Page 150, Parcel 046; Book 075, Page 570, Parcels 003 through 074; Book 075, Page 610, Parcels 001 through 026; and Book 075, Page 620, Parcels 001 through 028. Reference is hereby made to the Shasta County Assessor’s maps for a detailed description of the lines and dimensions of each lot and parcel of land within the District.

Part V
Assessment Roll: The assessment amount for each parcel is based on the parcel’s proportional special benefit as outlined in the method of apportionment and the initial Maximum Assessment Rates established in this Report. The Assessment Roll also provides the assessment amount for each parcel for the fiscal year 2024/2025 based on the method of apportionment and estimated expenses (budget) for fiscal year 2024/2025. 50 FY 2024/2025 Deer Creek Manor Landscape and Lighting District Page 4 of 16 I. PLANS AND SPECIFICATIONS
A. BENEFITING PROPERTIES WITHIN THE DISTRICT
The territory within the District totaling approximately thirty-six acres (36 acres), consists of all lots, parcels and subdivisions of land within the Deer Creek Manor subdivision that directly benefit from the improvements and services provided by the District. The district is comprised of 83 single-family residential properties within the Deer Creek Manor subdivision and various other properties that collectively represent the easements and public areas within the District.

The District is situated in the southern portion of the City of Shasta Lake generally located:
•
•
•
North of Trinity Street;
South of Pine Grove Avenue; and
West of Cascade Boulevard and Interstate
The parcels within the District at the time this District was formed were identified on the 5 Shasta County Assessor’s Secured Roll (as of July 18, 2007) and the Assessor’s Parcel Maps as follows:

Book 075, Page 150, Parcel 046;
Book 075, Page 560, Parcels 005 through 042; and
Book 075, Page 570, Parcels 001 through 051.

B. IMPROVEMENTS AUTHORIZED BY THE 1972 ACT
As generally defined by the Landscaping and Lighting Act of 1972 and applicable to this District, the improvements and associated assessments may include one or more of the following:
• The installation or planting of landscaping;
• The installation or construction of statuary, fountains, and other ornamental structures and facilities;
• The installation or construction of public lighting facilities including, but not limited to street lights and traffic signals;
• The installation or construction of any facilities which are appurtenant to any of the foregoing or which are necessary or convenient for the maintenance or servicing thereof;
• The installation of park/recreational improvements, including, but not limited to the following:
a. Land preparation, such as grading, leveling, cutting and filling, sod, landscaping, irrigation systems, sidewalks, and drainage. b. Lights, playground equipment, play courts, and public restrooms. c. The acquisition of land for park, recreational, or open-space purposes or any existing improvement otherwise authorized pursuant to this section. 51 FY 2024/2025 Deer Creek Manor Landscape and Lighting District Page 5 of 16 • The maintenance or servicing, of any of the foregoing including the furnishing of services and materials for the ordinary and usual maintenance, operation, and servicing of any improvement including but not limited to:
a. Repair, removal, or replacement of all or any part of any improvements; b. Grading, clearing, removal of debris, the installation or construction of curbs, gutters, walls, sidewalks, or paving, or water, irrigation, drainage, or electrical facilities;
c. Providing for the life, growth, health, and beauty of landscaping, including cultivation, irrigation, trimming, spraying, fertilizing, or treating for disease or injury;
d. The removal of trimmings, rubbish, debris, and other solid waste; e. The cleaning, sandblasting, and painting of walls and other improvements to remove or cover graffiti;
f. Electric current or energy, gas, or other illuminating agent for any public lighting facilities or for the lighting or operation of any other improvements; g. Water for the irrigation of any landscaping, the operation of any fountains, or the maintenance of any other improvements.
• Incidental expenses associated with the improvements including, but not limited to:
a. The cost of preparation of the report, including plans, specifications, estimates, diagram, and assessment;
b. The costs of printing, advertising, and the publishing, posting and mailing of notices;
c. Compensation payable to the County for collection of assessments; d. Compensation of any engineer or attorney employed to render services; • Any other expenses incidental to the construction, installation, or maintenance and servicing of the improvements;
• Costs associated with any elections held for the approval of a new or increased assessment.

C. DESCRIPTION OF IMPROVEMENTS
General Description of the Improvements
The purpose of this District is to ensure the ongoing maintenance, operation and servicing of local landscaping and street lighting improvements established or installed in connection with development of properties within the District. The improvements may consist of all or a portion of the public landscaped areas, street lighting and appurtenant facilities within and adjacent to the District. These improvements generally include, but are not limited to the materials, equipment, utilities, labor, contract services and incidental expenses necessary for the ongoing maintenance and operation of the landscaping and lighting improvements, amenities and appurtenant facilities within public properties, rights-of-way or easements including street lighting and various landscaped parkways, 52 FY 2024/2025 Deer Creek Manor Landscape and Lighting District Page 6 of 16 medians, slopes, open space areas, detention basins and related amenities including, but not limited to plantings, trees, monuments or other ornamental features, fencing, sidewalks and other facilities or landscapes constructed and installed as part of the development plans and agreements approved for the development of the lots and parcels within the District. The improvements maintained and funded entirely or partially through the District assessments are generally described as:
• Streetscape landscaping including street trees located on the perimeter of the development and interior streets that are within the public rights-of-way or easements and dedicated to the City for maintenance;
• Open space areas, slopes and landscaped drainage facilities established and/or constructed as part of developing properties within the District; • Public lighting facilities including internal and perimeter street lighting; safety lighting and/or ornamental lighting within landscaped improvement areas; • All appurtenant facilities, equipment, materials and utilities related to the aforementioned improvements; and
• Specifically not included as District improvements are those improvements located on private property, improvements and facilities that may be provided or maintained by an agency other than the City; improvements and facilities that may be provide by another assessment or tax levied by the City or any improvement provided and maintained by a Homeowner’s Association or similar entity.

Landscape Improvements
The landscape improvements for the District may include, but are not limited to turf, ground cover, shrubs and plants, trees, irrigation and drainage systems, ornamental lighting, masonry walls or other fencing, landscape improvements, monuments or other ornamental features and associated appurtenant facilities located within the landscape easements or public rights-of-way. Specifically the landscape improvement areas for this District are identified as:
• Landscape frontage on the south side of Pine Grove Avenue along the length of the District;
• Landscape areas of the entryway median and round-about on Jurak Way; • Landscape areas and decorative cobblestone concrete in 8 pop-out planters within the District;
• Isolated open space areas adjacent to lots 20, 21, 84 and 85; and • All appurtenant facilities, equipment, materials and utilities related to weed abatement, graffiti abatement, the trimming of trees and shrubs, and the aforementioned improvements.
53 FY 2024/2025 Deer Creek Manor Landscape and Lighting District Page 7 of 16 Public Lighting Improvements
The lighting improvements may include but are not limited to the cost of providing electrical energy and servicing of lighting fixtures, poles, meters, conduits, electrical cable and associated appurtenant facilities associated with:
• Public streetlights located on all public streets within and adjacent to the District including Pine Grove Avenue, Rissa Way, Jurak Way and Smith Avenue. (Estimated to be approximately 11 perimeter street lights and 12 internal street lights); and • Lighting facilities located within the landscaped areas that may include safety/security lights, and ornamental lights installed as part of the District’s landscape improvements and features.

Detailed maps and descriptions of the location and extent of the specific improvements maintained by the District are on file at the City of Shasta Lake and by reference are made part of this Report. These plans and specifications may be amended or modified from time to time to reflect future changes within the District or servicing of the improvements currently planned for this District. Those portions of the improvements that may be funded in whole or in part by other revenue sources as part of the approved development agreements, will not be included as part of the District assessments. The net annual cost to provide and maintain the improvements determined to be of special benefit shall be allocated to each property in proportion to the special benefits received from those various improvements.
54 FY 2024/2025 Deer Creek Manor Landscape and Lighting District Page 8 of 16 II. METHOD OF APPORTIONMENT
The 1972 Act permits the establishment of assessment districts by agencies for the purpose of providing certain public improvements, which include the construction, maintenance, and servicing of public lights, landscaping and appurtenant facilities. The 1972 Act further requires that the cost of these improvements be levied according to benefit rather than assessed value:
“The net amount assessed upon lands within an assessment district may be apportioned by any formula or method which fairly distributes the net amount among all assessable lots or parcels in proportion to the estimated benefits received by each such lot or parcel from the improvements.” The method of apportionment described in this Report for allocation of special benefit assessments utilizes commonly accepted engineering practices and have been established pursuant to the 1972 Act and the provisions of the California Constitution.

The formulas used for calculating assessments reflects the composition of parcels within the District and the improvements and services provided, to fairly apportion the costs based on the special benefits to each parcel.

A. BENEFIT ANALYSIS
Each of the improvements, the associated costs and assessments have been carefully reviewed, identified and allocated based on special benefit pursuant to the provisions of the California Constitution and 1972 Act. The landscaping and lighting improvements associated with this District and for which properties will be assessed have been identified as necessary, required and/or desired for the orderly development of the properties within the District to their full potential, consistent with the development plans and applicable portions of the City General Plan. As such, the ongoing operation, servicing and maintenance of these improvements would be necessary and required of individual property owners for the development of such properties and the ongoing operation, servicing and maintenance of these improvements would be the financial obligation of those properties. Therefore, the improvements and the annual costs of ensuring the maintenance and operation of the improvements are considered a distinct and special benefit to the properties developed within the District.

The construction and installation of these improvements are only necessary for development of the properties within the District. As such, these improvements were not required nor necessarily desired by any properties or developments outside the District boundary and any benefit derived by properties outside the District boundaries is considered incidental. Therefore, it has been determined that the ongoing maintenance, servicing and operation of the District improvements provide no measurable general benefit to properties outside the District or to the public at large, but clearly provide distinct and special benefits to properties within the District. 55 FY 2024/2025 Deer Creek Manor Landscape and Lighting District Page 9 of 16 B. ASSESSMENT METHODOLOGY
The method of apportionment established for this District and described herein, reflects the proportional special benefit each property receives from the improvements and services based on the actual or land use of that parcel as compared to other properties within the District. The special benefit received by each lot or parcel is equated to the overall land use of parcels within the District based on the parcel’s actual land use or proposed development.

All special benefit costs associated with the improvements shall be fairly distributed among the parcels based upon the benefit received by each parcel.

Additionally, in compliance with the California Constitution Article XIIID Section 4, each parcel’s assessment may not exceed the reasonable cost of the proportional special benefit conferred to that parcel. To identify and determine the special benefit received by each parcel and their proportionate share of the improvement costs it is necessary to consider the entire scope of the planned improvements as well as individual property development within the District. Upon review of the improvements it has been determined that each of the properties within the District receives special benefits from all the improvements funded by annual assessments and based on the overall planned development within the District a single zone of benefit is appropriate for the allocation of the assessments and proportional benefit.

The benefit formula used within the District reflects the composition of the parcels and the improvements and services provided, to fairly apportion the costs based on the special benefits to each assessable parcel. It has been previously determined that dedicated public easements, open space areas, public rights-of-ways, public greenbelts and parkways, utility rights-of-way, common areas, sliver parcels and bifurcated lots or any other property that cannot be developed, receive no special benefit from the improvements and are not assessed.

Equivalent Benefit Units
The method of apportionment established for most districts formed under the 1972 Act utilizes a weighted method of apportionment known as an Equivalent Benefit Unit (EBU) methodology (sometimes referred to as Equivalent Dwelling Units) that uses the singlefamily home site as the basic unit of assessment. A single-family home site equals one Equivalent Benefit Unit (EBU) and all other land uses are assigned a weighted EBU based on an assessment formula that equates various property characteristics to that of the single-family home site. This proportional weighting may be based on several factors that may include, but are not limited to: the type and status of development (land use), size of the property, location of the property, development plans or restrictions, vehicular trip generation, street frontage, population densities or other property related factors. For most districts the calculation of each parcel’s proportional special benefit can be reasonably determined by applying one or more of these factors.

While the Equivalent Benefit Unit method of apportioning special benefit is commonly used and applied to districts that have or may have a wide range of land use classifications (both residential and non-residential use) or have significant variations in the phasing of improvements and/or property development, this particular District involves
56 FY 2024/2025 Deer Creek Manor Landscape and Lighting District Page 10 of 16 only the development of single-family residential properties that will receive proportionately the same benefit from all the planned improvements. Therefore, each assessed parcel’s special benefits from the improvements are considered equal and each residential unit/parcel has been assigned one (1) EBU.

The following provides an overview of various land uses and their proportional special benefit as it applies or may apply to this District:

Single-Family Residential Units — This land use is defined as a fully subdivided residential home site with or without a structure. This land use classification shall be assessed at 1.0 EBU per lot or parcel.

Planned Residential Subdivision — This land use is defined as any property not fully subdivided, but has a specific number of residential lots or units approved for the parcel based on an approved tentative or final tract map or an approved development plan.

This land use classification shall be assessed at 1.0 EBU per planned single-family residential unit.

Exempt Parcels — This land use classification identifies parcels that receive little or no benefit from the improvements and are assigned 0.00 EBU. This land use classification may include, but is not limited to lots or parcels identified as:
• Public streets and other roadways (typically not assigned an APN by the County); • Public Easements including greenbelts, parkways, parks, dedicated open space areas or utility rights-of-ways or other public lands that are considered part of the District improvements or have similar characteristics; and
• Properties with restricted development potential such as common areas, sliver parcels and bifurcated lots.

Assessment Calculations
The benefit formula and assessment calculation applied to parcels within the District is based on the parcel’s special benefit received as compared to all other parcels benefiting from the improvements. The net annual cost of the maintenance, servicing and operation of the improvements and facilities is proportionately and equitably spread to all parcels that benefit from the District improvements utilizing the proportional special benefit allocation outlined previously.

The following formulas are used to calculate each parcel’s proportional benefit and assessment.

Balance to Levy =Levy Amount per Benefit Unit
Number of Benefit Units (EBU) (Assessment Rate)
Assessment Rate x Parcel’s Calculated EBU = Parcel’s Assessment Amount 57 FY 2024/2025 Deer Creek Manor Landscape and Lighting District Page 11 of 16 C. ASSESSMENT RANGE FORMULA
All budget items may be impacted by inflation in subsequent years. In an effort to minimize this impact on the District and ensure the long life of the improvements, an assessment range formula for inflation is included as part of the maximum assessment rate presented to the property owners within the District for approval. The formula, as described herein, provides for annual inflationary adjustment to the maximum assessment rate that may be imposed each year without requiring the extensive procedure and cost of balloting for normal operational cost increases. The purpose of establishing an assessment range formula is to provide for reasonable increases and inflationary adjustments to the assessment amounts without requiring costly noticing, mailing, and ballot procedures, which would further increase the assessments. The annual inflationary formula (assessment range formula) described herein is part of the assessment approved by the property owners and should provide for modest increases to the assessment revenues to meet anticipated cost increases in labor and materials that result from normal inflationary factors.

Commencing each fiscal year thereafter, the maximum assessment rate established in the previous fiscal year shall be adjusted by the greater of: (1) Three percent (3.0%); or (2) The percentage increase of the Local Consumer Price Index (CPI). The Consumer Price Index used for the inflationary adjustment shall be for the San Francisco-Oakland-San Jose, since renamed to San Francisco-Oakland-Hayward Area for All Urban Consumers, as established by the U.S. Bureau of Labor Statistics.

Each fiscal year the City shall identify the annual percentage change in the CPI, using the difference over a 12-month period between the current year and of the previous year. This annual percentage change in the CPI is generally reflected by the percentage change for the preceding calendar year (January to December), but a similar time period may be used if more current data is available. This percentage difference shall then establish the range of increase to the maximum assessment rates allowed based on CPI. If the percentage change in the CPI is less than three percent (3%), the maximum assessment rates shall be increased by three percent. Should the Bureau of Labor Statistics revise such index or discontinue the preparation of such index, the City shall use the revised index or comparable system as approved by the City Council for determining fluctuations in the cost of living.

The adjusted maximum assessments are calculated each fiscal year independent of the annual budget and annual assessments. Although the adjusted maximum assessments will increase each year, the budget and annual assessment rates adopted for a fiscal year may not change from the previous fiscal year. If the budget and the corresponding District assessments for that fiscal year do not require an increase or the increase is less than the allowable adjusted maximum assessment rates, then the assessments required to meet the expenditures shall be applied. If the budget and the corresponding assessments for a given fiscal year require an increase greater than the adjusted maximum assessment rates, then the assessments are considered increased assessments and mailed notices and approval of the property owners through a property owner ballot proceeding would be required before the assessment increases may be imposed.
58 FY 2024/2025 Deer Creek Manor Landscape and Lighting District Page 12 of 16 III. DISTRICT BUDGET
The following provides the budget establishing the maximum annual assessment rates for the District for fiscal year 2024/2025. The budget includes an estimate of anticipated expenditures and revenues associated with the maintenance and operation of the improvements. The budget and assessment for fiscal year 2024/2025 reflect the anticipated costs and expenses to provide the improvements for all twelve (12) months of the fiscal year.

Starting Fiscal Year 2015/2016, the City began maintenance, operation and servicing of the local landscaping and street lighting improvements. The City has decided to Levy the parcels within the District at $255.00 for Fiscal Year 2024/2025. This will be the ninth levy since the creation of the District in 2007/2008. 59 FY 2024/2025 Deer Creek Manor Landscape and Lighting District Page 13 of 16 City of Shasta Lake
Fiscal Year 2024/2025 Budget

DEER CREEK MANOR LANDSCAPING AND LIGHTING DISTRICT
ANNUAL MAINTENANCE (DIRECT COSTS) District Totals
Landscape and Lighting Maintenance Expenses
Turf, Landscape and Facility Maintenance $8,000
Median Maintenance 400
Open Space Maintenance 400
Tree Maintenance 500
Landscape Utilities (Water/Electricity) 6,500
Streetlight Maintenance and Energy 875
Miscellaneous Materials and Equipment 380
Total Landscaping and Lighting Maintenance $17,055

REPLACEMENT/REHABILITATION (CIP)
Collection for Future Rehabilitation/Replacements
Turf, Landscape and Facility Rehabilitation/Replacement $500 Median Rehabilitation/Replacement 100
Open Space Rehabilitation/Replacement 100
Tree Rehabilitation/Replacement 1,500
Total Collection for Capital Improvement/Rehabilitation Fund $2,200

ADMINISTRATION
Professional Fees for Admin $500
City Annual Admin 250
County Administration Fee 58
Miscellaneous Administrative Expenses 150
Total Annual Administration Costs $958
Total Costs and Expenses $20,213
Levy Adjustments
Reserve Fund / CIP Collection $952
Rounding 0
BALANCE TO LEVY $21,165

DISTRICT STATISTICS
Total Parcels in District 88
Parcels Levied 83
Total EBU 83.00
Prior Year Levy per EBU $255.00
Proposed Assessment per EBU $255.00
Annual Inflator (greater of CPI or 3%) 3.00%
Maximum Assessment Rate per EBU $565.4482

FUND BALANCE INFORMATION
Beginning Fund Balance (Reserves and CIP) $39,828
Reserve Fund/CIP Collection 952
Estimated Ending Fund Balance (Reserves and CIP) $40,780 Note: Totals may not foot due to rounding.
60 FY 2024/2025 Deer Creek Manor Landscape and Lighting District Page 14 of 16 IV. DISTRICT DIAGRAM
The parcels within this District consist of lots, parcels and subdivisions of land located in the planned residential development known as Deer Creek Manor. The District covers approximately thirty-six acres (36 acres) in the City of Shasta Lake.

The following District Diagram is based on the Shasta County Assessor’s Maps and the Shasta County Assessor’s information and identifies all the parcels of land within the District, as the same existed at the time this Report was prepared. The combination of this map and the Assessment Roll contained in this Report constitute the District Assessment Diagram.
61 FY 2024/2025 Deer Creek Manor Landscape and Lighting District Page 15 of 16 62 FY 2024/2025 Deer Creek Manor Landscape and Lighting District Page 16 of 16 V. ASSESSMENT ROLL
Parcel identification for each lot or parcel within the District is based on the Assessment Diagram presented herein and is based on available parcel maps and property data from the Shasta County Assessor’s Office at the time the Engineer’s Report was prepared. A listing of the lots and parcels assessed within this District along with the assessment amounts is provided herein.

Non-assessable lots or parcels may include, but are not limited to, public streets and other roadways (typically not assigned an APN by the County); dedicated public easements, open space areas, rights-of-way, common areas; bifurcated lots, and any other property that cannot be developed or has little or no value. These types of parcels are considered to receive little or no benefit from the improvements and are therefore exempted from assessment.

If any parcel submitted for collection is identified by the County Auditor-Controller to be an invalid parcel number for the fiscal year, a corrected parcel number and/or new parcel numbers will be identified and resubmitted to the County AuditorController. The assessment amount levied and collected for the resubmitted parcel or parcels shall be based on the method of apportionment and assessment rate described in this Report as approved by the City Council. Therefore, if a single parcel is subdivided to multiple parcels, the assessment amount applied to each of the new parcels shall be recalculated and applied according to the approved method of apportionment and assessment rate rather than a proportionate share of the original assessment.

The District is going to assess assessable parcels during the Fiscal Year 2024/2025.

The following is a list of parcels, the assessment and the maximum assessment amounts as determined by the assessment rates and method of apportionment described herein.
63 Assessor's Parcel Number Land Use Zone Benefit Units Lot Max Tax Charge 075-150-046-000 GOV A 0.00 1 $0.00 $0.00
075-570-003-000 SFR A 1.00 2 565.45 255.00
075-570-004-000 SFR A 1.00 3 565.45 255.00
075-570-005-000 SFR A 1.00 4 565.45 255.00
075-570-006-000 SFR A 1.00 5 565.45 255.00
075-570-007-000 SFR A 1.00 6 565.45 255.00
075-570-008-000 SFR A 1.00 7 565.45 255.00
075-570-009-000 SFR A 1.00 8 565.45 255.00
075-570-010-000 SFR B 1.00 9 565.45 255.00
075-570-011-000 SFV B 1.00 10 565.45 255.00
075-570-012-000 SFR B 1.00 11 565.45 255.00
075-570-013-000 SFR B 1.00 12 565.45 255.00
075-570-016-000 SFR A 1.00 13 565.45 255.00
075-570-019-000 SFR A 1.00 14 565.45 255.00
075-570-020-000 SFR A 1.00 15 565.45 255.00
075-570-021-000 SFR A 1.00 16 565.45 255.00
075-570-022-000 SFR A 1.00 17 565.45 255.00
075-570-023-000 SFR A 1.00 18 565.45 255.00
075-570-024-000 SFR A 1.00 19 565.45 255.00
075-570-025-000 SFR A 1.00 20 565.45 255.00
075-570-026-000 SFR A 1.00 21 565.45 255.00
075-570-027-000 SFR A 1.00 22 565.45 255.00
075-570-028-000 SFR A 1.00 23 565.45 255.00
075-570-029-000 SFR A 1.00 24 565.45 255.00
075-570-030-000 SFR A 1.00 25 565.45 255.00
075-570-031-000 SFR A 1.00 26 565.45 255.00
075-570-032-000 SFR A 1.00 27 565.45 255.00
075-570-033-000 SFR A 1.00 28 565.45 255.00
075-570-034-000 SFR A 1.00 29 565.45 255.00
075-570-035-000 SFR A 1.00 30 565.45 255.00
075-570-036-000 SFR A 1.00 31 565.45 255.00
075-570-037-000 SFR A 1.00 32 565.45 255.00
075-570-038-000 SFR A 1.00 33 565.45 255.00
075-570-039-000 SFR A 1.00 34 565.45 255.00
075-570-040-000 SFR A 1.00 35 565.45 255.00
075-570-041-000 SFR A 1.00 36 565.45 255.00
075-570-042-000 SFR A 1.00 37 565.45 255.00
075-570-047-000 GOV A 0.0 38 0.00 0.00
075-570-048-000 GOV A 0.0 39 0.00 0.00
075-570-049-000 GOV A 0.0 40 0.00 0.00
075-570-050-000 GOV A 0.0 41 0.00 0.00
075-570-052-000 SFR A 1.00 42 565.45 255.00
075-570-054-000 SFR A 1.00 43 565.45 255.00
075-570-057-000 SFR A 1.00 44 565.45 255.00
075-570-063-000 SFR A 1.00 45 565.45 255.00
075-570-064-000 SFR A 1.00 46 565.45 255.00
075-570-065-000 SFR A 1.00 47 565.45 255.00
075-570-070-000 SFR A 1.00 48 565.45 255.00
075-570-072-000 SFR A 1.00 49 565.45 255.00
075-570-073-000 SFR A 1.00 50 565.45 255.00
075-570-074-000 SFR A 1.00 51 565.45 255.00
075-610-001-000 SFR A 1.00 52 565.45 255.00
075-610-002-000 SFR A 1.00 53 565.45 255.00
075-610-003-000 SFR A 1.00 54 565.45 255.00
075-610-004-000 SFR A 1.00 55 565.45 255.00
075-610-005-000 SFR A 1.00 56 565.45 255.00
075-610-006-000 SFR A 1.00 57 565.45 255.00
075-610-007-000 SFR A 1.00 58 565.45 255.00
075-610-008-000 SFR A 1.00 59 565.45 255.00
075-610-009-000 SFR A 1.00 60 565.45 255.00
075-610-010-000 SFR A 1.00 61 565.45 255.00
075-610-011-000 SFR A 1.00 62 565.45 255.00
075-610-012-000 SFR A 1.00 63 565.45 255.00
075-610-013-000 SFR A 1.00 64 565.45 255.00
City of Shasta Lake
Deer Creek Landscaping and Lighting District
Preliminary Assessment Roll
Fiscal Year 2024/2025
Deer Creek Manor DMD Fiscal Year 2024/2025 Preliminary Assessment Page 1 of 2 64 Assessor's Parcel Number Land Use Zone Benefit Units Lot Max Tax Charge City of Shasta Lake
Deer Creek Landscaping and Lighting District
Preliminary Assessment Roll
Fiscal Year 2024/2025
075-610-014-000 SFR A 1.00 65 565.45 255.00
075-610-015-000 SFR A 1.00 66 565.45 255.00
075-610-016-000 SFR A 1.00 67 565.45 255.00
075-610-017-000 SFV A 1.00 68 565.45 255.00
075-610-026-000 SFV A 1.00 69 565.45 255.00
075-620-001-000 SFR A 1.00 70 565.45 255.00
075-620-002-000 SFR A 1.00 71 565.45 255.00
075-620-003-000 SFR A 1.00 72 565.45 255.00
075-620-004-000 SFR A 1.00 73 565.45 255.00
075-620-005-000 SFV A 1.00 74 565.45 255.00
075-620-006-000 SFR A 1.00 75 565.45 255.00
075-620-007-000 SFR A 1.00 76 565.45 255.00
075-620-008-000 SFR A 1.00 77 565.45 255.00
075-620-009-000 SFR A 1.00 78 565.45 255.00
075-620-010-000 SFR A 1.00 79 565.45 255.00
075-620-011-000 SFR A 1.00 80 565.45 255.00
075-620-012-000 SFR A 1.00 81 565.45 255.00
075-620-013-000 SFR A 1.00 82 565.45 255.00
075-620-014-000 SFV A 1.00 83 565.45 255.00
075-620-015-000 SFR A 1.00 84 565.45 255.00
075-620-016-000 SFR A 1.00 85 565.45 255.00
075-620-017-000 SFR A 1.00 86 565.45 255.00
075-620-026-000 SFR A 1.00 87 565.45 255.00
075-620-028-000 SFR A 1.00 88 565.45 255.00
Total: 83.00 $46,932.20 $21,165.00
Parcel Count: 88
Deer Creek Manor DMD Fiscal Year 2024/2025 Preliminary Assessment Page 2 of 2 65 RESOLUTION NO. 2024-_____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SHASTA LAKE, COUNTY OF SHASTA, STATE OF CALIFORNIA APPROVING THE ENGINEER’S

REPORT FOR DEER CREEK MANOR DRAINAGE MAINTENANCE DISTRICT AND

THE LEVY AND COLLECTION OF ASSESSMENTS WITHIN SUCH DISTRICT FOR FISCAL YEAR 2024/2025 AND CONFIRMING DIAGRAMS AND ASSESSMENTS PURSUANT TO THE BENEFIT ASSESSMENT ACT OF 1982
WHEREAS, the City Council by its Resolution No. CC08-50 initiated proceedings, and by its Resolution No. CC08-52 declared its intention to levy annual assessments for and to amend the boundaries of the Deer Creek Manor Drainage Maintenance District (hereinafter referred to as the "District"), and to levy and collect assessments against lots and parcels of land within such District pursuant to the provisions of the Benefit Assessment Act of 1982, being chapter 6.4, the California Government Code, commencing with Section 54703 (hereinafter referred to as the “1982 Act”), to pay for the maintenance and servicing related thereto, and WHEREAS, the Engineer selected by the City Council has prepared and filed with the City Clerk, and the City Clerk has presented to the City Council, a report in connection with the annual levy of assessments against lots and parcels of land within the District, and the City Council did by previous resolution approve such report (hereinafter referred to as the “Engineer’s Report”); and
WHEREAS, the City Council desires to levy and collect assessments against lots and parcels of land within the District for the fiscal year commencing July 1, 2024 and ending June 30, 2025, to pay for the costs and expenses of operating, maintaining and servicing turf, ground cover, shrubs, trees, irrigation, lighting systems, entry monuments, walls, drainage systems, park facilities, and associated appurtenances, located in public places within the boundaries of the District; and
WHEREAS, a mailed ballot election in connection with the levy of assessments within the District was not required in accordance with the Act.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SHASTA LAKE DOES HEREBY FIND, DETERMINE, RESOLVE AND ORDER AS FOLLOWS:

Section 1. Following notice duly given, the City Council has held a full and fair public hearing regarding its Resolution No. _, the Engineer's Report prepared in connection with the District and the levy and collection of assessments, and considered all oral and written statements, protests and communications made or filed by interested persons.

Section 2. The City Council hereby finds that a majority protest does not exist as defined in Section 4(e) of Article XIII D of the California Constitution with respect to the District. All oral and written protests and objections to the annual levy of assessments for the District and the proposed collection of assessments are hereby overruled by the City Council. 66 Section 3. Based upon its review of the Engineer's Report, a copy of which has been presented to the City Council and which has been filed with the City Clerk, and other reports and information, the City Council hereby finds and determines with respect to the District included in the Engineer’s Report, that:
(i) the land within the District will be specially benefited by the operation, maintenance and servicing of the street and drainage improvements
(ii) the District includes all lands so specially benefited; and (iii) the net amount to be assessed upon the lots and parcels within the District in accordance with the assessment for the fiscal year commencing July 1, 2024 and ending June 30, 2025 is apportioned by a formula and method which fairly distributes the net amount among all assessable lots or parcels in proportion to the estimated special benefits to be received by each lot or parcel from the improvements; and (iv) only special benefits are assessed, and no assessment is imposed on any parcel, which exceeds the reasonable cost of the proportional special benefit conferred on that parcel.

Section 4. The proposed improvements may be briefly described as follows: the operation, maintenance and servicing of the drainage improvements and appurtenant facilities that are necessary and essential requirements for the orderly development of properties within the District to their full potential, consistent with the conditions for development of the properties, and protection of downstream properties which could be negatively affected by increased storm runoff from the development of these properties. These improvements generally include but are not limited to the grading of access perimeter roads; repair of erosion to access roads; debris clearance; dust control through the application of soil stabilization agents; weed abatement; mosquito and vector control; water treatment and monitoring; maintenance, cleaning and minor repairs to storm drain inlets, outlets, pumps, filters, pipes and other drainage related equipment. Detailed maps and descriptions of the location and extent of the specific improvements to be maintained by the District are on file in the Office of Public Works of the City of Shasta Lake and by reference these plans and specifications are made part of this Resolution.

Section 6. The assessments are in compliance with the provisions of the Act, and the City Council has complied with all laws pertaining to the levy of annual assessments pursuant chapter 6.4, the California Government Code.
67 Section 7. The assessments are levied for the purpose of paying the costs and expenses of the improvements described in Section 4, above, for fiscal year 2024/2025.

Section 8. The City Treasurer shall deposit all money representing assessments collected for the Districts to the credit of a special fund known as "Improvement Fund, City of Shasta Lake Deer Creek Manor Drainage Maintenance District” and such money shall be expended only for the operation, maintenance and servicing of the street and drainage improvements and appurtenant facilities as described in Section 4 above.

Section 9. The adoption of this resolution constitutes the levy of assessments for the fiscal year commencing July 1, 2024 and ending June 30, 2025.

Section 10. A certified copy of the diagrams and assessments shall be filed in the office of the City Clerk and shall be open for public inspection. 68 ******
PASSED, APPROVED, AND ADOPTED THIS _______ day of _________________, 2024.

STATE OF CALIFORNIA )
COUNTY OF SHASTA ) ss

CITY OF SHASTA LAKE )
I, ______________________________________, City Clerk of the City of Shasta Lake, County of Shasta, State of California do hereby certify that the foregoing Resolution No. _________ was adopted by the City Council of said City of Shasta Lake at a regular meeting of said council held on the _______ day of _________________, 2024 by the following vote:

AYES:

NOES:

ABSENT:

ABSTAINED:

JANICE POWELL, MAYOR

CITY OF SHASTA LAKE

STATE OF CALIFORNIA
ATTEST:

CHARITY TATLOW, CITY CLERK

CITY OF SHASTA LAKE

STATE OF CALIFORNIA
69 CLERK’S CERTIFICATION TO COUNTY AUDITOR

DEER CREEK MANOR DRAINAGAE MAINTENANCE DISTRICT
FOR FISCAL YEAR 2024/2025
(Pursuant to Benefit Act of 1982)
TO THE COUNTY AUDITOR OF THE COUNTY OF SHASTA:

I, Charity Tatlow, hereby certify that the attached document is a true copy of that certain Engineer’s Report, including assessment and assessment diagram, for Deer Creek Manor Drainage Maintenance District, City of Shasta Lake, confirmed by the City Council of the City of Shasta Lake on the _____ day of _____, 2024, by its Resolution No. 2024-_____.

This document is certified, and is filed with you, pursuant to Section 22641 of the Streets and Highways Code.

DATED: ____________
______

CHARITY TATLOW, CITY CLERK

CITY OF SHASTA LAKE

STATE OF CALIFORNIA
70 27368 Via Industria
Suite 200
Temecula, CA 92590
T 951.587.3500 | 800.755.6864
F 951.587.3510
www.willdan.com/financial

City of Shasta Lake

Deer Creek Manor
Drainage Maintenance District

2024/2025 ENGINEER’S ANNUAL LEVY REPORT
Intent Meeting: May 7, 2024
Public Hearing: May 21, 2024

7171
AFFIDAVIT FOR THE ENGINEER’S REPORT

DEER CREEK MANOR DRAINAGE MAINTENANCE DISTRICT
Establishment of Annual Assessments for the:

City of Shasta Lake
County of Shasta, State of California
This Final Engineer’s Report (the “Report”) and the enclosed District Diagram showing the exterior boundaries of the territory formed as the Deer Creek Manor Drainage Maintenance District (hereinafter referred to as “District”); and each lot, parcel, and subdivision of land within said territory as the same existed at the time of the passage of the Resolution of Intention. Reference is hereby made to the Shasta County Assessor’s maps for a detailed description of the lines and dimensions of each lot, parcel, and subdivision of land within said territory and said District. The enclosed Report that includes a description of the plans and specifications, method of apportionment, budgets and special benefit assessments associated therewith. The undersigned respectfully submits the enclosed Report as directed by the City Council.

Dated this day of , 2024.

Willdan Financial
Assessment Engineer
On Behalf of the City of Shasta Lake
By:

Chonney Gano, Project Manager
District Administration Services
By:

Tyrone Peters
PE # C 81888
72 TABLE OF CONTENTS
INTRODUCTION ..................................................................................................... 1 I. PLANS AND SPECIFICATIONS ....................................................................... 4 A. BENEFITING PROPERTIES WITHIN THE DISTRICT ............................. 4 B. FUNDING AUTHORIZED BY THE 1982 ACT ........................................... 4 C. DESCRIPTION OF IMPROVEMENTS ...................................................... 5 Drainage Maintenance .................................................................................................... 5 II. METHOD OF APPORTIONMENT ................................................................... 7 A. BENEFIT ANALYSIS ................................................................................ 7 B. ASSESSMENT METHODOLOGY ............................................................ 8 Equivalent Benefit Units ................................................................................................. 8 Assessment Calculations............................................................................................... 9 C. ASSESSMENT RANGE FORMULA ........................................................ 10 III. DISTRICT BUDGET ....................................................................................... 11 IV. DISTRICT DIAGRAM ..................................................................................... 13 V. ASSESSMENT ROLL .................................................................................... 15 7373
FY 2024/2025 Deer Creek Manor Drainage Maintenance District Page 1 of 15

INTRODUCTION
Pursuant to the provisions of the Benefit Assessment Act of 1982, being Chapter 6.4 of the California Government Code, commencing with Section 54703 (hereafter referred to as the “1982 Act”), and in compliance with the substantive and procedural requirements of the California State Constitution Article XIIID (hereafter referred to as the “California Constitution”), the City Council of the City of Shasta Lake, County of Shasta, State of California (hereafter referred to as the “City”), formed and levied special benefit assessments for the district designated as:

City of Shasta Lake
Deer Creek Manor Drainage Maintenance District
(hereafter referred to as the “District”), which includes all lots and parcels of land within the residential subdivisions known as Deer Creek Manor that have been determined to receive special benefits from the improvements and facilities installed and constructed in conjunction with the development of such residential properties within the City limits of Shasta Lake. This Engineer’s Report (hereafter referred to as the “Report”) has been prepared as required pursuant to Article 4, Section 54716 of the 1982 Act.

The City Council formed the District to levy and collect annual assessments for Shasta County (the “County”) tax rolls to provide ongoing funding for the costs and expenses required to service and maintain the drainage (storm drain) improvements and related infrastructure that have been constructed in association with the development of properties within the District. The improvements, maintenance and services provided by the District, and the assessments described herein, are made pursuant to the 1982 Act and the substantive and procedural provisions of the California Constitution.

This Report describes the District, the improvements, and the assessments levied against properties in connection with the special benefits that the properties will receive from the maintenance and servicing of the District improvements and facilities commencing in Fiscal Year 2024/2025. The assessments described herein will provide a funding source (annual assessments) for the continued operation, maintenance and servicing of the drainage improvements, and related infrastructure (facilities).

The word “parcel,” for the purposes of this Report, refers to an individual property assigned its own Assessor’s Parcel Number (APN) by the County Assessor’s Office. The County Auditor-Controller uses Assessor’s Parcel Numbers and specific Fund Numbers to identify properties assessed on the tax roll for special benefit assessments.

Each subsequent fiscal year, a Report shall be prepared and presented to the City Council describing any changes to the services, the annual budget and assessments for that fiscal year, and the City Council shall hold a noticed public hearing regarding these matters prior to approving and ordering the levy of assessments. If the annual budget for the District requires an assessment that exceeds the maximum assessment described herein (as approved by the property owners at the time of the District formation), the new or increased assessment must be confirmed through another property owner protest ballot proceeding before such an assessment may be imposed.
7474
FY 2024/2025 Deer Creek Manor Drainage Maintenance District Page 2 of 15

This Report consists of five (5) parts:

Part I
Plans and Specifications: A general description of the District, the improvements, and authorized services for parcels within the District will be assessed is provided in this section of the Report. The specific drainage plans and associated facility specifications prepared in connection with the development of properties within the Deer Creek Manor subdivision (also known as the “Drainage Plans”) are on file in the offices of the City of Shasta Lake, and by reference these plans and specifications are made part of this Report. Based on these improvement and subdivision plans, it has been determined that the District will establish two (2) benefit zones. Four (4) parcels within the Deer Creek Manor subdivision shall not be a part of the District. These four parcels are accessed from Buckingham Drive and it has been determined that the development of these properties do not require the construction of the improvements associated with this District and therefore receive no special benefit from the drainage facilities provided and maintained by the District.

Part II
Method of Apportionment: A discussion of benefits the improvements and services provide to properties within the District and the method of calculating each property’s proportional special benefit and assessment. This section also identifies and outlines an Assessment Range Formula (Annual Inflation Adjustment) that provides for an annual adjustment to the maximum assessment rate that establishes limits on future assessments, but also provides for reasonable cost adjustments due to inflation without the added expense of additional property owner protest ballot proceedings.

Part III
District Budget: The annual costs to operate, maintain and service the drainage improvements installed and constructed to support the development of properties within the District. This budget includes direct maintenance costs and incidental expenses including, but not limited to, administration expenses and the collection of appropriate fund balances to establish the initial Maximum Assessment Rates approved by the property owners of record. The special benefit assessments are based on an estimate of the overall operation, maintenance and servicing costs minus any costs that are not assessed as special benefit. The assessments for each subsequent year shall be based on the estimated net annual cost for the City to operate, maintain and service the improvements for that fiscal year including the collection of funds in installments for periodic or long-term maintenance activities. The Maximum Assessment Rates (Rates per Equivalent Benefit Unit) identified in the budgets of this Report establish the Maximum Assessment Rates for the District in Fiscal Year 2024/2025 and shall be adjusted annually by the Assessment Range Formula described in the method of apportionment.

the Shasta County Assessor's Parcel Maps as they existed at the time this Report was prepared and shall include all subsequent subdivisions, lot line adjustments or parcel changes therein. Said parcels of land are consistent with and identified by the following Shasta County Assessor's Parcel Maps: Book 075, Page 150, Parcel 046; Book 075,

Page 570 ends

Book 075, Page 620, Parcels 001 through 028 and reference is hereby made to the Shasta County Assessor’s maps for a detailed description of the lines and dimensions of each lot and parcel of land within the District.

I. PLANS AND SPECIFICATIONS
A. BENEFITING PROPERTIES WITHIN THE DISTRICT
The territory within the District, totaling approximately thirty-six acres (36 acres), consists of all lots, parcels and subdivisions of land within the Deer Creek Manor subdivision that directly benefit from the improvements and services provided by the District. The District is comprised of 83 of the 88 single-family residential properties within the Deer Creek Manor subdivision and various other properties that collectively represent the easements and public areas within the District.

The District is situated in the southern portion of the City of Shasta Lake generally located:
 North of Trinity Street;
 South of Pine Grove Avenue; and
 West of Cascade Boulevard and Interstate 5
The parcels within the District at the time this District was formed were identified on the Shasta County Assessor’s Secured Roll (as of July 18, 2007) and the Assessor’s Parcel Maps as follows:

Book 075, Page 150, Parcel 046,
Book 075, Page 560, Parcels 005 through 042; and
Book 075, Page 570, Parcels 001 through 051,
B. FUNDING AUTHORIZED BY THE 1982 ACT
As generally defined by the Benefit Assessment Act of 1982 and applicable to this District, the City imposed a special benefit assessment to finance the maintenance and operation costs of the following services:
1) Drainage and Flood Control
In addition to imposing a benefit assessment for the annual maintenance and operation of the District improvements, the City may authorize an assessment or utilize existing assessment revenues to finance the installation, construction or replacement of drainage and flood control facilities. While such activities are permitted under the 1982 Act and may be applicable to this District, the funds necessary to perform such services or activities are generally greater than can be reasonably collected in a single year’s levy of assessments. Therefore, many of the services and activities associated with this District will be collected in installments over several years and held in a reserve fund until such time the services or activities are deemed necessary by the City. However, it should be noted that some of the funds collected in annual installments may not be fully utilized or may be insufficient to cover the full cost of such projects, but should be sufficient to cover the cost of normal repairs that can reasonably be anticipated as a result of typical weather, use, water flow and erosion over a twenty to thirty year period.

While the assessments for the District have been established to fund normal and anticipated maintenance needs for the improvements, major rehabilitation projects or reconstruction of the improvements resulting from unforeseen damages, caused by 7777
FY 2024/2025 Deer Creek Manor Drainage Maintenance District Page 5 of 15

natural disasters such as earthquakes or floods, are not included in the assessments.

The extent and cost of such activities are not easily predicted and it would not be reasonable or appropriate to collect and hold such significant fund in reserves for such projects.

C. DESCRIPTION OF IMPROVEMENTS
The purpose of this District is to fund the activities necessary to operate, maintain and service the drainage improvements constructed in connection with the development of properties within the residential subdivision known as Deer Creek Manor. The maintenance, operation and servicing of these improvements may include, but are not limited to, all materials, equipment, labor, and incidental expenses deemed necessary to keep the drainage improvements in satisfactory condition. The maintenance of the improvements and related activities shall be funded entirely through the District assessments. The District services are generally described as:

Drainage Maintenance
Drainage maintenance may include, but is not limited to: grading of access perimeter roads associated with the drainage facilities; repair of erosion to such roads; debris clearance; dust control through the application of soil stabilization agents; weed abatement; mosquito and vector control; water treatment and monitoring; maintenance, cleaning and minor repairs to storm drain inlets, outlets, pumps, filters, pipes and other drainage related equipment. The annual assessments for this District are intended to support the drainage facilities and the maintenance program that will adequately regulate and control storm water runoff resulting from and associated with the development of properties within the District. This maintenance program may include but is not limited to:
inspection and documentation of the system; cleaning, servicing or repair of the facilities and equipment; and the partial removal, replacement or rehabilitation of equipment and facilities. Generally, the drainage improvements for this District include, but are not limited to:
 Approximately 37,370 square feet of natural vegetation drainage basin area within the District;
 Approximately 5,675 square feet of landscaped drainage basin area within the District;  Approximately 17,215 square feet of landscaped channel ways within the District;  Approximately thirty (30) inlets, outlets and manholes located within the District;  Approximately 2,010 square feet of block retaining walls located within the District;  Approximately 4,592 square feet of storm drain fencing within the District;  Approximately 1,200 square feet of asphalt access/service roads within the District;  Approximately 3,215 linear feet of storm drain pipe ranging from 18 inches to 42 inches in diameter;
 Approximately 835 linear feet of flood control pipes associated with the French drain / Drainage System within the District;
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FY 2024/2025 Deer Creek Manor Drainage Maintenance District Page 6 of 15

The Public Works Department shall authorize and schedule all operational activities and maintenance of the drainage and storm water pollution treatment infrastructure, facilities and services that may include, but are not limited to:
 Cleaning of storm drain inlets, catch basins, manholes and pipes as needed;  Stencil maintenance and documentation of facilities as required by Federal, State and County regulations;
 Cleaning and landscape maintenance of the drainage basin, bio-filter areas and channel ways as needed;
 Debris removal and pest control in and around the drainage facilities as needed;  Minor repairs and maintenance of the storm drain inlets, catch basins and outlets as needed;
 Street sweeping services necessary to control debris and water flow for the drainage system; and,
 All operational costs related to the National Pollutant Discharge Elimination System (“NPDES”) compliance requirements.

A portion of the services described above might not be performed on an annual basis but rather as periodic maintenance or due to extraordinary events. The funds necessary for these activities shall be collected as part of the annual assessments and accumulated in a special fund of the District (Reserve Fund). The monies accumulated for these activities shall be spent as needed to perform the services deemed necessary by the City. This process of collecting assessment revenues for the Reserve Fund shall continue until such time the District is dissolved, or the City determines that such additional funding procedures require modification.

While all parcels within the District equally benefit from the maintenance and services associated with the drainage improvements as detailed in the preceding sections, the Regional Water Quality Control Board has required the monitoring and treatment of the water run-off emanating from four (4) parcels within the District, identified as lot numbers 9 through 12 of the Deer Creek Manor subdivision, and further identified as the County Assessor Parcel Numbers 075-570-010, 075-570-011, 075-570-012 and 075-570-013 (hereafter referred to as “Lots 9 through 12”). While the need for this water treatment and monitoring system (known as the “Drainage System”) is required to develop these four lots, this water issue directly affects the overall drainage system within the District and is clearly necessary for the overall development of properties within the District. Without the installation, implementation and ongoing servicing, maintenance and monitoring of this specialized water treatment system, these four residential lots directly affected would not otherwise be developed and the remaining properties would still be required to address the issue and would therefore be negatively impacted.

Pursuant to an agreement between the developer and the City, the developer shall be responsible for all costs and expenses associated with the maintenance and servicing of the Drainage System for the first two fiscal years, commencing with the year in which said improvements are installed and officially accepted by the City, and by reference, said agreement is incorporated herein and made part of this Report. 7979
FY 2024/2025 Deer Creek Manor Drainage Maintenance District Page 7 of 15 II. METHOD OF APPORTIONMENT
The 1982 Act permits the establishment of assessment districts by agencies for the purpose of providing for the maintenance, operation and servicing of drainage and flood control improvements and appurtenant facilities. The 1982 Act further requires that the cost of these improvements be levied according to benefit rather than assessed value:
“The amount of the assessment imposed on any parcel of property shall be related to the benefit to the parcel which will be derived from the provision of the service.”
Furthermore:
“The annual aggregate amount of the assessment shall not exceed the estimated annual cost of providing the service, except that the legislative body may, by resolution, determine that the estimated cost of work authorized is greater than can be conveniently raised from a single annual assessment and order that the estimated cost shall be raised by an assessment levied and collected in installments. The revenue derived from the assessment shall not be used to pay the cost of any service other than the service for which the assessment was levied.”
The method of apportionment described in this Report for allocation of special benefit assessments utilizes commonly accepted engineering practices and is in compliance with the provisions of the 1982 Act and the California Constitution. The formulas used for calculating assessments reflects the composition of parcels within the District and the improvements and services provided, to fairly apportion the costs based on the special benefits to each parcel.

A. BENEFIT ANALYSIS
Each of the services, and the associated costs and assessments have been carefully reviewed, identified and allocated based on special benefit pursuant to the provisions of the 1982 Act and the California Constitution. The drainage improvements associated with this District are necessary and essential requirements for the orderly development of properties within the District to their full potential, consistent with the conditions for development of the properties, and protection of downstream properties which could be negatively affected by increased storm runoff from the development of these properties. As such, the ongoing operation, servicing and maintenance of these improvements are considered the direct financial obligation of the property owners within the District. Since the parcels assessed are directly served by the drainage improvements, each parcel has a direct investment in the proper maintenance of the various improvements that is over and above any general benefits that may be conferred by such improvements and services.

outside the District or to the public at large, but clearly provide distinct and special benefits to properties within the District.

B. ASSESSMENT METHODOLOGY
All costs and expenses associated with the District’s improvements and services shall be fairly distributed among the parcels based upon the special benefit received by each parcel.

With the exception of the Drainage System, all other costs associated with the District improvements shall be fairly distributed among the parcels based upon the special benefit received by each parcel. Additionally, in compliance with the California Constitution Article XIIID Section 4, each parcel’s assessment may not exceed the reasonable cost of the proportional special benefit conferred to that parcel.

The benefit formula used to determine the assessment obligation is therefore based upon both the improvements that benefit the parcels within the District as well as their respective total Zone budget as compared to other parcels that benefit from those services. Zone A includes all of the parcels within the District except Lots 9 through 12, and said parcels proportionately share in the overall District improvements, including half of the costs associated with the Drainage System. Zone B includes Lots 9 through 12. These lots proportionately share in the overall District improvements and costs, as well as half of the costs associated with the Drainage System.

Equivalent Benefit Units
In order to assess benefits equitably it is necessary to relate each property’s proportional special benefits to the special benefits of all other properties within the District. The method of apportionment established for this District utilizes a weighted method of apportionment known as an Equivalent Benefit Unit (EBU) methodology (sometimes referred to as Equivalent Dwelling Units) that uses the single-family home site as the basic unit of assessment. A single-family home site equals one Equivalent Benefit Unit (EBU) and all other land uses are assigned a weighted EBU based on an assessment formula that equates various property characteristics to that of the single-family home site. This proportional weighting may be based on several factors that may include, but are not limited to: the type and status of development (land use), size of the property, location of the property, development plans or restrictions, vehicular trip generation, street frontage, population densities or other property related factors. Generally, for most districts the calculation of each parcel’s proportional special benefit can be reasonably determined by applying one or more of these factors.

While the Equivalent Benefit Unit method of apportioning special benefit is commonly used and applied to districts that have or may have a wide range of land use classifications (both residential and non-residential use) or have significant variations in the phasing of improvements and/or property development, this particular District involves only the development of single-family residential properties that will receive proportionately the same benefit from all the planned improvements, Therefore, each assessed parcel’s special benefits from the improvements are considered equal and each residential unit/parcel has been assigned one (1) EBU.
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FY 2024/2025 Deer Creek Manor Drainage Maintenance District Page 9 of 15

The following provides an overview of various land uses and their proportional special benefit as it applies or may apply to this District:

Exempt Parcels — This land use classification identifies parcels that receive little or no benefit from the improvements and are assigned 0.00 EBU. This land use classification may include, but is not limited to lots or parcels identified as:
 Public streets and other roadways (typically not assigned an APN by the County);  Public Easements including greenbelts, parkways, parks, dedicated open space areas or utility rights-of-ways or other public lands that are considered part of the District improvements or have similar characteristics; and
 Properties with restricted development potential such as common areas, sliver parcels and bifurcated lots.

The following formulas are used to calculate each parcel’s proportional benefit and assessment.

Balance to Levy (For the
Zone) = Levy Amount per Benefit Unit
Number of Benefit Units (Assessment Rate)
(EBU)
Assessment Rate x Parcel’s Calculated EBU = Parcel’s Assessment Amount 8282
FY 2024/2025 Deer Creek Manor Drainage Maintenance District Page 10 of 15 C. ASSESSMENT RANGE FORMULA
All budget items may be impacted by inflation in subsequent years. In an effort to minimize this impact on the District and ensure the long life of the improvements, an assessment range formula for inflation is included as part of the maximum assessment rate presented to the property owners within the District for approval. The formula, as described herein, provides for annual inflationary adjustment to the maximum assessment rate that may be imposed each year without requiring the extensive procedure and cost of balloting for normal operational cost increases. The purpose of establishing an assessment range formula is to provide for reasonable increases and inflationary adjustments to the assessment amounts without requiring costly noticing, mailing, and ballot procedures, which would further increase the assessments. The annual inflationary formula (assessment range formula) described herein is part of the assessment approved by the property owners and should provide for modest increases to the assessment revenues to meet anticipated cost increases in labor and materials that result from normal inflationary factors.

Commencing each fiscal year thereafter, the maximum assessment rate established in the previous fiscal year shall be adjusted by the greater of:
(1) Three percent (3.0%); or,
(2) The percentage increase of the Local Consumer Price Index (CPI).

The Consumer Price Index used for the inflationary adjustment shall be for the San Francisco-Oakland-San Jose Area for All Urban Consumers, since renamed to San Francisco-Oakland-Hayward, as established by the U.S. Bureau of Labor Statistics.

III. DISTRICT BUDGET
The following provides the budget establishing the maximum annual assessment rates for the District for Fiscal Year 2024/2025 The budget includes an estimate of anticipated expenditures and revenues associated with the maintenance and operation of the improvements. The budget and assessments for Fiscal Year 2024/2025 reflect the anticipated costs and expenses to provide the improvements for all twelve (12) months of the fiscal year.

The City took over ongoing maintenance, operation and servicing of the local drainage maintenance authorized by the District beginning in Fiscal Year 2015/2016. The City has decided to levy the parcels within the District at a rate of $36.14 per EBU for Fiscal Year 2024/2025. This will be the ninth levy since the creation of the District in 2007/2008. 8484
FY 2024/2025 Deer Creek Manor Drainage Maintenance District Page 12 of 15

City of Shasta Lake
Fiscal Year 2024/2025 Budget

DEER CREEK MANOR DRAINAGE MAINTENANCE DISTRICT
ANNUAL MAINTENANCE (DIRECT COSTS) District Totals
Drainage Improvements
Annual Inspection & Maintenance: Drainage Basin $250
Annual Inspection & Maintenance: Storm Drain Fencing and/or Access Roads 100 Annual Inspection & Maintenance: Drainage Infrastructure 250 Annual Maintenance Expenses: Drainage $600

REPLACEMENT/REHABILITATION (CIP)
Collection for Future Rehabilitation/Replacements
Periodic Debris Removal, Rehabilitation & Repairs: Drainage Basin $500 Periodic Repairs & Rehabilitation: Storm Drain Fencing and/or Access Roads 600 Periodic Repairs & Rehabilitation: Storm Drain Infrastructure 300 Periodic Maintenance & Projects: Drainage $1,400

ADMINISTRATION
Professional Fees & Services $500
City Annual Administrative and Overhead 250
County Admin Fee 58
Miscellaneous Administration Expenses 192
Total Annual Administrative Costs $1,000
Total Costs and Expenses $3,000

LEVY ADJUSTMENTS
Reserve Fund / CIP Collection $0
Rounding $0
BALANCE TO LEVY $3,000

DISTRICT STATISTICS
Total Parcels in District 88.00
Parcels Levied 83.00
Total EBU 83.00
Prior Year Levy per EBU $36.14
Proposed Assessment per EBU $36.14
Annual Inflator (greater of CPI or 3%) 3.00%
Maximum Assessment Rate per EBU $537.6961

FUND BALANCE INFORMATION
Estimated Beginning Reserve Balance $19,720
Reserve Fund / CIP Collection 0
Estimated Ending Fund Balance (Reserves & CIP) $19,720
Note: Totals may not foot due to rounding
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FY 2024/2025 Deer Creek Manor Drainage Maintenance District Page 13 of 15

IV. DISTRICT DIAGRAM
The parcels within this District consist of lots, parcels and subdivisions of land located in the planned residential development known as Deer Creek Manor. The District covers approximately thirty-six acres (36 acres) in the City of Shasta Lake.

The following District Diagram is based on the Shasta County Assessor’s Maps and the Shasta County Assessor’s information and identifies all the parcels of land within the District, as the same existed at the time this Report was prepared. The combination of this map and the Assessment Roll contained in this Report constitute the District Assessment Diagram. The Maximum Assessment Rate, assessment range formula and the assessment amount for each of the existing parcels within the District as described herein, shall be presented to the property owners of record for approval or protest in accordance with the provisions of the California Constitution.
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FY 2024/2025 Deer Creek Manor Drainage Maintenance District Page 14 of 15 8787
FY 2024/2025 Deer Creek Manor Drainage Maintenance District Page 15 of 15 V. ASSESSMENT ROLL
Parcel identification for each lot or parcel within the District is based on the Assessment Diagram presented herein and is based on available parcel maps and property data from the Shasta County Assessor’s Office at the time the Engineer’s Report was prepared. A listing of the lots and parcels assessed within this District along with the assessment amounts is provided herein.

Non-assessable lots or parcels may include, but are not limited to, public streets and other roadways (typically not assigned an APN by the County), dedicated public easements, open space areas, rights-of-way, common areas, bifurcated lots, and any other property that cannot be developed or has little or no value. These types of parcels are considered to receive little or no benefit from the improvements and are therefore exempted from assessment.

If any parcel submitted for collection is identified by the County Auditor-Controller to be an invalid parcel number for the fiscal year, a corrected parcel number and/or new parcel numbers will be identified and resubmitted to the County Auditor-Controller. The assessment amount levied and collected for the resubmitted parcel or parcels shall be based on the method of apportionment and assessment rate described in this Report as approved by the City Council. Therefore, if a single parcel is subdivided to multiple parcels, the assessment amount applied to each of the new parcels shall be recalculated and applied according to the approved method of apportionment and assessment rate rather than a proportionate share of the original assessment.

The District will assess parcels during Fiscal Year 2024/2025 at the assessment rate of $36.14 per parcel. The following is a list of the parcels, the charge and the maximum assessment amounts for each of the parcels within the District as determined by the assessment rates and method of apportionment described herein:
8888
Assessor's Parcel Number Land Use Zone Benefit Units Lot Max Tax Charge 075-150-046-000 GOV A 0.00 1 $0.00 $0.00
075-570-003-000 SFR A 1.00 2 537.70 36.14
075-570-004-000 SFR A 1.00 3 537.70 36.14
075-570-005-000 SFR A 1.00 4 537.70 36.14
075-570-006-000 SFR A 1.00 5 537.70 36.14
075-570-007-000 SFR A 1.00 6 537.70 36.14
075-570-008-000 SFR A 1.00 7 537.70 36.14
075-570-009-000 SFR A 1.00 8 537.70 36.14
075-570-010-000 SFR B 1.00 9 537.70 36.14
075-570-011-000 SFV B 1.00 10 537.70 36.14
075-570-012-000 SFR B 1.00 11 537.70 36.14
075-570-013-000 SFR B 1.00 12 537.70 36.14
075-570-016-000 SFR A 1.00 13 537.70 36.14
075-570-019-000 SFR A 1.00 14 537.70 36.14
075-570-020-000 SFR A 1.00 15 537.70 36.14
075-570-021-000 SFR A 1.00 16 537.70 36.14
075-570-022-000 SFR A 1.00 17 537.70 36.14
075-570-023-000 SFR A 1.00 18 537.70 36.14
075-570-024-000 SFR A 1.00 19 537.70 36.14
075-570-025-000 SFR A 1.00 20 537.70 36.14
075-570-026-000 SFR A 1.00 21 537.70 36.14
075-570-027-000 SFR A 1.00 22 537.70 36.14
075-570-028-000 SFR A 1.00 23 537.70 36.14
075-570-029-000 SFR A 1.00 24 537.70 36.14
075-570-030-000 SFR A 1.00 25 537.70 36.14
075-570-031-000 SFR A 1.00 26 537.70 36.14
075-570-032-000 SFR A 1.00 27 537.70 36.14
075-570-033-000 SFR A 1.00 28 537.70 36.14
075-570-034-000 SFR A 1.00 29 537.70 36.14
075-570-035-000 SFR A 1.00 30 537.70 36.14
075-570-036-000 SFR A 1.00 31 537.70 36.14
075-570-037-000 SFR A 1.00 32 537.70 36.14
075-570-038-000 SFR A 1.00 33 537.70 36.14
075-570-039-000 SFR A 1.00 34 537.70 36.14
075-570-040-000 SFR A 1.00 35 537.70 36.14
075-570-041-000 SFR A 1.00 36 537.70 36.14
075-570-042-000 SFR A 1.00 37 537.70 36.14
075-570-047-000 GOV A 0.0 38 0.00 0.00
075-570-048-000 GOV A 0.0 39 0.00 0.00
075-570-049-000 GOV A 0.0 40 0.00 0.00
075-570-050-000 GOV A 0.0 41 0.00 0.00
075-570-052-000 SFR A 1.00 42 537.70 36.14
075-570-054-000 SFR A 1.00 43 537.70 36.14
075-570-057-000 SFR A 1.00 44 537.70 36.14
075-570-063-000 SFR A 1.00 45 537.70 36.14
075-570-064-000 SFR A 1.00 46 537.70 36.14
075-570-065-000 SFR A 1.00 47 537.70 36.14
075-570-070-000 SFR A 1.00 48 537.70 36.14
075-570-072-000 SFR A 1.00 49 537.70 36.14
075-570-073-000 SFR A 1.00 50 537.70 36.14
075-570-074-000 SFR A 1.00 51 537.70 36.14
075-610-001-000 SFR A 1.00 52 537.70 36.14
075-610-002-000 SFR A 1.00 53 537.70 36.14
075-610-003-000 SFR A 1.00 54 537.70 36.14
075-610-004-000 SFR A 1.00 55 537.70 36.14
075-610-005-000 SFR A 1.00 56 537.70 36.14
075-610-006-000 SFR A 1.00 57 537.70 36.14
075-610-007-000 SFR A 1.00 58 537.70 36.14
075-610-008-000 SFR A 1.00 59 537.70 36.14
075-610-009-000 SFR A 1.00 60 537.70 36.14
075-610-010-000 SFR A 1.00 61 537.70 36.14
075-610-011-000 SFR A 1.00 62 537.70 36.14
075-610-012-000 SFR A 1.00 63 537.70 36.14
075-610-013-000 SFR A 1.00 64 537.70 36.14
City of Shasta Lake
Deer Creek Manor Drainage Maintenance District
Preliminary Assessment Roll
Fiscal Year 2024/2025
Deer Creek Manor DMD Fiscal Year 2024/2025 Preliminary Assessment Page 1 of 2 89 Assessor's Parcel Number Land Use Zone Benefit Units Lot Max Tax Charge City of Shasta Lake
Deer Creek Manor Drainage Maintenance District
Preliminary Assessment Roll
Fiscal Year 2024/2025
075-610-014-000 SFR A 1.00 65 537.70 36.14
075-610-015-000 SFR A 1.00 66 537.70 36.14
075-610-016-000 SFR A 1.00 67 537.70 36.14
075-610-017-000 SFV A 1.00 68 537.70 36.14
075-610-026-000 SFV A 1.00 69 537.70 36.14
075-620-001-000 SFR A 1.00 70 537.70 36.14
075-620-002-000 SFR A 1.00 71 537.70 36.14
075-620-003-000 SFR A 1.00 72 537.70 36.14
075-620-004-000 SFR A 1.00 73 537.70 36.14
075-620-005-000 SFV A 1.00 74 537.70 36.14
075-620-006-000 SFR A 1.00 75 537.70 36.14
075-620-007-000 SFR A 1.00 76 537.70 36.14
075-620-008-000 SFR A 1.00 77 537.70 36.14
075-620-009-000 SFR A 1.00 78 537.70 36.14
075-620-010-000 SFR A 1.00 79 537.70 36.14
075-620-011-000 SFR A 1.00 80 537.70 36.14
075-620-012-000 SFR A 1.00 81 537.70 36.14
075-620-013-000 SFR A 1.00 82 537.70 36.14
075-620-014-000 SFV A 1.00 83 537.70 36.14
075-620-015-000 SFR A 1.00 84 537.70 36.14
075-620-016-000 SFR A 1.00 85 537.70 36.14
075-620-017-000 SFR A 1.00 86 537.70 36.14
075-620-026-000 SFR A 1.00 87 537.70 36.14
075-620-028-000 SFR A 1.00 88 537.70 36.14
Total: 83.00 $44,628.78 $3,000.00
Parcel Count: 88
Deer Creek Manor DMD Fiscal Year 2024/2025 Preliminary Assessment Page 2 of 2 90 Report and Recommendations 7.2 Reviewed and Approved City Manager

AGENDA ITEM
City Council ______________________________________________________________________ TO: Mayor and City Council Members
FROM: Jessaca Lugo, City Manager
Presentation By: Sanjay Gaur, Principal Consultant/Water Resources Economics
DATE: May 21, 2024
SUBJECT: PUBLIC HEARING TO CONSIDER ADOPTING AN ORDINANCE

IMPLEMENTING INCREASED WATER RATES
FILE NO.: W-100-755-_____
______________________________________________________________________

RECOMMENDATION
Staff recommends that the City Council hold a Public Hearing and, following this, if there is no majority protest, approve an ordinance to implement new Water Utility rates starting July 1, 2024.

BACKGROUND
At the March 5, 2024 meeting, the City Council of the City of Shasta Lake accepted the water utility rate study completed by Water Resources Economics and directed staff to prepare a public notification in accordance with Proposition 218 of the proposed rates and set the public hearing for consideration of adoption on May 21, 2024.

The City complied with Proposition 218 provisions by notifying customers and property owners about the proposed water utility rate increases, each customer received a direct mail notification.

Additionally, in adherence to Proposition 218 guidelines, staff posted the notification and detailed information on the City's website to help customers understand the rate changes. The City has addressed numerous inquiries from customers, providing individualized responses to questions about how the rate adjustments will impact their monthly bill.

The Proposition 218 notice and public hearing process involves:

1. Mailing a notice of proposed rate increases to all customers and property owners at least 45 days prior to the public hearing on the Council’s proposed action to adjust rates. The notice must advise the property owners about the increase, the basis for the increase, the 91 date/time of the public hearing at which the Council will act to set rates and the customers and property owner’s right to appear and be heard regarding the proposed increase.

2. Holding the public hearing referenced in the notice. At that hearing, the Council is required to review all written protests and hear verbal protests to the rate increase. If more than 50% of property owners protest, (one protest per property is allowed) then the rate increase cannot be adopted. If 50% or less of property owners protest the City Council may adopt the rate increase.

Protests can be submitted in writing to the close of the public hearing on May 21st. The City Clerk will tally any submitted protests at the closing of the public hearing and include those counts in the record.

PROCEDURE:

1. Open the public hearing and receive any further protests and comments.

2. Close the public hearing and have the City Clerk tally the protests and consider the results.

3. If there is a majority protest (50% plus 1 of all customers), no further action will be taken.

4. If there is not a majority protest, then Staff recommends that City Council introduce the attached ordinance to adopt the new water utility fees.

FURTHER BACKGROUND REGARDING THE CITY’S WATER UTILITY:

The City of Shasta Lake (City) operates an independent and self-supporting water utility enterprise. Revenue collected through user rates are exclusively used within the fund to cover operations, maintenance, and capital improvements (with project guidance provided by the City’s 2016-2026 Water Master Plan).

As of 2023, the City’s water utility generally consists of the following components and assets:
• Water Supply: The City has the following long-term water contracts in place (agency as noted): 4480 Acre-Feet (Central Valley Project) and 2000 AF (Anderson-Cottonwood Irrigation District, available April - October). Additional single-year water is typically available for purchase from the McConnell Foundation located in Redding, CA; however, the available amount is severely curtailed during drought years and can be expensive. • Water Treatment: All water received by the City is withdrawn from intake piping within Shasta Dam and pumped to the City’s Fisherman’s Point Water Treatment Plant (WTP) via a US Bureau of Reclamation-owned pump station and transmission system. The WTP, with a maximum production capacity of approximately 9.72 million gallons per day (MGD), and a firm capacity (one filter offline) of about 6.5 MGD, treats all water used by the City.
• Transmission and Distribution System: The distribution system includes approximately 60 miles of pipelines consisting of steel, cast iron, asbestos cement, and polyvinyl chloride piping. Most of the steel piping is pre-1960 vintage with a large portion of smaller diameter mains (less than 5-inch) being installed prior to 1950. 92 • Storage: The City currently operates one (1) raw water (0.14 MG) and eight (8) potable water (total of approximately 5.5 MG) steel storage tanks.

The City, along with the Shasta Dam Area Public Utilities District that preceded it, has been tracking water usage through metering in our service area for many years. In the 1980’s, the SDAPUD implemented tiered water rates to encourage water conservation. The effect was a series of year-over-year usage decreases - in 1988, SDAPUD used approximately 2189 acrefeet of water; in 1990, usage was reduced to 1889 AF, a reduction of 13.8% for a population of approximately 8,833 people. For comparison, the City’s last unconstrained water year was 2019, where we used approximately 2054 AF for a population of approximately 10,374 people.

The 2016 the City underwent a comprehensive water rates study, where new water rates were implemented July 1, 2017; the 2017 five-year increases consisted of 30% (FY 2017); 15% (FY 2018); 10% (FY 2019); 0% (FY 2020); 0% (FY 2021) rate increases. Consequently, the City has refrained from raising rates for our customers since 2020/2021, despite a cumulative 18% increase in inflation over the same period.

In March 2023, the City Council instructed staff to adopt a uniform rate structure, abandoning the previous residential three-tier system. Since September 2023, City staff engaged Water Resources Economics, a consulting firm, to undertake a uniform rate study. Collaborating with the City's ad-hoc committee, the staff and consultant have developed the uniform rate study presented at the May 21st public hearing before the City Council and the community.

SUMMARY OF PROPOSED RATE INCREASES:

The City’s proposed water rate structure includes the following changes:
• Rate revenue adjustments of 25% in FY 2025 and 6% annually from FY 2026 through FY 2029.
• Lifeline program discount of $4 per customer per month, applied on the monthly service charge.
• Uniform consumption charges per hcf of water use for all customer classes. • Increasing fixed revenue recovery percentage from 45% to 54% for financial stability • Drought rates based on six drought stages from the City’s Water Shortage Contingency Plan to recover lost revenue during periods of government-mandated usage cutbacks.
• Water supply surcharges to recover additional costs associated with purchasing ACID and McConnell water during constrained water supply years.

Monthly Service
Charges Current Effective 7/1/2024
Effective
7/1/2025
Effective
7/1/2026
Effective
7/1/2027
Effective
7/1/2028
Lifeline $31.08 $40.29 $42.95 $45.77 $48.76 $51.93
5/8" $31.08 $44.29 $46.95 $49.77 $52.76 $55.93
1" $70.45 $108.89 $115.43 $122.36 $129.71 $137.50

1.5" $136.06 $216.55 $229.55 $243.33 $257.93 $273.41
2" $214.79 $345.75 $366.50 $388.49 $411.80 $436.51
3" $398.52 $647.23 $686.07 $727.24 $770.88 $817.14
4" $660.97 $1,077.89 $1,142.57 $1,211.13 $1,283.80 $1,360.83 6" $1,317.12 $2,154.57 $2,283.85 $2,420.89 $2,566.15 $2,720.12 8" $2,104.51 $3,446.57 $3,653.37 $3,872.58 $4,104.94 $4,351.24 10" $3,810.49 $6,245.90 $6,620.66 $7,017.90 $7,438.98 $7,885.32 93 12" $5,647.71 $9,260.58 $9,816.22 $10,405.20 $11,029.52 $11,691.30 Monthly Private Fire
Charges Current Effective 7/1/2024
Effective
7/1/2025
Effective
7/1/2026
Effective
7/1/2027
Effective
7/1/2028
2" or Less $5.53 $16.93 $17.95 $19.03 $20.18 $21.40
3" or Less $16.06 $46.17 $48.95 $51.89 $55.01 $58.32
4" or Less $34.22 $96.60 $102.40 $108.55 $115.07 $121.98 6" or Less $99.42 $277.62 $294.28 $311.94 $330.66 $350.50 8" or Less $211.86 $589.82 $625.21 $662.73 $702.50 $744.65 10" or Less $381.00 $1,059.43 $1,123.00 $1,190.38 $1,261.81 $1,337.52 12" or Less $615.41 $1,710.30 $1,812.92 $1,921.70 $2,037.01 $2,159.24 Consumption Charges
($/hcf) Current Effective 7/1/2024
Effective
7/1/2025
Effective
7/1/2026
Effective
7/1/2027
Effective
7/1/2028
Residential
Tier 1 $2.44 $2.85 $3.03 $3.22 $3.42 $3.63
Tier 2 $2.79 $2.85 $3.03 $3.22 $3.42 $3.63
Tier 3 $3.50 $2.85 $3.03 $3.22 $3.42 $3.63
Lifeline
Tier 1 $1.94 $2.85 $3.03 $3.22 $3.42 $3.63
Tier 2 $2.79 $2.85 $3.03 $3.22 $3.42 $3.63
Tier 3 $3.50 $2.85 $3.03 $3.22 $3.42 $3.63
Multi-Family & Mobile $2.58 $2.85 $3.03 $3.22 $3.42 $3.63 Commercial & Industrial $2.63 $2.85 $3.03 $3.22 $3.42 $3.63 Comm. Irr. & Govt. $2.86 $2.85 $3.03 $3.22 $3.42 $3.63
Schools $3.07 $2.85 $3.03 $3.22 $3.42 $3.63
Drought Rates Effective
7/1/2024
Effective
7/1/2025
Effective
7/1/2026
Effective
7/1/2027
Effective
7/1/2028
Stage 1 - 10% Reduction $0.32 $0.34 $0.37 $0.40 $0.43
Stage 2 - 20% Reduction $0.72 $0.77 $0.82 $0.87 $0.93
Stage 3 - 30% Reduction $1.23 $1.31 $1.39 $1.48 $1.57
Stage 4 - 40% Reduction $1.90 $2.02 $2.15 $2.28 $2.42
Stage 5 - 50% Reduction $2.85 $3.03 $3.22 $3.42 $3.63
Stage 6 - 60% Reduction $4.28 $4.54 $4.82 $5.11 $5.42
Pass-Through Supply Surcharges Effective
7/1/2024
Constrained Year Water Supply
McConnell Water Surcharge $0.17
ACID Water Surcharge $0.24
Combined Surcharge $0.41
THE COUNCIL HAS THE FOLLOWING ALTERNATIVES TO CONSIDER:

1. Approve Water Rate increases as recommended by staff and ad-hoc committee.

2. Approve Water Rate increases less than what is proposed by staff. If this alternative is selected, staff would proceed with adjusting the capital project list along with expenditure and revenue projections for the Fiscal Year 2024-25 Adopted Budget. A resolution related to each Utility’s rates would be brought back at a subsequent Council meeting for the Council to consider; 94 3. If it appears the majority protest standard (50 percent plus one) may be met, set a time and place for the City of Shasta Lake (City) Clerk to tabulate the protest notices and return to the Council at its next regular meeting on June 4, 2024, with the results;

4. Decline to open the public hearing and provide direction to staff. If a new public hearing were to be set, the public hearing would need to be noticed providing a minimum 45-day notification period; or

5. Do not approve any rate increases at this time and maintain the current rate structure. Should this option be selected, staff will adjust planned expenditures and revenue projections to ensure financial stability. However, this decision will significantly impact planned capital projects and/or service levels for the water utility, likely resulting in increased pipe failures, water quality issues, higher maintenance and repair costs, reduced routine maintenance, and potential regulatory fines and penalties. Future Councils may need to consider larger rate increases to implement deferred capital programs.

FISCAL IMPACTS:

Without implementing the proposed rates, essential infrastructure projects required for utility operations will be delayed, leading to potential reductions in service levels. By fiscal year 2026, the water utility is projected to operate at a deficit and will require support from the general fund, potentially impacting services such as law enforcement, parks, and general services.

ATTACHMENTS
Ordinance 2024-__
2024 Water Rate Study (Water Resources Economics)
Public Hearing Notice

DISTRIBUTION
City Council
City Attorney
Finance Department
95 ORDINANCE NO 2024-__

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SHASTA LAKE AMENDING

CITY MUNICIPAL CODE SECTIONS FOR WATER RATES AND CHARGES The City of Shasta Lake City Council does hereby ordain that City of Shasta Lake Municipal Code Sections 13.12.200 and 13.12.280 are hereby amended to read as follows:

Section 1. 13.12.200 Rates for Service: The following rates and compensation are fixed and established as the rates to be charged and collected by the city’s water department for water furnished by the department:

Monthly
Service
Charges
Effective
7/1/2024
Effective
7/1/2025
Effective
7/1/2026
Effective
7/1/2027
Effective
7/1/2028
Lifeline $40.29 $42.95 $45.77 $48.76 $51.93
5/8" $44.29 $46.95 $49.77 $52.76 $55.93
1" $108.89 $115.43 $122.36 $129.71 $137.50

1.5" $216.55 $229.55 $243.33 $257.93 $273.41
2" $345.75 $366.50 $388.49 $411.80 $436.51
3" $647.23 $686.07 $727.24 $770.88 $817.14
4" $1,077.89 $1,142.57 $1,211.13 $1,283.80 $1,360.83
6" $2,154.57 $2,283.85 $2,420.89 $2,566.15 $2,720.12
8" $3,446.57 $3,653.37 $3,872.58 $4,104.94 $4,351.24
10" $6,245.90 $6,620.66 $7,017.90 $7,438.98 $7,885.32
12" $9,260.58 $9,816.22 $10,405.20 $11,029.52 $11,691.30 Consumption
Charges ($/hcf)
Effective
7/1/2024
Effective
7/1/2025
Effective
7/1/2026
Effective
7/1/2027
Effective
7/1/2028
Residential $2.85 $3.03 $3.22 $3.42 $3.63
Lifeline $2.85 $3.03 $3.22 $3.42 $3.63
Multi-Family &
Mobile $2.85 $3.03 $3.22 $3.42 $3.63
Commercial &
Industrial $2.85 $3.03 $3.22 $3.42 $3.63
Comm. Irr. & Govt. $2.85 $3.03 $3.22 $3.42 $3.63
Schools $2.85 $3.03 $3.22 $3.42 $3.63
Drought Rates Effective
7/1/2024
Effective
7/1/2025
Effective
7/1/2026
Effective
7/1/2027
Effective
7/1/2028
Stage 1 - 10%
Reduction $0.32 $0.34 $0.37 $0.40 $0.43
Stage 2 - 20%
Reduction $0.72 $0.77 $0.82 $0.87 $0.93
96 Stage 3 - 30%
Reduction $1.23 $1.31 $1.39 $1.48 $1.57
Stage 4 - 40%
Reduction $1.90 $2.02 $2.15 $2.28 $2.42
Stage 5 - 50%
Reduction $2.85 $3.03 $3.22 $3.42 $3.63
Stage 6 - 60%
Reduction $4.28 $4.54 $4.82 $5.11 $5.42
Water Supply Surcharges Effective
7/1/2024
Constrained Year Water Supply
McConnell Water Surcharge $0.17
ACID Water Surcharge $0.24
Combined Surcharge $0.41
Section 2. 13.12.280 - Fire service—Monthly rates—Use of hydrants prohibited when.A. The monthly rates to be charged and collected for service used for unmetered fire protection shall be as follows:

Monthly Private
Fire Charges
Effective
7/1/2024
Effective
7/1/2025
Effective
7/1/2026
Effective
7/1/2027
Effective
7/1/2028
2" or Less $16.93 $17.95 $19.03 $20.18 $21.40
3" or Less $46.17 $48.95 $51.89 $55.01 $58.32
4" or Less $96.60 $102.40 $108.55 $115.07 $121.98
6" or Less $277.62 $294.28 $311.94 $330.66 $350.50
8" or Less $589.82 $625.21 $662.73 $702.50 $744.65
10" or Less $1,059.43 $1,123.00 $1,190.38 $1,261.81 $1,337.52 12" or Less $1,710.30 $1,812.92 $1,921.70 $2,037.01 $2,159.24 Section 3. Severability: If any provision of this ordinance or the applications thereof to any person or circumstances is held invalid, the remainder of the ordinance and the applications of such provision will remain in effect to the extent permitted by law.

Section 4. Effective Date: This ordinance shall take effect 30 days after the date of its second reading and posting pursuant to City Code.

I HEREBY CERTIFYthat the foregoing Ordinance was introduced and read at a regular meeting of the City Council of the City of Shasta Lake held on the 21st day of May 2024.

PASSED, APPROVED, AND ADOPTED this 21st day of May 2024, by the following vote:

AYES:

NOES:

ABSENT:
_____
JANICE POWELL, Mayor
97 ATTEST:
_______________________________
CHARITY TATLOW, Deputy City Clerk
98 City of Shasta Lake
2024 Water Rate Study
Final Report – March 2024
Prepared by: Water Resources Economics, LLC
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100

March 28, 2024
Jessaca Lugo
City Manager
City of Shasta Lake
4477 Main Street
Shasta Lake, CA 96019
Subject: City of Shasta Lake 2024 Water Rate Study Report Dear Ms. Lugo,
Water Resources Economics, LLC is pleased to submit this 2024 Water Rate Study Report to the City of Shasta Lake. This report documents the results and recommendations of the City’s water rate study. The overall goal of the study was to develop an updated five-year schedule of water rates that will sufficiently fund the City’s water system expenses, provide financial sustainability, and comply with cost-of-service principles.

This study utilized industry-standard rate-setting methodology in accordance with guidelines developed by the American Water Works Association and incorporates guidance provided by the City’s policymakers. Our project team has a proven track record of developing fair and equitable water rates for numerous public water agencies in California over the past 25 years. We are confident in our ability to develop sound water rates that satisfy the requirements of Proposition 218.

It has been a pleasure assisting the City, and we appreciate the support provided by yourself and other City staff over the course of the study.

Sincerely,
Sanjay Gaur Nancy Phan
Principal Consultant Senior Consultant
101
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TABLE OF CONTENTS

1. Executive Summary .................................................................................................................... 1

1.1 System Overview ........................................................................................................................ 1

1.2 Rate Study Overview ................................................................................................................... 1

1.3 Legal Requirements .................................................................................................................... 1

1.4 Rate-Setting Methodology .......................................................................................................... 2

1.5 Additional Information and Disclaimers ...................................................................................... 2

1.6 Current Water Rates ................................................................................................................... 3

1.7 Financial Plan .............................................................................................................................. 4

1.8 Cost-of-Service Analysis .............................................................................................................. 8

1.9 Proposed Water Rates ................................................................................................................ 9

2. Financial Plan ........................................................................................................................... 13

2.1 Financial Plan Methodology ...................................................................................................... 13

2.2 Revenues................................................................................................................................... 13

2.3 Operating Expenses .................................................................................................................. 17

2.4 Debt Service .............................................................................................................................. 20

2.5 Capital Improvement Plan ........................................................................................................ 21

2.6 Financial Policies ....................................................................................................................... 22

2.7 Status Quo Financial Plan .......................................................................................................... 22

2.8 Proposed Financial Plan ............................................................................................................ 27

3. Cost-of-Service Analysis ........................................................................................................... 32

3.1 Cost-of-Service Methodology.................................................................................................... 32

3.2 Revenue Requirement .............................................................................................................. 32

3.3 Cost Functionalization ............................................................................................................... 33

3.4 Cost Causation Components ..................................................................................................... 35

3.5 System Capacity Allocations ...................................................................................................... 39

3.6 Allocation to Cost Components ................................................................................................. 42

3.7 Unit Cost Calculation ................................................................................................................. 44

4. Water Rates ............................................................................................................................. 46

4.1 Rate Design Methodology ......................................................................................................... 46

4.2 Proposed Changes to Rate Structure ........................................................................................ 46

4.3 Proposed Water Rate Calculation ............................................................................................. 47

4.4 Proposed Water Rate Schedule ................................................................................................ 50

4.5 Customer Impacts ..................................................................................................................... 51

5. Water Shortage Rates .............................................................................................................. 52

5.1 Water Shortage Rate Design Methodology ............................................................................... 52

5.2 Risks Related to Water Shortages ............................................................................................. 52

5.3 Proposed Water Supply Cost Surcharges .................................................................................. 53

5.4 Proposed Drought Rates ........................................................................................................... 53 102
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5.5 Proposed Water Shortage Rate Schedule ................................................................................. 55

5.6 Water Shortage Impacts ........................................................................................................... 56

6. Appendices .............................................................................................................................. 57

6.1 Financial Plan Appendices ......................................................................................................... 57

6.2 Cost-of-Service Analysis Appendices ......................................................................................... 61

LIST OF TABLES
Table 1-1: Current Monthly Service Charges .......................................................................................... 3 Table 1-2: Current Monthly Private Fire Charges .................................................................................... 3 Table 1-3: Current Consumption Charges ............................................................................................... 4 Table 1-4: Current Reserve Policy ........................................................................................................... 5 Table 1-5: Revenue Adjustments and Debt Issuances (Proposed Financial Plan) ................................... 6 Table 1-6: Proposed 5-Year Rate Schedule (Monthly Service Charges) ................................................ 10 Table 1-7: Proposed 5-Year Rate Schedule (Monthly Private Fire Charges) .......................................... 10 Table 1-8: Proposed 5-Year Rate Schedule (Consumption Charges) ..................................................... 10 Table 1-9: Residential Customer Impacts at Various Usage Levels ....................................................... 11 Table 1-10: Proposed Water Supply Cost Surcharges ........................................................................... 11 Table 1-11: Proposed Drought Rates by Stage ...................................................................................... 12 Table 1-12: Residential Water Shortage Impacts .................................................................................. 12 Table 2-1: Current Monthly Service Charges ........................................................................................ 14 Table 2-2: Current Monthly Private Fire Charges .................................................................................. 14 Table 2-3: Current Consumption Charges ............................................................................................. 14 Table 2-4: Customer Account Projections ............................................................................................. 15 Table 2-5: Water Usage Projections ...................................................................................................... 16 Table 2-6: Calculated Water Rate Revenues from Current Rates.......................................................... 17 Table 2-7: Revenue Summary ............................................................................................................... 17 Table 2-8: Expense Inflationary Assumptions ....................................................................................... 18 Table 2-9: Calculated Non-Constrained Water Supply Costs ................................................................ 19 Table 2-10: Operating Expense Summary ............................................................................................. 19 Table 2-11: Existing Debt Service .......................................................................................................... 20 Table 2-12: Proposed Debt Service ....................................................................................................... 20 Table 2-13: Debt Service Summary ....................................................................................................... 20 Table 2-14: Capital Improvement Projects ............................................................................................ 21 Table 2-15: Capital Expense Summary .................................................................................................. 22 Table 2-16: Revenue Adjustments and Debt Issuances (Status Quo Financial Plan) ............................. 22 Table 2-17: Cash Flow Projections (Status Quo Financial Plan) ............................................................. 23 Table 2-18: Fund Balance Projections (Status Quo Financial Plan) ....................................................... 24 Table 2-19: Financial Performance (Status Quo Financial Plan) ............................................................ 25 Table 2-20: Revenue Adjustments and Debt Issuances (Proposed Financial Plan) ............................... 27 Table 2-21: Cash Flow Projections (Proposed Financial Plan) ............................................................... 28 Table 2-22: Fund Balance Projections (Proposed Financial Plan) .......................................................... 29 103
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Table 2-23: Financial Performance (Proposed Financial Plan) .............................................................. 30 Table 3-1: Revenue Requirement for FY 2024 ...................................................................................... 33 Table 3-2: Operating Costs by Function ................................................................................................ 34 Table 3-3: Capital Assets by Function ................................................................................................... 34 Table 3-4: System-Wide Peaking Factor Allocations ............................................................................. 35 Table 3-5: Cost Component Allocation Factors ..................................................................................... 36 Table 3-6: Operating Cost Component Allocation ................................................................................. 37 Table 3-7: Capital Cost Component Allocation ..................................................................................... 38 Table 3-8: Equivalent Meter Units ........................................................................................................ 39 Table 3-9: Equivalent Fire Lines ............................................................................................................ 40 Table 3-10: Customer Demand Capacity Calculation ............................................................................ 41 Table 3-11: Fire Capacity Calculation .................................................................................................... 41 Table 3-12: Preliminary Cost-of-Service Allocation ............................................................................... 42 Table 3-13: Cost-of-Service Allocation Adjusted for General and Fire Protection ................................. 42 Table 3-14: Cost-of-Service Allocation Adjusted for Meter and Peaking .............................................. 43 Table 3-15: Final Cost-of-Service Allocation .......................................................................................... 44 Table 3-16: Units of Service Definitions ................................................................................................ 44 Table 3-17: Unit Cost Calculation .......................................................................................................... 45 Table 4-1: Revenue Neutral Monthly Service Charge Calculation ......................................................... 47 Table 4-2: Proposed Monthly Service Charge Calculation for FY 2025 .................................................. 47 Table 4-3: Revenue Neutral Monthly Private Fire Charge Calculation .................................................. 48 Table 4-4: Proposed Monthly Private Fire Charge Calculation for FY 2025 ........................................... 48 Table 4-5: Revenue Neutral Uniform Consumption Charge Calculation ............................................... 49 Table 4-6: Proposed Uniform Consumption Charge Calculation for FY 2025 ........................................ 49 Table 4-7: Proposed Revenue Adjustments .......................................................................................... 50 Table 4-8: Proposed Five-Year Monthly Service Charges ...................................................................... 50 Table 4-9: Proposed Five-Year Monthly Private Fire Charges ............................................................... 50 Table 4-10: Proposed Five-Year Consumption Charges ........................................................................ 51 Table 4-11: Residential Customer Impacts at Various Usage Levels ..................................................... 51 Table 5-1: Constrained Year Water Supply Costs .................................................................................. 53 Table 5-2: Proposed Water Supply Cost Surcharges ............................................................................. 53 Table 5-3: Water Usage Reductions by Drought Stage ......................................................................... 54 Table 5-4: Consumption Revenue Loss by Drought Stage ..................................................................... 54 Table 5-5: Proposed Drought Rates by Drought Stage for FY 2025 ....................................................... 55 Table 5-6: Proposed Revenue Adjustments .......................................................................................... 55 Table 5-7: Proposed Five-Year Water Supply Cost Surcharges and Drought Rates ............................... 55 Table 5-8: Residential Water Shortage Impacts .................................................................................... 56 Table 6-1: (Appendix) Residential Customer Accounts ......................................................................... 57 Table 6-2: (Appendix) Non-Residential Customer Accounts ................................................................. 58 Table 6-3: (Appendix) Operating Expense Budget Detail ...................................................................... 59 Table 6-4: (Appendix) Operating Cost Function Detail .......................................................................... 61 Table 6-5: (Appendix) Capital Asset Function Detail ............................................................................. 62 104
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LIST OF FIGURES
Figure 1-1: Fund Balance Projections (Status Quo Financial Plan) .......................................................... 5 Figure 1-2: Debt Coverage Projections (Status Quo Financial Plan) ........................................................ 6 Figure 1-3: Fund Balance Projections (Proposed Financial Plan) ............................................................. 7 Figure 1-4: Debt Coverage Projections (Proposed Financial Plan) .......................................................... 8 Figure 2-1: Revenue vs. Revenue Requirement (Status Quo Financial Plan) ......................................... 25 Figure 2-2: Fund Balance Projections (Status Quo Financial Plan) ........................................................ 26 Figure 2-3: Debt Coverage Projections (Status Quo Financial Plan) ...................................................... 26 Figure 2-4: Revenue vs. Revenue Requirement (Proposed Financial Plan) ........................................... 30 Figure 2-5: Fund Balance Projections (Proposed Financial Plan) ........................................................... 31 Figure 2-6: Debt Coverage Projections (Proposed Financial Plan) ........................................................ 31 105
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1 1. EXECUTIVE SUMMARY

1.1 SYSTEM OVERVIEW
The City of Shasta Lake (City) provides water service to approximately 4,000 metered connections, including residential, multi-family residential, and non-residential customers (commercial, industrial, irrigation, government, schools). The City’s water utility enterprise serves a population of approximately 10,000 residents.

The water system consists of a water treatment plant (the Fisherman’s Point Water Treatment Plant), approximately 60 miles of transmission and distribution pipelines, and nine storage tanks (one for raw water; eight for potable water). The City’s water supply sources include Central Valley Project (CVP), Anderson-Cottonwood Irrigation District (ACID), and the McConnell Foundation (McConnell).

CVP water, which is the City’s main source of water supply, requires use of pump stations and transmission pipelines owned by the US Bureau of Reclamation (USBR).

1.2 RATE STUDY OVERVIEW
Public retail water agencies in California typically conduct a water rate study at least once every five years to ensure that customers are appropriately charged for water service. The City’s currently adopted rates were established during the most recent adopted rate study, which was conducted in 2016, spanning fiscal year (FY) 2017 through FY 2021.

The City engaged Water Resources Economics (WRE) in 2023 conduct an updated water rate study, with the following objectives in mind:
 Develop a five-year water rate schedule for implementation in FY 2025 through FY 2029  Evaluate the impact of a uniform volumetric rate for water usage  Identify amount of revenue required to maintain financial sufficiency  Conduct an updated cost-of-service analysis
 Develop drought rates and/or surcharges to implement in years with constrained water supply and government-mandated usage cutbacks

1.3 LEGAL REQUIREMENTS
Legal considerations relating to retail water rates in California focus heavily on Proposition 218, which was enacted in 1996 and is now reflected in Article XIII C and Article XIII D of the California Constitution. Proposition 218 states that “property related fees and charges” (which include retail water rates) may not exceed the proportional cost of providing the service to the customer and may not be used for any purpose other than providing said service. The practical implication is that public retail water agencies in California must demonstrate a sufficient nexus between the costs incurred by the agency to provide water service and the rates charged to customers. The primary means by which retail water agencies address this requirement is by conducting a “cost-of-service analysis.” 106
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2 Proposition 218 also affects the rate adoption process by requiring agencies to hold a public hearing to adopt rates. The agency must mail public hearing notices to all customers no fewer than 45 days prior to the public hearing. The public hearing notices must clearly show all proposed rate changes, provide information on the public hearing date/time/location, and provide instructions on how customers may protest the proposed rate changes. If a majority of customers submit a protest, the proposed rate changes cannot be adopted.

1.4 RATE-SETTING METHODOLOGY
This study was conducted using industry-standard methodology outlined by the American Water Works Association (AWWA) in its Manual of Water Supply Practices M1: Principles of Water Rates, Fees and Charges, Seventh Edition (M1 Manual). The overall rate study process includes the following steps:

1. Financial Plan: Annual revenues and expenses are projected over the rate-setting period to determine the magnitude of rate increases needed to maintain financial sufficiency. Financial policies, such as reserve targets, are also evaluated and updated if necessary.

2. Cost-of-Service Analysis: Costs are allocated to customers in proportion to use of and burden on the water system. The overall goal is to establish a robust nexus between the costs incurred by an agency and the rates charged to customers, as required by Proposition 218.

3. Rate Design: The existing rate structure is evaluated, and potential changes are identified. A multi-year proposed rate schedule is then calculated directly from the results of the financial plan and cost-of-service analysis.

4. Rate Study Documentation: A rate study report is developed to document the proposed rate development process. This provides transparency and enhances legal defensibility in light of Proposition 218 requirements. This document serves as the report for this rate study.

1.5 ADDITIONAL INFORMATION AND DISCLAIMERS
This report summarizes the data, analyses, processes, and results of the City’s water rate study. Some important information to keep in mind when reading the report includes the following:
 All study projections are based on the best available data as of February 2024.  All table values are rounded to the nearest digit shown unless stated otherwise. However, all calculations are based on precise values. Attempting to manually recreate the calculations described in this report from the values displayed in tables may therefore produce slightly different results.
 All current and proposed rates and charges in this report are shown on a monthly basis. 107
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3 1.6 CURRENT WATER RATES
The City’s current water rate structure includes a monthly service charge based on meter size, a monthly private fire charge (for customers with private fire service) based on fire line size, and a consumption charge based on units of water usage. One unit of water is equal to 100 cubic feet (hcf).

The consumption charge for the Residential and Lifeline customer classes are based on an inclining three-tiered structure. Customers that qualify for the City’s Lifeline assistance program currently receive a discounted Tier 1 rate for usage up to 10 hcf per month.

The current water rates and rate structure were effective starting on July 1, 2020 or the beginning of FY 2021. These rates were developed in the City’s most recent adopted water rate study, which was conducted in 2016.

Table 1-1 shows the current monthly service charges; Table 1-2 shows the current monthly private fire charges; and Table 1-3 shows the current consumption charges for all customer classes.

Table 1-1: Current Monthly Service Charges
Line Current Monthly Service Charges As of 7/1/2020
1 5/8" Meter $31.08
2 1" Meter $70.45
3 1.5" Meter $136.06
4 2" Meter $214.79
5 3" Meter $398.52
6 4" Meter $660.97
7 6" Meter $1,317.12
8 8" Meter $2,104.51
9 10" Meter $3,810.49
10 12" Meter $5,647.71
Table 1-2: Current Monthly Private Fire Charges
Line Current Monthly Private Fire Charges As of 7/1/2020 1 2" or Less $5.53
2 3" or Less $16.06
3 4" or Less $34.22
4 6" or Less $99.42
5 8" or Less $211.86
6 10" or Less $381.00
7 12" or Less $615.41
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4 Table 1-3: Current Consumption Charges
Line Current Consumption Charges ($/hcf) As of 7/1/2020 1 Residential
2 Tier 1 (0-10 hcf) $2.44
3 Tier 2 (11-20 hcf) $2.79
4 Tier 3 (>20 hcf) $3.50
5 6 Lifeline
7 Tier 1 (0-10 hcf) $1.94
8 Tier 2 (11-20 hcf) $2.79
9 Tier 3 (>20 hcf) $3.50
10 11 Multi-Family & Mobile $2.58
12 Commercial & Industrial $2.63
13 Commercial Irr. & Govt. $2.86
14 Schools $3.07

1.7 FINANCIAL PLAN
WRE worked closely with City staff and the City’s Ad Hoc Committee (a subcommittee of the City Council) to determine the financial plan scenario that best suits the City’s needs. The results and recommendations of the water rate study are driven by the City’s financial performance, input from City staff, and feedback and direction from the Ad Hoc Committee.

FACTORS AFFECTING FINANCIAL PERFORMANCE
The water system’s financial performance is driven by the ability of the current water rates to meet the City’s funding needs. To maintain financial sufficiency, water rates must fully fund operations and maintenance (O&M) costs, capital improvement plan (CIP) expenditures, and any relevant financial policies, which typically include target reserve balances and debt coverage.

The key factors affecting financial performance include:
 No water rate increases since FY 2021: The current water rates were adopted in FY 2021, which means that rates are not keeping pace with inflating costs. Based on the Consumer Price Index (CPI), prices have increased by approximately 18% since 2021. The water enterprise’s revenues at current rates are just enough to cover O&M expenses and debt service, with no additional funds available to fund CIP needs or reserve balances to meet policy targets.
 Substantial capital needs on the planning horizon: Between FY 2024 and FY 2029, the total CIP for the water system totals approximately $18.8 million. After netting out approximately $6.0 million worth of confirmed grant funding, the City’s water enterprise must fund $12.8 million over six years. The water enterprise’s current revenues cannot fund any CIP; the City must increase rate revenues to fund critical CIP projects over the planning horizon.  Reserve policy targets: The City’s reserve policy, shown in Table 1-4, includes targets for an operating reserve (to maintain cash on hand to meet short-term cash flow imbalances) and a 109
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5 capital projects reserve (to maintain cash on hand to execute CIP projects). The projected fund balances at the end of FY 2024 are just below target; fund balances will be depleted without future rate increases.

Table 1-4: Current Reserve Policy
Line Current Reserve Policy Policy Targets FY 2024
1 Reserve Targets
2 Operating Reserve Target 25% of O&M expenses $912,987 3 Capital Projects Reserve Target 1 year of average CIP $1,137,965 4 Combined Target $2,050,952
5 6 Projected Reserve Levels $1,949,566

STATUS QUO FINANCIAL PLAN
The first step in evaluating the City’s financial performance is to develop a “status quo financial plan,” which is the scenario in which the City does not increase its water rate revenues. This exercise is to determine whether the City’s current water rates are sufficient to meet key financial performance metrics. This section shows two important metrics: fund balance and debt coverage.

Figure 1-1 shows the projected fund balances under the status quo scenario. The green bars represent the projected water fund balance, and the black line represents the reserve target. In this scenario, the City will not meet its reserve targets, and funds will be completely depleted in FY 2026.

Figure 1-1: Fund Balance Projections (Status Quo Financial Plan) Figure 1-2 shows the projected debt coverage under the status quo financial plan. The blue line represents the projected debt coverage, and the dotted black line represents the required debt coverage for the City’s debt service. If the City does not meet its debt coverage requirements, it is 110
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6 considered to be in technical default1. Under the status quo scenario, the City will be in technical default starting in FY 2027.

Figure 1-2: Debt Coverage Projections (Status Quo Financial Plan)

PROPOSED REVENUE ADJUSTMENTS AND DEBT ISSUANCES
Overall annual increases in water rate revenues resulting from rate increases are referred to as “revenue adjustments.” WRE worked with City staff and the Ad Hoc Committee to determine the most appropriate financial plan scenario, which is shown in Table 1-5. The proposed financial plan scenario includes five years of revenue adjustments, which are required to maintain financial sufficiency, and one debt issuance in FY 2026 to fund the tank replacement project in the City’s CIP.

Since the City has not had a water rate increase since FY 2021, the first year of revenue adjustments in FY 2025 is higher to realign water rate revenues with cost escalations that occurred over the past several years. The proposed revenue adjustments in the latter four years, between FY 2026 and FY 2029, are designed to keep pace with ongoing O&M and CIP costs.

Table 1-5: Revenue Adjustments and Debt Issuances (Proposed Financial Plan) Line Fiscal Year Revenue
Adjustments Debt Issuance
1 FY 2025 25.0% $0
2 FY 2026 6.0% $6,122,449
3 FY 2027 6.0% $0
4 FY 2028 6.0% $0
5 FY 2029 6.0% $0
1 Although the calculated debt coverage for FY 2024 is below the required debt coverage, this is not due to technical default. Rather, this is due to the City’s early repayment of its CalPERS Loan in that year. 111
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7 PROPOSED FINANCIAL PLAN
The proposed financial plan applies the revenue adjustments and debt issuance, shown in Table 1-5, to reevaluate the water enterprise’s financial performance.

Figure 1-3 shows the projected fund balances under the proposed financial plan scenario. The fund balance for FY 2026 is high due to the inclusion of debt proceeds, which will be drawn down in latter years due to CIP expenditures. Under this scenario, the City will meet its reserve targets in the latter four years.

Figure 1-3: Fund Balance Projections (Proposed Financial Plan) Figure 1-4 shows the projected debt coverage in the proposed financial plan scenario; the City will meet its debt coverage requirements in all years of the study (see earlier footnote about FY 2024).

The calculated debt coverage decreases in FY 2026 due to the proposed debt issuance but is still sufficiently above the required coverage of 125%.
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8 Figure 1-4: Debt Coverage Projections (Proposed Financial Plan)

1.8 COST-OF-SERVICE ANALYSIS
A cost-of-service analysis is a technical process used to determine the cost of providing water service to the City’s customers based on each customer’s use of and burden on the water system. The costof-service analysis is the basis of the nexus between the costs incurred by the utility to provide water service and the water rates charged to customers, which is a requirement of Proposition 218.

COST-OF-SERVICE METHODOLOGY
The cost-of-service methodology is based on industry standards set forth by AWWA in its M1 Manual; this rate study utilizes the base-extra capacity method. The overall goal of the cost-of-service analysis is to develop “unit costs,” which provide the basis from which proposed rates are directly calculated from. Note that although the study period spans five years, the cost-of-service analysis is limited to a single representative year referred to as the “test year.” The test year in this study is FY 2024. The key steps in conducting a water cost-of-service analysis are outlined below:
 Revenue requirement determination: The total rate revenue requirement for the test year is determined based on the results of the proposed financial plan and divided into primary subcomponents (operating, capital, etc.).  Cost functionalization: Operating and capital costs are evaluated and assigned to “functional categories” in the water system (e.g., customer service, groundwater wells, distribution, etc.).

This provides a proportional breakdown of system costs by functional category.  Revenue requirement allocation to cost causation components: Functionalized costs are allocated to “cost causation components” (e.g., water supply, base delivery, max day delivery, etc.), which is used to attribute customers’ use of the system to the City’s incursion of costs. 113
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9  Unit cost development: The rate revenue requirement allocation for each individual cost causation component is divided by the appropriate units of service to establish unit costs for the test year. Unit costs provide the basis from which proposed rates are calculated.

1.9 PROPOSED WATER RATES
WRE worked closely with City staff and the Ad Hoc Committee to evaluate various rate structure alternatives and determine an appropriate water rate structure.

PROPOSED RATE STRUCTURE CHANGES
The proposed changes to the water rate structure were developed based on direction from the Ad Hoc Committee and include the following:
 Proposed uniform consumption charge: the City’s current consumption charge includes a three-tiered structure for Residential customers and a uniform consumption charge that varies by non-residential customer classes. A key objective of this study is to evaluate the impact of a uniform consumption charge, based on direction provided by the Ad Hoc Committee. The proposed water rate structure includes one uniform consumption charge for all customer classes.
 Proposed change to fixed revenue recovery: the City’s current water rate structure collects approximately 45% of its revenues via fixed charges (monthly service charges and monthly private fire charges). The Ad Hoc Committee provided direction to increase the fixed revenue recovery to approximately 54%, which would increase financial stability for the City’s water enterprise.
 Proposed change to Lifeline discount: the current Lifeline discount is applied to Tier 1 usage.

The proposed Lifeline discount is applied to the monthly service charge since the proposed rate structure does not have tiered rates. Additionally, this proposed change can help offset some affordability concerns due to increasing fixed revenue recovery. City staff and the Ad Hoc Committee recommended a discount of $4 per Lifeline customer per month; the costs of this program are funded via the General Fund. The Lifeline discount will stay at $4 per customer per month for all years of the study.

PROPOSED FIVE-YEAR WATER RATE SCHEDULE
The proposed five-year water rate schedules in this section of the report are based on the proposed rate structure changes, the updated cost-of-service analysis, and the proposed revenue adjustments for the five-year period. The rate schedule shows water rates that are proposed to be implemented from FY 2025 through FY 2029.

The proposed five-year rate schedule for monthly service charges, monthly private fire charges, and consumption charges is shown in Table 1-6, Table 1-7, and Table 1-8, respectively. 114
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10 Table 1-6: Proposed 5-Year Rate Schedule (Monthly Service Charges) Line Proposed Monthly
Service Charges
Effective
7/1/2024
Effective
7/1/2025
Effective
7/1/2026
Effective
7/1/2027
Effective
7/1/2028
1 Lifeline $40.29 $42.95 $45.77 $48.76 $51.93
2 5/8" Meter $44.29 $46.95 $49.77 $52.76 $55.93
3 1" Meter $108.89 $115.43 $122.36 $129.71 $137.50
4 1.5" Meter $216.55 $229.55 $243.33 $257.93 $273.41
5 2" Meter $345.75 $366.50 $388.49 $411.80 $436.51
6 3" Meter $647.23 $686.07 $727.24 $770.88 $817.14
7 4" Meter $1,077.89 $1,142.57 $1,211.13 $1,283.80 $1,360.83 8 6" Meter $2,154.57 $2,283.85 $2,420.89 $2,566.15 $2,720.12 9 8" Meter $3,446.57 $3,653.37 $3,872.58 $4,104.94 $4,351.24 10 10" Meter $6,245.90 $6,620.66 $7,017.90 $7,438.98 $7,885.32 11 12" Meter $9,260.58 $9,816.22 $10,405.20 $11,029.52 $11,691.30 Table 1-7: Proposed 5-Year Rate Schedule (Monthly Private Fire Charges) Line Proposed Monthly
Private Fire Charges
Effective
7/1/2024
Effective
7/1/2025
Effective
7/1/2026
Effective
7/1/2027
Effective
7/1/2028
1 2" or Less $16.93 $17.95 $19.03 $20.18 $21.40
2 3" or Less $46.17 $48.95 $51.89 $55.01 $58.32
3 4" or Less $96.60 $102.40 $108.55 $115.07 $121.98
4 6" or Less $277.62 $294.28 $311.94 $330.66 $350.50
5 8" or Less $589.82 $625.21 $662.73 $702.50 $744.65
6 10" or Less $1,059.43 $1,123.00 $1,190.38 $1,261.81 $1,337.52 7 12" or Less $1,710.30 $1,812.92 $1,921.70 $2,037.01 $2,159.24 Table 1-8: Proposed 5-Year Rate Schedule (Consumption Charges) Line Proposed Consumption
Charges ($/hcf)
Effective
7/1/2024
Effective
7/1/2025
Effective
7/1/2026
Effective
7/1/2027
Effective
7/1/2028
1 Residential $2.85 $3.03 $3.22 $3.42 $3.63
2 Multi-Family & Mobile $2.85 $3.03 $3.22 $3.42 $3.63
3 Commercial & Industrial $2.85 $3.03 $3.22 $3.42 $3.63 4 Commercial Irr. & Govt. $2.85 $3.03 $3.22 $3.42 $3.63 5 Schools $2.85 $3.03 $3.22 $3.42 $3.63

CUSTOMER IMPACTS
WRE evaluated the impact to the Residential customer class (which makes up approximately 79% of metered connections within the City’s water system) based on the proposed water rates in FY 2025.

Table 1-9 shows the impact to Residential customers with a 5/8” meter size at various usage levels.

The customer impacts are driven by several factors: the proposed change to a uniform consumption charge, the proposed change to the fixed revenue recovery percentage, and the updated cost-ofservice analysis. 115
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11 Table 1-9: Residential Customer Impacts at Various Usage Levels Line Residential Customer Impacts Billed
Usage (hcf)
Proposed
Bill
Current
Bill
Difference
($)
Difference
(%)
1 Very Low Use (10th percentile) 2 $49.99 $35.96 $14.03 39% 2 Low Use (25th percentile) 4 $55.69 $40.84 $14.85 36%
3 Median Use 7 $64.24 $48.16 $16.08 33%
4 Average Use 11 $75.64 $58.27 $17.37 30%
5 High Use (75th percentile) 14 $84.19 $66.64 $17.55 26% 6 Very High Use (90th percentile) 25 $115.54 $100.88 $14.66 15%

PROPOSED WATER SUPPLY SURCHARGES AND DROUGHT RATES
The City relies solely on imported water purchases from CVP, ACID, and McConnell to meet its customer water demand. However, these sources of supply are subject to cost increases during years with constrained water supply. This poses a financial risk for the City; constrained year costs can be double those of non-constrained years. The proposed water rate structure includes a water supply cost surcharge that can be implemented during constrained years when costs are increased, which is shown in Table 1-10.

The McConnell and ACID water supply cost surcharges are based on the maximum potential cost per acre-feet (AF) and maximum purchases in AF for each source of supply, based on guidance from City staff and the Ad Hoc Committee. These surcharges represent the maximum the City can charge in constrained years; the City has the discretion to implement lower surcharges dependent upon the actual constrained year costs.

Table 1-10: Proposed Water Supply Cost Surcharges
Line Water Supply Cost Surcharges Effective
7/1/2024
1 Constrained Year Water Supply
2 McConnell Water Surcharge $0.17
3 ACID Water Surcharge $0.24
4 Combined Surcharge $0.41
In addition to the risk of water supply cost increases during constrained years, the City also faces risks related to government-mandated cutbacks in water usage. The City’s Water Shortage Contingency Plan (WSCP) includes six stages of drought, which all require a different level of usage reduction from the City’s customers. When customers reduce their usage, the City’s rate revenues are directly impacted. Drought rates are a tool to recover lost consumption charge revenue during each stage of drought, which keeps the water enterprise financially sufficient even during periods of mandated usage cutbacks. Table 1-11 shows the proposed drought rates during each stage of drought as defined by the WSCP.

The drought rates represent the maximum the City can charge its customers during each stage of drought. Drought rates are in addition to the City’s base consumption charge and are designed to recover lost revenue from usage cutbacks.
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12 Table 1-11: Proposed Drought Rates by Stage
Line Drought Rates Effective
7/1/2024
Effective
7/1/2025
Effective
7/1/2026
Effective
7/1/2027
Effective
7/1/2028
1 Stage 1 - 10% Reduction $0.32 $0.34 $0.37 $0.40 $0.43 2 Stage 2 - 20% Reduction $0.72 $0.77 $0.82 $0.87 $0.93 3 Stage 3 - 30% Reduction $1.23 $1.31 $1.39 $1.48 $1.57 4 Stage 4 - 40% Reduction $1.90 $2.02 $2.15 $2.28 $2.42 5 Stage 5 - 50% Reduction $2.85 $3.03 $3.22 $3.42 $3.63 6 Stage 6 - 60% Reduction $4.28 $4.54 $4.82 $5.11 $5.42 Table 1-12 shows the Residential water shortage impacts for a customer with a 5/8” meter using 11 hcf during no drought conditions (11 hcf is the average monthly usage for a Residential customer in the City’s water system).
 During non-constrained years with no drought, this customer’s water bill is $75.64.  During non-constrained years during a Stage 2 drought, this customer’s water bill is $83.56 if they do not reduce their water usage; this is an increase of $7.92.  If the same customer during a non-constrained year and Stage 2 drought does reduce their water usage by the 20% required by Stage 2, they will use approximately 9 hcf of water instead. With their reduced water usage, this customer’s water bill is $76.42, which is similar to their water bill during no drought. The proposed drought rates are designed to minimize impacts to customers that reduce their water according to the appropriate drought stage.  The last scenario shows the same customer during a constrained year and Stage 2 drought, with a 20% reduction in use. The water supply cost surcharge is added to the total water bill to recover higher costs related to constrained year supply. Their water bill will be $80.11.

Table 1-12: Residential Water Shortage Impacts
Line Residential Water
Shortage Impacts
No Drought
(NonConstrained)
Stage 2 Drought
w/ No Reduction
(NonConstrained)
Stage 2 Drought
w/ 20%
Reduction (NonConstrained)
Stage 2 Drought
w/ 20%
Reduction
(Constrained)
1 Residential Meter Size 5/8" Meter 5/8" Meter 5/8" Meter 5/8" Meter 2 Monthly Usage (hcf) 11 11 9 9
3 4 Monthly Service Charge $44.29 $44.29 $44.29 $44.29
5 Consumption Charge $31.35 $31.35 $25.65 $25.65
6 Drought Rate $0.00 $7.92 $6.48 $6.48
7 Water Supply Cost Surcharge $0.00 $0.00 $0.00 $3.69
8 Total Water Bill $75.64 $83.56 $76.42 $80.11
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13 2. FINANCIAL PLAN

2.1 FINANCIAL PLAN METHODOLOGY
The purpose of a financial plan is to project revenues, expenses, cash flows, reserve balances, and debt coverage over a multi-year period to assess financial sufficiency and performance and to determine the amount of required rate revenue. For this study, the planning period is from FY 2024 through FY 2029. The key steps in developing a financial plan for a water enterprise are below:
 Revenue projections: Annual revenues from rates and other miscellaneous sources are projected over the planning period. Rate revenues are projected based on current rates to establish baseline revenues from which the need for additional rate increases can be evaluated.
 Expense projections: Annual expenses are projected over the study period, including O&M expenses, debt service, and CIP costs. CIP funding options (grants, debt, etc.) are evaluated.  Financial policy evaluation: Key financial policies include debt coverage requirements and reserve targets. Debt coverage requirements are typically explicitly stated in official agreements on outstanding debt issuances. Reserve targets are typically set by an agency’s elected officials and may need to be periodically evaluated and updated.  Status quo financial plan projections: Cash flow, reserve balances, and debt coverage are projected over the study period in the absence of additional rate increases (this scenario is called the “status quo”). Projected reserve balances and debt coverage are then compared to the agency’s financial policy requirements and targets. The status quo financial plan provides a baseline to evaluate the need for rate increases.
 Proposed financial plan projections: The magnitude and timing of annual proposed revenue increases over the study period are evaluated and determined based on the agency’s financial policies, financial performance, and policy objectives. Proposed rate increases (referred to as “revenue adjustments”) should generate sufficient revenue to recover the agency’s expenses, maintain adequate reserves, and meet all debt coverage requirements. The proposed financial plan determines the total annual rate revenue requirement over the study period.

2.2 REVENUES

CURRENT WATER RATES
The City’s current water rate structure includes a monthly service charge based on meter size, a monthly private fire charge (for customers with private fire service) based on fire line size, and a consumption charge based on units of water usage in hcf. The consumption charge for the Residential and Lifeline customer classes are based on an inclining three-tiered structure. Customers that qualify for the City’s Lifeline assistance program currently receive a discounted Tier 1 rate, for usage up to 10 hcf per month.

The current water rates and rate structure were effective starting on July 1, 2020 or the beginning of FY 2021. These rates were developed in the City’s most recent water rate study, which was 118
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14 conducted in 2016. Table 2-1 shows the current monthly service charges; Table 2-2 shows the current monthly private fire charges; and Table 2-3 shows the current consumption charges for all customer classes.

Table 2-1: Current Monthly Service Charges
Line Current Monthly Service Charges As of 7/1/2020
1 5/8" Meter $31.08
2 1" Meter $70.45
3 1.5" Meter $136.06
4 2" Meter $214.79
5 3" Meter $398.52
6 4" Meter $660.97
7 6" Meter $1,317.12
8 8" Meter $2,104.51
9 10" Meter $3,810.49
10 12" Meter $5,647.71
Table 2-2: Current Monthly Private Fire Charges
Line Current Monthly Private Fire
Charges As of 7/1/2020
1 2" or Less $5.53
2 3" or Less $16.06
3 4" or Less $34.22
4 6" or Less $99.42
5 8" or Less $211.86
6 10" or Less $381.00
7 12" or Less $615.41
Table 2-3: Current Consumption Charges
Line Current Consumption Charges
($/hcf) As of 7/1/2020
1 Residential
2 Tier 1 (0-10 hcf) $2.44
3 Tier 2 (11-20 hcf) $2.79
4 Tier 3 (>20 hcf) $3.50
5 6 Lifeline
7 Tier 1 (0-10 hcf) $1.94
8 Tier 2 (11-20 hcf) $2.79
9 Tier 3 (>20 hcf) $3.50
10 11 Multi-Family & Mobile $2.58
12 Commercial & Industrial $2.63
13 Commercial Irr. & Govt. $2.86
14 Schools $3.07
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15 CUSTOMER ACCOUNTS AND USAGE
Units of service represent the quantity of billing units that are subject to the City’s water rates and charges. The number of metered water connections are the units of service for the City’s monthly service charges. The number of private fire lines are the units of service for the City’s monthly private fire charges.

Table 2-4 shows the projected number of water meters and private fire lines for the study period.

City staff provided data for FY 2023 and number of new connections for the remainder of the period.

Detailed information on the number of water meters by customer class is provided in the Appendix (Table 6-1).

Table 2-4: Customer Account Projections
Line Customer Accounts FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Water Meters
2 5/8" 3,849 3,849 3,849 3,849 3,849 3,849 3,849
3 1" 71 71 71 71 71 71 71
4 1.5" 14 14 14 14 14 14 14
5 2" 43 43 44 44 44 44 44
6 3" 1 1 1 1 1 1 1
7 4" 2 2 3 3 3 3 3
8 6" 1 1 1 1 1 1 1
9 8" 0 0 0 0 0 0 0
10 10" 2 2 2 2 2 2 2
11 12" 0 0 0 0 0 0 0
12 Subtotal 3,983 3,983 3,985 3,985 3,985 3,985 3,985
13 14 Private Fire Lines
15 2" or Less 0 0 0 0 0 0 0
16 3" or Less 0 0 0 0 0 0 0
17 4" or Less 5 5 5 5 5 5 5
18 6" or Less 8 8 8 8 8 8 8
19 8" or Less 4 4 4 4 4 4 4
20 10" or Less 2 2 2 2 2 2 2
21 12" or Less 0 0 0 0 0 0 0
22 Subtotal 19 19 19 19 19 19 19
23 24 Total 4,002 4,002 4,004 4,004 4,004 4,004 4,004
The amount of water usage in hcf is the unit of service for the City’s consumption charges. Table 2-5 shows the water usage projections for the study period. City staff provided usage data for FY 2023; WRE worked with City staff to determine demand projections for FY 2024 based on estimated water rate revenues. Water demand per account is estimated to increase by approximately 7.5% in FY 2024 and will stay constant for the remaining years.
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16 Table 2-5: Water Usage Projections
Line Water Usage (hcf) FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Residential
2 Tier 1 (0-10 hcf) 252,237 271,211 271,211 271,211 271,211 271,211 271,211 3 Tier 2 (11-20 hcf) 89,651 96,395 96,395 96,395 96,395 96,395 96,395 4 Tier 3 (>20 hcf) 83,742 90,041 90,041 90,041 90,041 90,041 90,041 5 6 Lifeline
7 Tier 1 (0-10 hcf) 28,507 30,651 30,651 30,651 30,651 30,651 30,651 8 Tier 2 (11-20 hcf) 8,795 9,457 9,457 9,457 9,457 9,457 9,457 9 Tier 3 (>20 hcf) 7,060 7,591 7,591 7,591 7,591 7,591 7,591 10 11 Multi-Family & Mobile 62,303 66,990 66,990 66,990 66,990 66,990 66,990 12 Commercial & Industrial 157,073 168,889 168,889 168,889 168,889 168,889 168,889 13 Commercial Irr. & Govt. 29,899 32,148 32,148 32,148 32,148 32,148 32,148 14 Schools 28,700 30,859 30,859 30,859 30,859 30,859 30,859 15 16 Total (hcf) 747,967 804,232 804,232 804,232 804,232 804,232 804,232

REVENUES FROM CURRENT RATES
Annual revenues from current rates were projected over the study period in Table 2-6. These revenue projections assume no rate increases during the period and are the baseline for the status quo financial plan.

Monthly service charge revenues are calculated by multiplying the current monthly service charge (Table 2-1) by the respective number of connections for each meter size in each year (Table 2-4), and then multiplying by 12 months to annualize the revenue.

Monthly private fire charge revenues are calculated by multiplying the current private fire charge (Table 2-2) by the respective number of fire lines for each size in each year (Table 2-4), and then multiplying by 12 months.

Consumption charge revenues are calculated by multiplying the current consumption charges (Table 2-3) by the respective amount of water usage by customer class and tier in each year (Table 2-5).

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17 Table 2-6: Calculated Water Rate Revenues from Current Rates Line Calculated Water Rate
Revenues FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Monthly Service Charges
2 Residential $1,179,300 $1,179,300 $1,179,300 $1,179,300 $1,179,300 $1,179,300 3 Lifeline $183,123 $183,123 $183,123 $183,123 $183,123 $183,123 4 Multi-Family & Mobile $145,720 $153,652 $153,652 $153,652 $153,652 $153,652 5 Commercial & Industrial $166,954 $169,531 $169,531 $169,531 $169,531 $169,531 6 Commercial Irr. & Govt. $49,123 $49,123 $49,123 $49,123 $49,123 $49,123 7 Schools $32,919 $32,919 $32,919 $32,919 $32,919 $32,919 8 Private Fire Lines $30,911 $30,911 $30,911 $30,911 $30,911 $30,911 9 Subtotal $1,757,139 $1,767,648 $1,767,648 $1,767,648 $1,767,648 $1,767,648 10 11 Consumption Charges
12 Residential $1,245,843 $1,245,843 $1,245,843 $1,245,843 $1,245,843 $1,245,843 13 Lifeline $112,416 $112,416 $112,416 $112,416 $112,416 $112,416 14 Multi-Family & Mobile $172,833 $172,833 $172,833 $172,833 $172,833 $172,833 15 Commercial & Industrial $444,177 $444,177 $444,177 $444,177 $444,177 $444,177 16 Commercial Irr. & Govt. $91,944 $91,944 $91,944 $91,944 $91,944 $91,944 17 Schools $94,737 $94,737 $94,737 $94,737 $94,737 $94,737 18 Subtotal $2,161,950 $2,161,950 $2,161,950 $2,161,950 $2,161,950 $2,161,950 19 20 Total $3,950,000 $3,960,509 $3,960,509 $3,960,509 $3,960,509 $3,960,509

REVENUE SUMMARY
Table 2-7 shows the summary of projected revenues throughout the study period. Water rate revenues (Line 1) are from Table 2-6. Connection fee revenues, miscellaneous revenues, and interest income for FY 2024 are from the City’s annual revenue budget. Interest income was projected beginning in FY 2025 and is based on projected fund balances and assumed a 1% interest rate.

Miscellaneous and connection fee revenues are expected to stay constant and are therefore not inflated.

Table 2-7: Revenue Summary
Line Revenues FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Water Rate Revenues $3,950,000 $3,960,509 $3,960,509 $3,960,509 $3,960,509 $3,960,509 2 Connection Fees $32,500 $32,500 $32,500 $32,500 $32,500 $32,500 3 Miscellaneous Revenue $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 4 Interest Income $0 $18,383 $44,581 $60,223 $38,587 $30,777 5 Total $3,991,500 $4,020,392 $4,046,591 $4,062,232 $4,040,597 $4,032,786

2.3 OPERATING EXPENSES

INFLATIONARY ASSUMPTIONS
Annual inflationary assumptions were developed based on data provided by City staff in its annual operating budget. The assumptions utilized in the study are shown in Table 2-8; no inflationary 122
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18 assumptions are shown for FY 2024, which is the base year from which all inflationary adjustments were applied.

Table 2-8: Expense Inflationary Assumptions
Line Inflationary Assumptions FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 General 3.0% 3.0% 3.0% 3.0% 3.0%
2 Salaries 5.0% 5.0% 5.0% 5.0% 5.0%
3 Benefits 10.0% 10.0% 10.0% 10.0% 10.0%
4 Water Supply 5.0% 5.0% 5.0% 5.0% 5.0%
5 Utilities 4.0% 4.0% 4.0% 4.0% 4.0%
6 Capital 4.0% 4.0% 4.0% 4.0% 4.0%
7 Meter & Insurance 5.0% 5.0% 5.0% 5.0% 5.0%

NON-CONSTRAINED WATER SUPPLY COSTS
The City purchases water to serve its customers from three sources: the Central Valley Project (using pump stations and transmission pipelines owned by the US Bureau of Reclamation), AndersonCottonwood Irrigation District, and the McConnell Foundation.

Water supply costs during constrained years (when supply is constrained, or lower, than typical years) can be significantly more expensive for the City. The estimated water supply costs calculated in this study assume a non-constrained water supply year; the study proposes a water supply cost surcharge that the City can implement during constrained years.

Table 2-9 shows the calculated non-constrained water supply costs for the study period, starting in FY 2025. FY 2024 water supply costs are based on the City’s operating budget.

The amount of water produced in each year (Line 5) is calculated by applying the estimated water loss percentage (Line 1) to the amount of water used by customers each year (Lines 3-4, from Table 2-5). City staff provided historical water supply cost data, which provides the proportion of water produced from each source (Lines 7-11) and the cost of water from each source (Lines 13-16). The water supply cost by source (Lines 18-22) is calculated by multiplying the water produced by source by the cost per source.
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19 Table 2-9: Calculated Non-Constrained Water Supply Costs Line Non-Constrained Water Supply Costs FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Estimated Water Loss 4.72% 4.72% 4.72% 4.72% 4.72%
2 3 Water Usage (hcf) 804,232 804,232 804,232 804,232 804,232 4 Water Usage (AF) 1,846 1,846 1,846 1,846 1,846
5 Water Production (AF) 1,938 1,938 1,938 1,938 1,938
6 7 Water Produced by Source (AF)
8 USBR 800 800 800 800 800
9 ACID 1,069 1,069 1,069 1,069 1,069
10 McConnell 68 68 68 68 68
11 Total 1,938 1,938 1,938 1,938 1,938
12 13 Water Unit Cost by Source ($/AF)
14 USBR $65.40 $68.67 $72.10 $75.71 $79.49
15 ACID $240.03 $252.03 $264.63 $277.86 $291.75
16 McConnell $58.71 $61.64 $64.73 $67.96 $71.36
17 18 Water Supply Cost by Source
19 USBR $52,322 $54,938 $57,685 $60,569 $63,598
20 ACID $256,691 $269,526 $283,002 $297,152 $312,010
21 McConnell $4,008 $4,208 $4,418 $4,639 $4,871
22 Total $313,021 $328,672 $345,105 $362,361 $380,479

OPERATING EXPENSE SUMMARY
Table 2-10 shows the operating expense summary for the study period. The operating expenses are based on the City’s O&M budget for FY 2024, inflated based on the assumptions in Table 2-8 for future years. The water purchases (Line 4) for FY 2025 and beyond are based on the non-constrained water supply cost calculations in Table 2-9. Detailed operating expense projections are included in the Appendix (Table 6-3).

Table 2-10: Operating Expense Summary
Line Expense Summary FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Water Admin $896,567 $925,164 $954,704 $985,219 $1,016,744 $1,049,313 2 Water Distribution $1,087,876 $1,121,112 $1,155,376 $1,190,698 $1,227,114 $1,264,657 3 Water Treatment Plant $1,047,505 $1,108,818 $1,174,506 $1,244,932 $1,320,493 $1,401,618 4 Water Purchases $620,000 $313,021 $328,672 $345,105 $362,361 $380,479 5 Total $3,651,948 $3,468,115 $3,613,257 $3,765,956 $3,926,711 $4,096,066 124
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20 2.4 DEBT SERVICE

EXISTING DEBT SERVICE
The City has two existing debt issuances: an I-Bank Water Loan and a CalPERS Loan. The City is paying off the CalPERS Loan early; the last payment is in FY 2024. Table 2-11 shows the City’s existing debt service for the study period.

Table 2-11: Existing Debt Service
Line Existing Debt Service FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 I-Bank Water Loan (Interest) $77,687 $71,937 $66,013 $59,910 $53,622 $47,143 2 I-Bank Water Loan (Principal) $186,926 $192,590 $198,425 $204,437 $210,632 $217,014 3 CalPERS Loan (Interest) $48,231 $0 $0 $0 $0 $0
4 CalPERS Loan (Principal) $186,926 $0 $0 $0 $0 $0
5 Total $499,770 $264,527 $264,438 $264,347 $264,253 $264,157

PROPOSED DEBT SERVICE
The proposed financial plan (detailed in a later section of this report) includes a $6,122,449 debt issuance in FY 2026. This debt issuance will provide $6 million in debt proceeds (after paying for a 2% issuance cost) for the City to spend on capital projects. The proposed debt issuance assumes a 6% interest rate over a 30-year term. Table 2-12 shows the proposed debt service for the $6.1 million issuance.

Table 2-12: Proposed Debt Service
Line Proposed Debt Service FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Proposed FY 2026 Issuance $0 $0 $444,789 $444,789 $444,789 $444,789 2 Total $0 $0 $444,789 $444,789 $444,789 $444,789

DEBT SERVICE SUMMARY
Table 2-13 shows the debt service summary for the study period. The City will pay approximately $709,000 each year in debt service starting in FY 2026.

Table 2-13: Debt Service Summary
Line Debt Service Summary FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Existing Debt $499,770 $264,527 $264,438 $264,347 $264,253 $264,157 2 Proposed Debt $0 $0 $444,789 $444,789 $444,789 $444,789 3 Total - Debt Service $499,770 $264,527 $709,228 $709,136 $709,043 $708,946 125
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21 2.5 CAPITAL IMPROVEMENT PLAN CAPITAL IMPROVEMENT PROJECTS Table 2-14 shows the City’s six-year CIP. Project costs have been inflated for future years using the Capital cost inflationary assumption(Table 2-8) starting in FY 2025. The City has secured grant funding for the Centimudi Tank (Line 2) and Lake Boulevard Water TransmissionLine Design (Line 12) projects. Another major project is the Water Treatment Plant (WTP) Raw Water Tank Replacement (Line 11), which costs approximately $4.6 million in total and will be funded by the proposed debt issuance. The City expects to spend approximately $18.8 million on capital projects over six years.

Table 2-14: Capital Improvement Projects
Line Capital Improvement Projects FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Storage Tank Maintenance $275,000 $286,000 $297,440 $309,338 $321,711 $334,580 2 Centimudi Tank $5,000,000 $0 $0 $0 $0 $0 3 PRV Replacement Project $100,000 $104,000 $108,160 $112,486 $116,986 $121,665 4 Water Rate Study $55,000 $0 $0 $0 $0 $0 5 Water Improvements 22-23 (Ranchera Water) $1,143,000 $0 $0 $0 $0 $0 6 WTP-Centrifuge Skid Unit $0 $468,000 $0 $0 $0 $0 7 WTP-UCMR5 Testing $10,000 $0 $0 $0 $0 $0 8 WTP-20" Mag Meter (Raw Water Line) $30,000 $0 $0 $0 $0 $0 9 WTP-Filter 2-Clarifier Beads $175,000 $0 $0 $0 $0 $0 10 Filter to Waste Improvements $0 $0 $540,800 $0 $0 $0 11 WTP - Raw Water Tank Demo/Replacement $0 $0 $0 $2,249,728 $2,339,717 $0 12 Lake Blvd. Water Transmission Line (Design) $0 $1,040,000 $0 $0 $0 $0 13 Water Master Plan update $0 $0 $216,320 $0 $0 $0 14 Water Meter ERT Replacement $0 $260,000 $270,400 $281,216 $0 $0 15 BOR Raw Water Pumps- Upgrade SCADA/Comms $0 $0 $108,160 $0 $0 $0 16 WTP Backwash Basin Pumps $0 $260,000 $0 $0 $0 $0 17 SCADA Radios (City Wide) $0 $104,000 $0 $0 $0 $0 18 Water Improvements (Projects TBD) $0 $0 $0 $562,432 $584,929 $608,326 19 Total $6,788,000 $2,522,000 $1,541,280 $3,515,200 $3,363,343 $1,064,571 126
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22 CAPITAL EXPENSE SUMMARY
Table 2-15 shows the capital expense summary and funding sources. The Centimudi and Lake Boulevard projects are entirely grant funded. The proposed debt issuance will provide $6 million in debt proceeds, which will fund capital projects from FY 2026 through FY 2028. All other project costs will be funded by water rates (or cash balances).

Table 2-15: Capital Expense Summary
Line Capital Summary FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Grant Funded $5,000,000 $1,040,000 $0 $0 $0 $0
2 Debt Funded $0 $0 $1,541,280 $3,515,200 $943,520 $0
3 Rate Funded $1,788,000 $1,482,000 $0 $0 $2,419,823 $1,064,571 4 Total $6,788,000 $2,522,000 $1,541,280 $3,515,200 $3,363,343 $1,064,571

2.6 FINANCIAL POLICIES

RESERVE POLICY
The City’s reserve policy maintains cash on hand to meet short-term cash imbalances and to execute CIP projects. The reserve target for the study period ranges from approximately $2.1 million to $2.2 million in the City’s reserve funds (Fund 510). The City current has an adopted reserve policy that consists of the following components:
 Operating Reserve Target: 25% of annual operating expenses  Capital Projects Reserve Target: 100% of average annual rate funded CIP

DEBT COVERAGE REQUIREMENT
The City’s debt coverage requirement is 125% of annual debt service. To meet coverage requirements, net revenues (revenues less operating expenses) must be 125% or more of annual debt service. If the City does not meet its debt coverage requirements, it will be in technical default.

2.7 STATUS QUO FINANCIAL PLAN

STATUS QUO FINANCIAL PLAN SCENARIO
Table 2-16 shows the revenue adjustments and proposed debt issuances for the status quo scenario.

This scenario shows no revenue adjustments and no proposed debt issuances.

Table 2-16: Revenue Adjustments and Debt Issuances (Status Quo Financial Plan) Line Fiscal Year Revenue
Adjustments
Debt
Issuance
1 FY 2025 0.0% $0
2 FY 2026 0.0% $0
3 FY 2027 0.0% $0
4 FY 2028 0.0% $0
5 FY 2029 0.0% $0
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23 STATUS QUO CASH FLOW PROJECTIONS Table 2-17 shows the status quo cash flow projections. Revenues are from Table 2-7. Operating expenses are from Table 2-10; debt service is from Table 2-13. Rate funded CIP is from Table 2-15 (rate and debt funded). Net cash flow is negative in all years.

Table 2-17: Cash Flow Projections (Status Quo Financial Plan) Line Cash Flow Projections FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Revenues 2 Rate Revenues at Existing Rates $3,950,000 $3,960,509 $3,960,509 $3,960,509 $3,960,509 $3,960,509 3 Revenue Adjustments $0 $0 $0 $0 $0 $0 4 Connection Fees $32,500 $32,500 $32,500 $32,500 $32,500 $32,500 5 Miscellaneous Revenues $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 6 Interest Income $28,947 $13,432 $419 $0 $0 $0 7 Subtotal $4,020,447 $4,015,442 $4,002,428 $4,002,009 $4,002,009 $4,002,009 8 9 Operating Expenses 10 Water Admin $896,567 $925,164 $954,704 $985,219 $1,016,744 $1,049,313 11 Water Distribution $1,087,876 $1,121,112 $1,155,376 $1,190,698 $1,227,114 $1,264,657 12 Water Treatment Plant $1,047,505 $1,108,818 $1,174,506 $1,244,932 $1,320,493 $1,401,618 13 Water Purchases $620,000 $313,021 $328,672 $345,105 $362,361 $380,479 14 Subtotal $3,651,948 $3,468,115 $3,613,257 $3,765,956 $3,926,711 $4,096,066 15 16 Net Revenue $368,499 $547,327 $389,171 $236,053 $75,298 ($94,057) 17 18 Debt Service 19 Existing Debt $499,770 $264,527 $264,438 $264,347 $264,253 $264,157 20 Proposed Debt $0 $0 $0 $0 $0 $0 21 Subtotal $499,770 $264,527 $264,438 $264,347 $264,253 $264,157 22 23 Capital Projects 24 Rate Funded CIP $1,788,000 $1,482,000 $1,541,280 $3,515,200 $3,363,343 $1,064,571 25 Subtotal $1,788,000 $1,482,000 $1,541,280 $3,515,200 $3,363,343 $1,064,571 26 27 Net Cash Flow ($1,919,271) ($1,199,200) ($1,416,548) ($3,543,494) ($3,552,299) ($1,422,785) 128
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24 STATUS QUO FUND BALANCE PROJECTIONS Table 2-18 shows the fund balance projections for the status quo financial plan. Based on the sources (revenues, grants, and debt proceeds) and uses (operating expenses, debt service, and CIP) of funds, the City’s fund balances will be negative at the end of FY 2026. At the end of the study period, the fund balances will be approximately negative $9.2 million.

Table 2-18: Fund Balance Projections (Status Quo Financial Plan) Line Fund Balance Projections FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Beginning Balance $3,868,837 $1,949,566 $750,366 ($666,181) ($4,209,675) ($7,761,974) 2 3 Sources of Funds 4 Rate Revenues $3,950,000 $3,960,509 $3,960,509 $3,960,509 $3,960,509 $3,960,509 5 Revenue Adjustments $0 $0 $0 $0 $0 $0 6 Non-Rate Revenues $41,500 $41,500 $41,500 $41,500 $41,500 $41,500 7 Grant Proceeds $5,000,000 $1,040,000 $0 $0 $0 $0 8 Debt Proceeds $0 $0 $0 $0 $0 $0 9 Interest Income $28,947 $13,432 $419 $0 $0 $0 10 Subtotal $9,020,447 $5,055,442 $4,002,428 $4,002,009 $4,002,009 $4,002,009 11 12 Uses of Funds 13 Operating Expenses $3,651,948 $3,468,115 $3,613,257 $3,765,956 $3,926,711 $4,096,066 14 Debt Service $499,770 $264,527 $264,438 $264,347 $264,253 $264,157 15 Grant Funded CIP $5,000,000 $1,040,000 $0 $0 $0 $0 16 Debt Funded CIP $0 $0 $0 $0 $0 $0 17 Rate Funded CIP $1,788,000 $1,482,000 $1,541,280 $3,515,200 $3,363,343 $1,064,571 18 Subtotal $10,939,718 $6,254,641 $5,418,976 $7,545,503 $7,554,308 $5,424,794 19 20 Ending Balance $1,949,566 $750,366 ($666,181) ($4,209,675) ($7,761,974) ($9,184,759) 129
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25 STATUS QUO FINANCIAL PERFORMANCE
The water utility’s financial performance is evaluated based on the reserve targets and debt coverage requirements, shown in Table 2-19. The City will not meet its reserve targets in any year of the study; it will also not meet its debt coverage requirements for the latter years of the study.

Table 2-19: Financial Performance (Status Quo Financial Plan) Line Financial Performance FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Existing Reserve Targets
2 Operating Target $912,987 $867,029 $903,314 $941,489 $981,678 $1,024,017 3 Capital Reserve Target $2,337,965 $2,337,965 $2,337,965 $2,337,965 $2,337,965 $2,337,965 4 Combined Target $3,250,952 $3,204,993 $3,241,279 $3,279,454 $3,319,643 $3,361,981 5 Combined Reserves $1,949,566 $750,366 ($666,181) ($4,209,675) ($7,761,974) ($9,184,759) 6 Meets Target? No No No No No No
7 8 Debt Coverage Target
9 Required Debt Coverage 125% 125% 125% 125% 125% 125%
10 Calculated Debt Coverage 74% 207% 147% 89% 28% -36%
11 Meets Target? No Yes Yes No No No
Figure 2-1 shows the comparison of revenues and the revenue requirement in the status quo financial plan. The stacked bars represent the revenue requirements, or costs: navy for O&M expenses, green for debt service, and turquoise for rate funded CIP. The City will not be adding to its reserves (grey bars) in this scenario. The current revenue, shown as a solid line, is lower than the revenue requirements, meaning that revenues are insufficient to fund necessary costs.

Figure 2-1: Revenue vs. Revenue Requirement (Status Quo Financial Plan) 130
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26 Figure 2-2 shows the fund balance projections in the status quo financial plan. The City’s ending balances (green bars) will not meet its reserve targets (solid black line) during the study period.

Starting in FY 2026, the City’s water funds will be negative.

Figure 2-2: Fund Balance Projections (Status Quo Financial Plan) Figure 2-3 shows the debt coverage projections in the status quo financial plan. The required debt coverage (dashed black line) is not met in FY 2027 and beyond. Debt coverage is lower than the requirement in FY 2024 due to an early repayment of the CalPERS loan; the City is not in technical default in that year. However, the City will be in technical default in this scenario starting in FY 2027.

Figure 2-3: Debt Coverage Projections (Status Quo Financial Plan) 131
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27 2.8 PROPOSED FINANCIAL PLAN

PROPOSED FINANCIAL PLAN SCENARIO
The proposed financial plan scenario includes five years of revenue adjustments, which are needed to maintain the financial sufficiency of the water enterprise, and one debt issuance in FY 2026 to fund CIP. WRE worked with City staff and the Ad Hoc Committee to determine the most appropriate financial plan scenario, which is shown in Table 2-20.

Table 2-20: Revenue Adjustments and Debt Issuances (Proposed Financial Plan) Line Fiscal Year Revenue
Adjustments
Debt
Issuance
1 FY 2025 25.0% $0
2 FY 2026 6.0% $6,122,449
3 FY 2027 6.0% $0
4 FY 2028 6.0% $0
5 FY 2029 6.0% $0
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28 PROPOSED CASH FLOW PROJECTIONS Table 2-21 shows the proposed cash flow projections. Revenues are from Table 2-7; revenue adjustments are derived from the percentage revenue adjustments in Table 2-20. Net cash flow is positive in FY 2026, FY 2027, and FY 2029; reserves are replenished in those years.

Table 2-21: Cash Flow Projections (Proposed Financial Plan) Line Cash Flow Projections FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Revenues 2 Rate Revenues at Existing Rates $3,950,000 $3,960,509 $3,960,509 $3,960,509 $3,960,509 $3,960,509 3 Revenue Adjustments $0 $990,127 $1,287,165 $1,602,026 $1,935,778 $2,289,555 4 Connection Fees $32,500 $32,500 $32,500 $32,500 $32,500 $32,500 5 Miscellaneous Revenues $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 6 Interest Income $28,947 $18,383 $44,581 $60,223 $38,587 $30,777 7 Subtotal $4,020,447 $5,010,520 $5,333,756 $5,664,258 $5,976,375 $6,322,341 8 9 Operating Expenses 10 Water Admin $896,567 $925,164 $954,704 $985,219 $1,016,744 $1,049,313 11 Water Distribution $1,087,876 $1,121,112 $1,155,376 $1,190,698 $1,227,114 $1,264,657 12 Water Treatment Plant $1,047,505 $1,108,818 $1,174,506 $1,244,932 $1,320,493 $1,401,618 13 Water Purchases $620,000 $313,021 $328,672 $345,105 $362,361 $380,479 14 Subtotal $3,651,948 $3,468,115 $3,613,257 $3,765,956 $3,926,711 $4,096,066 15 16 Net Revenue $368,499 $1,542,405 $1,720,499 $1,898,302 $2,049,663 $2,226,275 17 18 Debt Service 19 Existing Debt $499,770 $264,527 $264,438 $264,347 $264,253 $264,157 20 Proposed Debt $0 $0 $444,789 $444,789 $444,789 $444,789 21 Subtotal $499,770 $264,527 $709,228 $709,136 $709,043 $708,946 22 23 Capital Projects 24 Rate Funded CIP $1,788,000 $1,482,000 $0 $0 $2,419,823 $1,064,571 25 Subtotal $1,788,000 $1,482,000 $0 $0 $2,419,823 $1,064,571 26 27 Net Cash Flow ($1,919,271) ($204,122) $1,011,271 $1,189,166 ($1,079,203) $452,758 133
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29 PROPOSED FUND BALANCE PROJECTIONS Table 2-22 shows the fund balance projections for the proposed financial plan. Based on the sources (revenues, grants, and debt proceeds) and uses (operating expenses, debt service, and CIP) of funds, the City’s fund balances will be approximately $3.3 million at the end of the study. The ending balances from FY 2024 to FY 2029 are slowly growing, meaning that the City is replenishing its reserves to meet its reserve targets.

Table 2-22: Fund Balance Projections (Proposed Financial Plan) Line Fund Balance Projections FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Beginning Balance $3,868,837 $1,949,566 $1,745,444 $7,215,435 $4,889,401 $2,866,679 2 3 Sources of Funds 4 Rate Revenues $3,950,000 $3,960,509 $3,960,509 $3,960,509 $3,960,509 $3,960,509 5 Revenue Adjustments $0 $990,127 $1,287,165 $1,602,026 $1,935,778 $2,289,555 6 Non-Rate Revenues $41,500 $41,500 $41,500 $41,500 $41,500 $41,500 7 Grant Proceeds $5,000,000 $1,040,000 $0 $0 $0 $0 8 Debt Proceeds $0 $0 $6,000,000 $0 $0 $0 9 Interest Income $28,947 $18,383 $44,581 $60,223 $38,587 $30,777 10 Subtotal $9,020,447 $6,050,520 $11,333,756 $5,664,258 $5,976,375 $6,322,341 11 12 Uses of Funds 13 Operating Expenses $3,651,948 $3,468,115 $3,613,257 $3,765,956 $3,926,711 $4,096,066 14 Debt Service $499,770 $264,527 $709,228 $709,136 $709,043 $708,946 15 Grant Funded CIP $5,000,000 $1,040,000 $0 $0 $0 $0 16 Debt Funded CIP $0 $0 $1,541,280 $3,515,200 $943,520 $0 17 Rate Funded CIP $1,788,000 $1,482,000 $0 $0 $2,419,823 $1,064,571 18 Subtotal $10,939,718 $6,254,641 $5,863,765 $7,990,292 $7,999,097 $5,869,584 19 20 Ending Balance $1,949,566 $1,745,444 $7,215,435 $4,889,401 $2,866,679 $3,319,436 134
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30 PROPOSED FINANCIAL PERFORMANCE
Table 2-23 shows the water enterprise’s financial performance in the proposed financial plan scenario. The City will meet its reserve targets starting in FY 2026 and maintain adequate levels throughout the rest of the study period. The City will meet its debt coverage requirements for all years of the study as well (debt coverage is low in FY 2024 due to an early repayment of the CalPERS loan). In the proposed financial plan, the City will meet its financial targets and adequately fund its necessary operating and capital costs.

Table 2-23: Financial Performance (Proposed Financial Plan) Line Financial Performance FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Existing Reserve Targets
2 Operating Target $912,987 $867,029 $903,314 $941,489 $981,678 $1,024,017 3 Capital Reserve Target $1,137,965 $1,137,965 $1,137,965 $1,137,965 $1,137,965 $1,137,965 4 Combined Target $2,050,952 $2,004,993 $2,041,279 $2,079,454 $2,119,643 $2,161,981 5 Combined Reserves $1,949,566 $1,745,444 $7,215,435 $4,889,401 $2,866,679 $3,319,436 6 Meets Target? No No Yes Yes Yes Yes
7 8 Debt Coverage Target
9 Required Debt Coverage 125% 125% 125% 125% 125% 125%
10 Calculated Debt Coverage 74% 583% 243% 268% 289% 314% 11 Meets Target? No Yes Yes Yes Yes Yes
Figure 2-4 shows the comparison of revenues and the revenue requirement in the proposed financial plan. The stacked bars represent the revenue requirements, or costs: navy for O&M expenses, green for debt service, turquoise for rate funded CIP, and grey for reserve funding. The proposed revenue, shown as a dashed line, is higher than the stacked bars for most years. This means that the City is adequately funding operating, debt service, and capital costs.

Figure 2-4: Revenue vs. Revenue Requirement (Proposed Financial Plan) 135
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31 Figure 2-5 shows the fund balance projections in the proposed financial plan. The City’s ending balances (green bars) will meet its reserve targets (solid black line) starting in FY 2026. The City’s fund balances in FY 2026 are high due to the $6 million in debt proceeds, which will be spent down by FY 2028. The City will meet its reserve targets at the end of the study period.

Figure 2-5: Fund Balance Projections (Proposed Financial Plan) Figure 2-6 shows the debt coverage projections in the proposed financial plan. The required debt coverage (dashed black line) is met in all years. Debt coverage is lower than the requirement in FY 2024 due to an early repayment of the CalPERS loan; the City is not in technical default in that year.

Figure 2-6: Debt Coverage Projections (Proposed Financial Plan) 136
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32 3. COST-OF-SERVICE ANALYSIS

3.1 COST-OF-SERVICE METHODOLOGY
A cost-of-service analysis was conducted to allocate the proposed FY 2024 rate revenue requirement to customers in proportion to use of and burden on the City’s water system. The overall goal of the cost-of-service analysis is to develop “unit costs,” which provide the basis from which proposed rates are directly calculated from. Note that although the study period spans five years, the cost-of-service analysis is limited to a single representative year referred to as the “test year.” The test year in this study is FY 2024.

The cost-of-service analysis is “revenue neutral,” meaning that the resulting cost-of-service based rates collect the same amount of revenue as the City expects to collect in FY 2024 (equal to $3,950,000). The revenue neutral unit costs determine revenue neutral rates, which are then adjusted based on the proposed financial plan increases to arrive at the proposed water rates for five years. All values presented in this section pertain to FY 2024 and are revenue neutral unless stated otherwise.

The key steps in conducting a water cost-of-service analysis are outlined below:
 Revenue requirement determination: The total rate revenue requirement for the test year is determined based on the results of the proposed financial plan and divided into primary subcomponents (operating, capital, etc.).  Cost functionalization: Operating and capital costs are evaluated and assigned to “functional categories” in the water system (e.g., customer service, groundwater wells, distribution, etc.).

This provides a proportional breakdown of system costs by functional category.  Revenue requirement allocation to cost causation components: Functionalized costs are allocated to “cost causation components” (e.g., water supply, base delivery, max day delivery, etc.), which is used to attribute customers’ use of the system to the District’s incursion of costs.
 Unit cost development: The rate revenue requirement allocation for each individual cost causation component is divided by the appropriate units of service to establish unit costs for the test year. Unit costs provide the basis from which proposed rates are calculated.

3.2 REVENUE REQUIREMENT

REVENUE REQUIREMENT DETERMINATION
The total rate revenue requirement for FY 2024 is based on the financial plan projections (Table 2-21) and was allocated between Operating and Capital components, shown in Table 3-1. The Operating revenue requirement consists of operating expenses (Line 2), miscellaneous non-rate revenues (Lines 7-12), and cash from reserves (Line 15) which is equal to net cash flow in FY 2024. The revenue adjustment annualization (Line 16) is an adjustment for when rates are not implemented for partial 137
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33 years; for this study this adjustment is equal to $0 because proposed rates will be effective for the entire fiscal year. The Capital operating revenue requirement is equal to debt service and CIP (Lines 3- 4). The total revenue requirement (Line 19) is equal to the amount of rate revenue collected in FY 2024 in the financial plan (Table 2-21, Line 2).

Table 3-1: Revenue Requirement for FY 2024
Line FY 2024 Revenue Requirement Operating Capital Total 1 Revenue Requirements
2 Operating Expenses $3,651,948 $0 $3,651,948
3 Debt Service $0 $499,770 $499,770
4 Rate Funded CIP $0 $1,788,000 $1,788,000
5 Subtotal $3,651,948 $2,287,770 $5,939,718
6 7 Non-Rate Revenues
8 Connection Fees ($32,500) $0 ($32,500)
9 Miscellaneous Revenues ($9,000) $0 ($9,000)
10 All Other Revenues $0 $0 $0
11 Interest Income ($28,947) $0 ($28,947)
12 Subtotal ($70,447) $0 ($70,447)
13 14 Adjustments
15 Cash to/(from) Reserves ($1,919,271) $0 ($1,919,271) 16 Revenue Adjustment Annualization $0 $0 $0
17 Subtotal ($1,919,271) $0 ($1,919,271)
18 19 Total $1,662,230 $2,287,770 $3,950,000

3.3 COST FUNCTIONALIZATION

FUNCTIONAL CATEGORY DEFINITIONS
The City’s water system costs were evaluated and assigned to various functional categories within the water system. The functional categories include the following:
 Supply: costs of acquiring water to serve the City’s customers  Distribution: costs related to delivering water through the City’s distribution system  Treatment: costs related to treatment of water to potable standards  Pumping: costs related to pumping water to higher elevations  Storage: costs related to water storage (such as reservoirs and tanks)  Conservation: costs of the City’s water conservation program  Meter: costs of meter maintenance and replacement
 Fire: costs related to fire protection
 Billing & Admin: costs related to customer service, billing, and other administrative activities  General: related to general costs that are not directly attributable to any other functional category
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34 OPERATING COST FUNCTIONALIZATION
Operating expenses for FY 2024 were evaluated and allocated to the most closely associated functional categories within the water system, as shown in Table 3-2. The detailed functionalization of the operating budget is included in the Appendix (Table 6-4).

Table 3-2: Operating Costs by Function
Line Cost Functions Operating
Expenses
1 Supply $620,000
2 Distribution $1,057,876
3 Treatment $1,027,505
4 Pumping $0
5 Storage $0
6 Conservation $20,000
7 Meter $30,000
8 Fire $0
9 Billing & Admin $281,391
10 General $615,176
11 Total $3,651,948

CAPITAL ASSET FUNCTIONALIZATION
Current capital assets were evaluated and allocated to the most closely associated functional categories within the water system, as shown in Table 3-3. It is standard practice in water cost-ofservice studies to functionalize existing capital assets rather than planned CIP costs; this is because planned CIP projects can fluctuate significantly from year to year. The existing capital asset base provides a more stable representation of long-term capital needs and their associated costs. The asset valuation methodology utilized in this study is Replacement Cost Less Depreciation (RCLD), which takes both inflation and depreciation of the City’s water system assets into account. The derivation of capital asset value and detailed functionalization of the capital assets is included in the Appendix (Table 6-5).

Table 3-3: Capital Assets by Function
Line Cost Functions Capital Assets
(RCLD)
1 Supply $0
2 Distribution $12,834,870
3 Treatment $2,063,261
4 Pumping $62,121
5 Storage $55,462
6 Conservation $0
7 Meter $0
8 Fire $0
9 Billing & Admin $0
10 General $2,512,452
11 Total $17,528,166
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35 3.4 COST CAUSATION COMPONENTS

COST COMPONENT DEFINITIONS
While the functional categories represent the costs of system functions, cost causation components represent the reasons for why and how those costs are incurred within the system (thus, cost causation). Cost causation components will be referred to as cost components in this report. The next step of the cost-of-service analysis is to allocate the functionalized operating and capital costs between the cost components, most of which directly correspond to a single functional category.

The cost components in this study include the following:
 Meter: directly corresponds to the Meter functional category  Customer: costs associated with customer service and billing-related activities included in the Billing & Admin functional category
 Fire: directly corresponds to the Fire functional category  Average Day Demand (Base): costs associated with delivering water to customers during average water demand conditions (average water use)
 Maximum Day Demand (Max Day): costs associated with delivering water to customers during maximum day demand conditions (water usage during highest day of year)  Maximum Hour Demand (Max Hour): costs associated with delivering water to customer during maximum hour demand conditions (water usage during highest hour of highest day)  Supply: directly corresponds to the Supply functional category  Conservation: directly corresponds to the Conservation functional category  General: directly corresponds to the General functional category

SYSTEM-WIDE PEAKING FACTORS
System-wide peaking factors for the City’s water system, shown in Table 3-4, are used to allocate costs associated with the Distribution, Treatment, Pumping, and Storage functional categories to the Base, Max Day, and Max Hour cost components. Peaking factors represent the ratio of maximum to average water demand over the course of one year. This provides a basis from which to identify costs incurred to provide water service during average demand conditions and to provide additional capacity during peak demand conditions.

City staff provided the peaking factor data. Average day demand is allocated entirely to Base. Max day demand is allocated proportionately to Base (1.00/2.50) and Max Day ([2.50-1.00]/2.50). Max hour demand is allocated proportionately to Base (1.00/3.50), Max Day ([2.50-1.00]/3.50), and Max Hour ([3.50-2.50]/3.50).

Table 3-4: System-Wide Peaking Factor Allocations
Line System-Wide Peaking Peaking
Factor Base Max Day Max Hour Total
1 Average Day Demand 1.00 100.0% 0.0% 0.0% 100.0%
2 Max Day Demand 2.50 40.0% 60.0% 0.0% 100.0%
3 Max Hour Demand 3.50 28.6% 42.9% 28.6% 100.0%
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36 COST COMPONENT ALLOCATION FACTORS Table 3-5 shows the allocation factors to allocate the functionalized costs between the cost components. For the cost components that directly correlate to a functional category (Supply, Conservation, Meter, Fire, General), the functionalized costs are allocated entirely to the matching cost component. Distribution systems (Line 2) and pumping infrastructure (Line 4) are sized to withstand maximum hour demand, and thus are allocated based on the Max Hour peaking factor allocations (Table 3-4, Line 3). Treatment- and storage-related infrastructure is sized to meet maximum day demand, and thus are allocated based on the Max Day peaking factor allocations (Table 3-4, Line 2). The portion of Billing & Admin costs related to customer service and billing activities is allocated to the Customer cost component; the remaining is allocated to General.

Table 3-5: Cost Component Allocation Factors
Line Cost Functions Meter Customer Fire Base Max Day Max Hour Supply Conserv- ation General Total 1 Supply 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 100.0% 2 Distribution 0.0% 0.0% 0.0% 28.6% 42.9% 28.6% 0.0% 0.0% 0.0% 100.0% 3 Treatment 0.0% 0.0% 0.0% 40.0% 60.0% 0.0% 0.0% 0.0% 0.0% 100.0% 4 Pumping 0.0% 0.0% 0.0% 28.6% 42.9% 28.6% 0.0% 0.0% 0.0% 100.0% 5 Storage 0.0% 0.0% 0.0% 40.0% 60.0% 0.0% 0.0% 0.0% 0.0% 100.0% 6 Conservation 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 100.0% 7 Meter 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 8 Fire 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 9 Billing & Admin 0.0% 30.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 70.0% 100.0% 10 General 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 100.0% 141
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37 OPERATING COST COMPONENT ALLOCATION Table 3-6 shows the operating cost component allocation. The functionalized costs from Table 3-2 are allocated based on the cost component allocation factors in Table 3-5. The operating allocation (Line 12) is derived from the total operating costs by cost component (Line 11) and represents the proportion of the operating revenue requirement that is allocated to each cost component.

Table 3-6: Operating Cost Component Allocation
Line Operating Expenses Meter Customer Fire Base Max Day Max Hour Supply Conserv- ation General Total 1 Supply $0 $0 $0 $0 $0 $0 $620,000 $0 $0 $620,000 2 Distribution $0 $0 $0 $302,250 $453,375 $302,250 $0 $0 $0 $1,057,876 3 Treatment $0 $0 $0 $411,002 $616,503 $0 $0 $0 $0 $1,027,505 4 Pumping $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 5 Storage $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 6 Conservation $0 $0 $0 $0 $0 $0 $0 $20,000 $0 $20,000 7 Meter $30,000 $0 $0 $0 $0 $0 $0 $0 $0 $30,000 8 Fire $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 9 Billing & Admin $0 $84,417 $0 $0 $0 $0 $0 $0 $196,974 $281,391 10 General $0 $0 $0 $0 $0 $0 $0 $0 $615,176 $615,176 11 Total $30,000 $84,417 $0 $713,252 $1,069,878 $302,250 $620,000 $20,000 $812,150 $3,651,948 12 Operating Allocation 0.8% 2.3% 0.0% 19.5% 29.3% 8.3% 17.0% 0.5% 22.2% 100.0% 142
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38 CAPITAL COST COMPONENT ALLOCATION Table 3-7 shows the capital cost component allocation. The functionalized costs from Table 3-3 are allocated based on the cost component allocation factors in Table 3-5. The capital allocation (Line 12) is derived from the total capital asset value by cost component (Line 11) and represents the proportion of the capital revenue requirement that is allocated to each cost component.

Table 3-7: Capital Cost Component Allocation
Line Capital Fixed Assets Meter Customer Fire Base Max Day Max Hour Supply Conserv- ation General Total 1 Supply $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 2 Distribution $0 $0 $0 $3,667,106 $5,500,659 $3,667,106 $0 $0 $0 $12,834,870 3 Treatment $0 $0 $0 $825,304 $1,237,957 $0 $0 $0 $0 $2,063,261 4 Pumping $0 $0 $0 $17,749 $26,623 $17,749 $0 $0 $0 $62,121 5 Storage $0 $0 $0 $22,185 $33,277 $0 $0 $0 $0 $55,462 6 Conservation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 7 Meter $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 8 Fire $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 9 Billing & Admin $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 10 General $0 $0 $0 $0 $0 $0 $0 $0 $2,512,452 $2,512,452 11 Total $0 $0 $0 $4,532,344 $6,798,516 $3,684,855 $0 $0 $2,512,452 $17,528,166 12 Capital Allocation 0.0% 0.0% 0.0% 25.9% 38.8% 21.0% 0.0% 0.0% 14.3% 100.0% 143
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39 3.5 SYSTEM CAPACITY ALLOCATIONS
The costs for certain system functions are based on the capacity requirements related to that function. For example, meter-related costs are allocated based on meter capacity, which is defined by the safe maximum operating capacity of each meter size. This section describes and defines capacity requirements and allocations relating to water meters, private fire lines, customer water usage, and fire protection.

EQUIVALENT METER UNITS
Costs related to meter capacity increase based on meter size. Therefore, equivalent meter units (EMUs) are calculated to provide a basis from which to allocate costs in proportion to meter size.

Equivalent meter calculations are shown in Table 3-8.

EMUs are calculated based on meter capacity ratios, which represent the safe operating capacity of a water meter relative to the base meter size. For this study, the base meter size is a 5/8” meter, which is the most common meter size in the City’s system. Capacity in gallons per minute (gpm) is derived from the AWWA M1 Manual. The meter ratio for a 1.5” meter is 5.00, which means that the capacity of a 1.5” meter is five times that of a 5/8” meter.

The number of meters in each meter size is from Table 2-4. Equivalent meters are calculated by multiplying the meter counts by the meter ratio in each size.

Table 3-8: Equivalent Meter Units
Line Meter Size Capacity
(gpm) Meter Ratio Meter Counts
Equivalent
Meters
1 5/8" 20 1.00 3,849 3,849
2 1" 50 2.50 71 178
3 1.5" 100 5.00 14 70
4 2" 160 8.00 43 344
5 3" 300 15.00 1 15
6 4" 500 25.00 2 50
7 6" 1,000 50.00 1 50
8 8" 1,600 80.00 0 0
9 10" 2,900 145.00 2 290
10 12" 4,300 215.00 0 0
11 Total 3,983 4,846

EQUIVALENT FIRE LINES
Costs related to fire protection capacity increase based on fire line diameter and are attributable to both public fire hydrants and private fire connections. Therefore, equivalent fire lines are calculated to provide a basis from which to allocate costs in proportion to fire line size, and between public and private fire connections. Equivalent fire line calculations are shown in Table 3-9. 144
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40 The capacity of a fire line is based on the diameter of the connection and is equal to the connection diameter in inches raised to the 2.63 power based on the Hazen-Williams equation in the AWWA M1 Manual. The fire line ratio is the fire capacity of each diameter size divided by the base fire line, which is a 2” diameter. Equivalent fire lines are calculated by multiplying the fire line ratio of each diameter size by the number of connections by size.

The concept of equivalent fire lines provides a methodology to compare the capacity requirements of both private fire protection and public hydrants. The fire protection capacity attributed to private fire connections is equal to 5.7%; the remaining 94.3% is attributed to public fire hydrants.

Table 3-9: Equivalent Fire Lines
Line Fire Line Size Fire
Capacity
Fire Line
Ratio
Private Fire
Counts
Public
Hydrant
Counts
Private Fire
Equivalents
Public
Hydrant
Equivalents
1 2" or Less 6.19 1.00 0 0 0 0
2 3" or Less 17.98 2.90 0 0 0 0
3 4" or Less 38.32 6.19 5 51 31 316
4 6" or Less 111.31 17.98 8 411 144 7,390
5 8" or Less 237.21 38.32 4 0 153 0
6 10" or Less 426.58 68.91 2 0 138 0
7 12" or Less 689.04 111.31 0 0 0 0
8 Total 19 462 466 7,706
9 % of Equiv. Lines 5.7% 94.3%

CUSTOMER DEMAND AND FIRE CAPACITY
Cost-of-service allocations are typically based on system-wide capacity (which is the combination of customer demand and fire protection). However, Max Day and Max Hour cost components are further allocated between customer demand and fire protection based on their proportion share of the system.

Table 3-10 shows the customer demand capacity calculation for Max Day and Max Hour. The annual use (Line 1) matches the FY 2024 total water usage in Table 2-5. The average daily use (Line 2) is the total use divided by 365 days.

The Max Day peaking factor (Line 3) utilizes the maximum month demand for all customer classes as a proxy for maximum day demand; typically, maximum day demand is not determined at the customer level due to data limitations. The Max Day demand (Line 4) is the average use multiplied by the Max Day peaking factor. Max Day extra capacity (Line 5) is the difference between Max Day demand and average daily use.

The Max Hour peaking factor (Line 6) is derived from the ratio of the system-wide Max Hour factor to the system-wide Max Day factor (Table 3-4). The Max Hour demand is calculated similarly to Max Day demand. The Max Hour extra capacity (Line 8) is the incremental difference between Max Hour demand and Max Day demand.
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41 Table 3-10: Customer Demand Capacity Calculation
Line Customer Demand Capacity All Classes
1 Annual Use (hcf) 804,232
2 Average Use (hcf/day) 2,203
3 Max Day Peaking Factor 1.56
4 Max Day Demand 3,444
5 Max Day Extra Capacity (hcf/day) 1,240
6 Max Hour Peaking Factor 2.19
7 Max Hour Demand 4,821
8 Max Hour Extra Capacity (hcf/day) 1,378
Table 3-11 shows the fire capacity calculation, which is later utilized to allocate the Max Day and Max Hour cost-of-service between customer demand, public fire protection, and private fire protection costs. The extra capacity required for fire is based on a maximum fire that lasts three hours using 3,000 gpm of water based on the City’s Water Master Plan. The fire capacity is allocated between public hydrants (Line 5) and private fire (Line 6) using the proportion of equivalent fire lines attributed to each service (Table 3-9).

The customer demand (Table 3-10), public hydrant, and private fire extra capacity are added together to form the total capacity requirements of the system within the Max Day and Max Hour cost components. From there, the capacity allocations (Lines 13-16) are calculated. These allocations are used in a later section of the report to reallocate Max Day and Max Hour costs.

Table 3-11: Fire Capacity Calculation
Line Fire Capacity Max Day Max Hour
1 Maximum Fire
2 Hours 3 3
3 gpm 3,000 3,000
4 Fire Extra Capacity 7222 5,0533
5 Public Hydrants 94.3% 94.3%
6 Private Fire 5.7% 5.7%
7 8 Customer Demand 1,240 1,378
9 Public Hydrants 681 4,765
10 Private Fire 41 288
11 Total - Capacity Requirements 1,962 6,431
12 13 Customer Demand 63% 21%
14 Public Hydrants 35% 74%
15 Private Fire 2% 4%
16 Total - Capacity Allocation 100% 100%
2 3 hours x 3,000 gpm x 60 minutes/hour x 748 gallons/hcf 3 (3,000 gpm x 60 minutes/hour x 24 hours/day / 748 gallons/hcf) – 722 (Max Day fire capacity) 146
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42 3.6 ALLOCATION TO COST COMPONENTS PRELIMINARY COST-OF-SERVICE ALLOCATION Table 3-12 shows the preliminary cost-of-service allocation prior to any adjustments or reallocation. The operating and capital revenue requirements (Table 3-1) are allocated to the cost components based on the operating allocation factors (Table 3-6, Line 12) and the capital allocation factors (Table 3-7, Line 12). Note that the preliminary cost-of-service allocation by cost components (Line 3) equals the total rate revenue requirement for FY 2024 (Table 3-1, Line 19).

Table 3-12: Preliminary Cost-of-Service Allocation
Line Revenue Requirement Meter Customer Fire Base Max Day Max Hour Supply Conserv- ation General Total 1 Operating Costs $13,655 $38,424 $0 $324,646 $486,969 $137,573 $282,201 $9,103 $369,660 $1,662,230 2 Capital Costs $0 $0 $0 $591,560 $887,340 $480,946 $0 $0 $327,924 $2,287,770 3 Preliminary Allocation $13,655 $38,424 $0 $916,206 $1,374,308 $618,519 $282,201 $9,103 $697,584 $3,950,000 GENERAL AND FIRE PROTECTION COST REALLOCATION The next step is to reallocate General costs and capacity-related costs (between customer demand, public fire, and private fire), as shown in Table 3-13. The preliminary allocation is from Table 3-12. The general costs are allocated between the other cost components proportionately based on the preliminary allocation to form the cost-of-service adjusted for General (Line 3). Then public fire (Line 4) and private fire (Line 5) costs are allocated from Max Day and Max Hour based on the fire capacity allocations (Table 3-11, Line 14-15). Public fire costs are allocated to Meter, since all public fire protection is a benefit shared by all water customers. Private fire costs are allocated to Fire. The remainder of Max Day and Max Hour costs are related to customer demand.

Table 3-13: Cost-of-Service Allocation Adjusted for General and Fire Protection Line Revenue Requirement Meter Customer Fire Base Max Day Max Hour Supply Conserv- ation General Total 1 Preliminary Allocation $13,655 $38,424 $0 $916,206 $1,374,308 $618,519 $282,201 $9,103 $697,584 $3,950,000 2 General Cost Allocation $2,929 $8,241 $0 $196,510 $294,764 $132,661 $60,527 $1,952 ($697,584) $0 3 Adjusted - General $16,584 $46,665 $0 $1,112,715 $1,669,073 $751,180 $342,728 $11,056 $0 $3,950,000 4 Public Fire Allocation $1,135,644 $0 $0 $0 ($579,020) ($556,624) $0 $0 $0 $0 5 Private Fire Allocation $0 $0 $68,660 $0 ($35,007) ($33,653) $0 $0 $0 $0 6 Adjusted - Fire $1,152,228 $46,665 $68,660 $1,112,715 $1,055,046 $160,903 $342,728 $11,056 $0 $3,950,000 147
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43 METER AND PEAKING COST REALLOCATION After adjusting the cost-of-service allocations based on General and Fire costs, it is adjusted for Meter and Peaking costs in Table 3-14.

Meter costs are broken out between Meter Maintenance (which are charged to private fire lines) and Meter Capacity (which are not charged to private fire lines). Meter Maintenance costs (Line 2) are equal to Meter costs after the General adjustment but prior to the Fire reallocation (Table 3-13, Line 3). Finally, the peaking costs in Max Day and Max Hour are adjusted to recover peak-capacity costs in the Meter Capacity component. This allocation is to increase the percentage of fixed revenue recovery from approximately 45% to 54% based on direction from the City’s Ad Hoc Committee. Some of the capacity-related costs from Max Day and Max Hour are recovered through the meter charges to increaserevenue stability.

Table 3-14: Cost-of-Service Allocation Adjusted for Meter and Peaking Line Revenue Requirement
Meter
Maintenance Meter Capacity Customer Private Fire Base Max Day Max Hour Supply Conserv- ation Total 1 Adjusted - Fire $0 $1,152,228 $46,665 $68,660 $1,112,715 $1,055,046 $160,903 $342,728 $11,056 $3,950,000 2 Meter Maint. Allocation $16,584 ($16,584) $0 $0 $0 $0 $0 $0 $0 $0 3 Adjusted - Meter $16,584 $1,135,644 $46,665 $68,660 $1,112,715 $1,055,046 $160,903 $342,728 $11,056 $3,950,000 4 Peaking Allocation $0 $851,164 $0 $0 $0 ($738,532) ($112,632) $0 $0 $0 5 Adjusted - Peaking $16,584 $1,986,808 $46,665 $68,660 $1,112,715 $316,514 $48,271 $342,728 $11,056 $3,950,000 148
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44 FINAL COST-OF-SERVICE ALLOCATION
Table 3-15 shows the final cost-of-service allocation based on the adjustments for General, Fire, Meter, and Peaking from the prior report tables. Note that the final cost-of-service after all readjustments is equal to the revenue neutral FY 2024 revenue requirement derived in Table 3-1.

Table 3-15: Final Cost-of-Service Allocation
Line Cost Components Final Cost
Allocation
1 Meter Maintenance $16,584
2 Meter Capacity $1,986,808
3 Customer $46,665
4 Private Fire $68,660
5 Base $1,112,715
6 Max Day $316,514
7 Max Hour $48,271
8 Supply $342,728
9 Conservation $11,056
10 Total $3,950,000

3.7 UNIT COST CALCULATION

UNITS OF SERVICE DEFINITIONS
The appropriate units of service are then established for each cost component based on cost causation. Cost components to be recovered by fixed charges are assigned units of service based on the number of water meters, EMUs, or equivalent fire lines. Cost components to be recovered by the uniform consumption charges are assigned units based on annual usage for all customers in hcf.

Table 3-16 shows the units of service for each cost component. Units of service for the Meter Maintenance cost component includes EMUs for water service and number of fire lines for private fire protection. Private fire lines within the City have a 5/8” “tattle-tale meter,” which measures water usage in the event of a fire; Meter Maintenace captures the costs of maintaining these meters.

Table 3-16: Units of Service Definitions
Line Cost Components Units of Service Definition
Annualized
Units of
Service
Units
1 Meter Maintenance Equiv. meters and fire lines x 12 mo. 58,374 EMUs/year 2 Meter Capacity Equiv. meters x 12 mo. 58,146 EMUs/year 3 Customer Meters and fire lines x 12 mo. 48,024 bills/year 4 Private Fire Equiv. fire lines x 12 mo. 5,591 EFLs/year 5 Base Annual usage in hcf 804,232 hcf/year
6 Max Day Annual usage in hcf 804,232 hcf/day
7 Max Hour Annual usage in hcf 804,232 hcf/day
8 Supply Annual usage in hcf 804,232 hcf/year
9 Conservation Annual usage in hcf 804,232 hcf/year
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45 UNIT COST BY COST COMPONENT
The final step in the cost-of-service analysis is to calculate the unit costs by cost component, shown in Table 3-17. The final cost-of-service allocation by cost component (Table 3-15) is divided by the units of service (Table 3-16) to derive the unit cost. These unit costs will determine the revenue neutral rates based on cost-of-service.

Table 3-17: Unit Cost Calculation
Line Cost Components Final Cost
Allocation
Annualized
Units of
Service
Unit
Cost Units
1 Meter Maintenance $16,584 58,374 $0.28 per EMU
2 Meter Capacity $1,986,808 58,146 $34.17 per EMU
3 Customer $46,665 48,024 $0.97 per bill
4 Private Fire $68,660 5,591 $12.28 per EFL
5 Base $1,112,715 804,232 $1.38 per hcf
6 Max Day $316,514 804,232 $0.39 per hcf
7 Max Hour $48,271 804,232 $0.06 per hcf
8 Supply $342,728 804,232 $0.43 per hcf
9 Conservation $11,056 804,232 $0.01 per hcf
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46 4. WATER RATES

4.1 RATE DESIGN METHODOLOGY
A five-year proposed water rate schedule was developed based on the results of the proposed financial plan and cost-of-service analysis. The key steps in developing the proposed rate schedule are outlined below:
 Rate structure evaluation: The existing rate structure is evaluated, and any proposed changes are identified. Proposed rate structure changes are typically intended to address specific policy objectives or to improve legal defensibility.
 Test year rate development: Rates are calculated for the proposed rate structure for the costof-service test year (FY 2024). Rate calculations directly incorporate the unit costs developed in the cost-of-service analysis. The test year rates are revenue neutral, then are increased based on the proposed financial plan revenue adjustments. Although total rate revenues in the first year of adjustments (FY 2025) are designed to increase by the proposed revenue adjustment percentage (25% in FY 2025), the proposed percentage increase to each rate/charge varies due to the updated cost-of-service allocations.  Five-year rate schedule development: Proposed rates for the full five-year study period are calculated by increasing the cost-of-service rates by the proposed annual revenue adjustment percentages from the proposed financial plan.

4.2 PROPOSED CHANGES TO RATE STRUCTURE
The proposed changes to the water rate structure were developed based on direction from the Ad Hoc Committee and include the following:
 Proposed uniform consumption charge: the City’s current consumption charge includes a three-tiered structure for Residential customers and a uniform consumption charge that varies by non-residential customer classes. A key objective of this study is to evaluate the impact of a uniform consumption charge, based on direction provided by the Ad Hoc Committee. The proposed water rate structure includes one uniform consumption charge for all customer classes.
 Proposed change to fixed revenue recovery: the City’s current water rate structure collects approximately 45% of its revenues via fixed charges (monthly service charges and monthly private fire charges). The Ad Hoc Committee provided direction to increase the fixed revenue recovery to approximately 54%, which would increase financial stability for the City’s water enterprise.
 Proposed change to Lifeline discount: the current Lifeline discount is applied to Tier 1 usage.

The proposed Lifeline discount is applied to the monthly service charge since the proposed rate structure does not have tiered rates. Additionally, this proposed change can help offset some affordability concerns due to increasing fixed revenue recovery. City staff and the Ad Hoc Committee recommended a discount of $4 per Lifeline customer per month; the costs of 151
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47 this program are funded via the General Fund. The Lifeline discount will stay at $4 per customer per month for all years of the study.

4.3 PROPOSED WATER RATE CALCULATION

PROPOSED MONTHLY SERVICE CHARGES
Table 4-1 shows the revenue neutral monthly service charge calculation. The Meter Maintenance, Meter Capacity, and Customer unit costs are from Table 3-17 (Lines 1, 2, and 3, respectively). Meter Maintenance and Meter Capacity unit costs are multiplied by the meter ratio; Customer costs do not vary based on meter size and thus are the same for all meter sizes. The revenue neutral rate represents the cost-of-service analysis for FY 2024 but does not include the proposed revenue adjustments for the first year of rates in FY 2025.

Table 4-1: Revenue Neutral Monthly Service Charge Calculation Line Meter Size Meter
Ratio
Number of
Meters
Meter
Maintenance
Cost
Meter
Capacity
Cost
Customer
Cost
Revenue
Neutral
Rate
1 5/8" 1.00 3,849 $0.28 $34.17 $0.97 $35.43
2 1" 2.50 71 $0.71 $85.42 $0.97 $87.11
3 1.5" 5.00 14 $1.42 $170.85 $0.97 $173.24
4 2" 8.00 43 $2.27 $273.35 $0.97 $276.60
5 3" 15.00 1 $4.26 $512.54 $0.97 $517.78
6 4" 25.00 2 $7.10 $854.23 $0.97 $862.31
7 6" 50.00 1 $14.20 $1,708.47 $0.97 $1,723.65
8 8" 80.00 0 $22.73 $2,733.54 $0.97 $2,757.25
9 10" 145.00 2 $41.19 $4,954.55 $0.97 $4,996.72
10 12" 215.00 0 $61.08 $7,346.40 $0.97 $7,408.46
Table 4-2 shows the proposed monthly service charge for FY 2025 based on the revenue neutral rate (Table 4-1) and adjusted by the proposed revenue adjustment of 25% in the first year.

Table 4-2: Proposed Monthly Service Charge Calculation for FY 2025 Line Meter Size
Proposed
Rate (w/ 25%
Adjustment)
Current Rate Difference
($)
Difference
(%)
1 5/8" $44.29 $31.08 $13.21 43%
2 1" $108.89 $70.45 $38.44 55%
3 1.5" $216.55 $136.06 $80.49 59%
4 2" $345.75 $214.79 $130.96 61%
5 3" $647.23 $398.52 $248.71 62%
6 4" $1,077.89 $660.97 $416.92 63%
7 6" $2,154.57 $1,317.12 $837.45 64%
8 8" $3,446.57 $2,104.51 $1,342.06 64%
9 10" $6,245.90 $3,810.49 $2,435.41 64%
10 12" $9,260.58 $5,647.71 $3,612.87 64%
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48 PROPOSED MONTHLY PRIVATE FIRE CHARGES
Table 4-3 shows the revenue neutral monthly private fire charge calculation. The Private Fire, Meter Maintenance, and Customer unit costs are from Table 3-17 (Lines 4, 1, and 3, respectively). Private Fire costs are multiplied by the fire ratio. Meter Maintenance costs do not vary based on the fire line size (all private fire customers have the same size tattle-tale meter); Customer costs also do not vary based on fire line size. The revenue neutral rate represents the cost-of-service analysis for FY 2024 but does not include the proposed revenue adjustments for the first year of rates in FY 2025.

Table 4-3: Revenue Neutral Monthly Private Fire Charge Calculation Line Fire Line
Size Fire Ratio Number of Fire Lines
Private Fire
Cost
Meter
Maintenance
Cost
Customer
Cost
Revenue
Neutral
Rate
1 2" or Less 1.00 0 $12.28 $0.28 $0.97 $13.54
2 3" or Less 2.90 0 $35.67 $0.28 $0.97 $36.93
3 4" or Less 6.19 5 $76.02 $0.28 $0.97 $77.28
4 6" or Less 17.98 8 $220.83 $0.28 $0.97 $222.09
5 8" or Less 38.32 4 $470.59 $0.28 $0.97 $471.85
6 10" or Less 68.91 2 $846.28 $0.28 $0.97 $847.54
7 12" or Less 111.31 0 $1,366.98 $0.28 $0.97 $1,368.24
Table 4-4 shows the proposed monthly private fire charge for FY 2025 based on the revenue neutral rate (Table 4-3) and adjusted by the proposed revenue adjustment of 25% in the first year.

Table 4-4: Proposed Monthly Private Fire Charge Calculation for FY 2025 Line Fire Line Size
Proposed
Rate (w/ 25%
Adjustment)
Current Rate Difference
($)
Difference
(%)
1 2" or Less $16.93 $5.53 $11.40 206%
2 3" or Less $46.17 $16.06 $30.11 187%
3 4" or Less $96.60 $34.22 $62.38 182%
4 6" or Less $277.62 $99.42 $178.20 179%
5 8" or Less $589.82 $211.86 $377.96 178%
6 10" or Less $1,059.43 $381.00 $678.43 178%
7 12" or Less $1,710.30 $615.41 $1,094.89 178%

PROPOSED UNIFORM CONSUMPTION CHARGES
The consumption charges calculated in this study result in a uniform charge that is the same for all customers, based on direction from the City’s Ad Hoc Committee. The City currently has a threetiered Residential rate and a uniform rate that is differentiated by all non-Residential classes. Table 4-5 shows the revenue neutral uniform consumption charge calculation. The Base, Max Day, Max Hour, Supply, and Conservation unit costs are from Table 3-17 (Lines 5, 6, 7, 8, and 9, respectively).

The revenue neutral rate represents the cost-of-service analysis for FY 2024 but does not include the proposed revenue adjustments for the first year of rates in FY 2025. 153
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49 Table 4-5: Revenue Neutral Uniform Consumption Charge Calculation Line Customer Class Annual
Use (hcf)
Base
Cost
Max Day
Cost
Max Hour
Cost
Supply
Cost
Conservation Cost Revenue
Neutral Rate
1 Residential
2 Tier 1 271,211 $1.38 $0.39 $0.06 $0.43 $0.01 $2.28
3 Tier 2 96,395 $1.38 $0.39 $0.06 $0.43 $0.01 $2.28
4 Tier 3 90,041 $1.38 $0.39 $0.06 $0.43 $0.01 $2.28
5 6 Lifeline
7 Tier 1 30,651 $1.38 $0.39 $0.06 $0.43 $0.01 $2.28
8 Tier 2 9,457 $1.38 $0.39 $0.06 $0.43 $0.01 $2.28
9 Tier 3 7,591 $1.38 $0.39 $0.06 $0.43 $0.01 $2.28
10 11 Multi-Family & Mobile 66,990 $1.38 $0.39 $0.06 $0.43 $0.01 $2.28 12 Commercial & Industrial 168,889 $1.38 $0.39 $0.06 $0.43 $0.01 $2.28 13 Commercial Irr. & Govt. 32,148 $1.38 $0.39 $0.06 $0.43 $0.01 $2.28 14 Schools 30,859 $1.38 $0.39 $0.06 $0.43 $0.01 $2.28
Table 4-6 shows the proposed monthly private fire charge for FY 2025 based on the revenue neutral rate (Table 4-5) and adjusted by the proposed revenue adjustment of 25% in the first year.

Table 4-6: Proposed Uniform Consumption Charge Calculation for FY 2025 Line Customer Class
Proposed
Rate (w/ 25%
Adjustment)
Current Rate Difference
($)
Difference
(%)
1 Residential
2 Tier 1 $2.85 $2.44 $0.41 17%
3 Tier 2 $2.85 $2.79 $0.06 2%
4 Tier 3 $2.85 $3.50 ($0.65) -19%
5 6 Lifeline
7 Tier 1 $2.85 $1.94 $0.91 47%
8 Tier 2 $2.85 $2.79 $0.06 2%
9 Tier 3 $2.85 $3.50 ($0.65) -19%
10 11 Multi-Family & Mobile $2.85 $2.58 $0.27 10%
12 Commercial & Industrial $2.85 $2.63 $0.22 8%
13 Commercial Irr. & Govt. $2.85 $2.86 ($0.01) 0%
14 Schools $2.85 $3.07 ($0.22) -7%
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50 4.4 PROPOSED WATER RATE SCHEDULE

PROPOSED FIVE-YEAR REVENUE ADJUSTMENTS
Table 4-7 shows the revenue adjustments based on the proposed financial plan and their effective date.

Table 4-7: Proposed Revenue Adjustments
Line Fiscal Year Revenue
Adjustments
Effective
Date
1 FY 2025 25.0% 7/1/2024
2 FY 2026 6.0% 7/1/2025
3 FY 2027 6.0% 7/1/2026
4 FY 2028 6.0% 7/1/2027
5 FY 2029 6.0% 7/1/2028

PROPOSED FIVE-YEAR WATER RATE SCHEDULE
Table 4-8, Table 4-9, and Table 4-10 show the proposed five-year water rate schedule for the monthly service charges, monthly private fire charges, and uniform consumption charges. The fiveyear rates are based on the proposed cost-of-service rates (Table 4-2, Table 4-4, Table 4-6, respectively) adjusted by the proposed revenue adjustments (Table 4-7) for the four remaining years.

Table 4-8: Proposed Five-Year Monthly Service Charges
Line Proposed Monthly
Service Charges
Effective
7/1/2024
Effective
7/1/2025
Effective
7/1/2026
Effective
7/1/2027
Effective
7/1/2028
1 Lifeline $40.29 $42.95 $45.77 $48.76 $51.93
2 5/8" Meter $44.29 $46.95 $49.77 $52.76 $55.93
3 1" Meter $108.89 $115.43 $122.36 $129.71 $137.50
4 1.5" Meter $216.55 $229.55 $243.33 $257.93 $273.41
5 2" Meter $345.75 $366.50 $388.49 $411.80 $436.51
6 3" Meter $647.23 $686.07 $727.24 $770.88 $817.14
7 4" Meter $1,077.89 $1,142.57 $1,211.13 $1,283.80 $1,360.83 8 6" Meter $2,154.57 $2,283.85 $2,420.89 $2,566.15 $2,720.12 9 8" Meter $3,446.57 $3,653.37 $3,872.58 $4,104.94 $4,351.24 10 10" Meter $6,245.90 $6,620.66 $7,017.90 $7,438.98 $7,885.32 11 12" Meter $9,260.58 $9,816.22 $10,405.20 $11,029.52 $11,691.30 Table 4-9: Proposed Five-Year Monthly Private Fire Charges Line Proposed Monthly
Private Fire Charges
Effective
7/1/2024
Effective
7/1/2025
Effective
7/1/2026
Effective
7/1/2027
Effective
7/1/2028
1 2" or Less $16.93 $17.95 $19.03 $20.18 $21.40
2 3" or Less $46.17 $48.95 $51.89 $55.01 $58.32
3 4" or Less $96.60 $102.40 $108.55 $115.07 $121.98
4 6" or Less $277.62 $294.28 $311.94 $330.66 $350.50
5 8" or Less $589.82 $625.21 $662.73 $702.50 $744.65
6 10" or Less $1,059.43 $1,123.00 $1,190.38 $1,261.81 $1,337.52 7 12" or Less $1,710.30 $1,812.92 $1,921.70 $2,037.01 $2,159.24 155
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51 Table 4-10: Proposed Five-Year Consumption Charges
Line Proposed Consumption
Charges ($/hcf)
Effective
7/1/2024
Effective
7/1/2025
Effective
7/1/2026
Effective
7/1/2027
Effective
7/1/2028
1 Residential $2.85 $3.03 $3.22 $3.42 $3.63
2 Multi-Family & Mobile $2.85 $3.03 $3.22 $3.42 $3.63
3 Commercial & Industrial $2.85 $3.03 $3.22 $3.42 $3.63 4 Commercial Irr. & Govt. $2.85 $3.03 $3.22 $3.42 $3.63 5 Schools $2.85 $3.03 $3.22 $3.42 $3.63

4.5 CUSTOMER IMPACTS

RESIDENTIAL CUSTOMER IMPACTS
WRE evaluated the impact to the Residential customer class (which makes up approximately 79% of metered connections within the City’s water system) based on the proposed water rates in FY 2025.

Table 4-11 shows the impact to Residential customers with a 5/8” meter size at various usage levels.

Table 4-11: Residential Customer Impacts at Various Usage Levels Line Residential Customer Impacts Billed
Usage (hcf)
Proposed
Bill
Current
Bill
Difference
($)
Difference
(%)
1 Very Low Use (10th percentile) 2 $49.99 $35.96 $14.03 39% 2 Low Use (25th percentile) 4 $55.69 $40.84 $14.85 36%
3 Median Use 7 $64.24 $48.16 $16.08 33%
4 Average Use 11 $75.64 $58.27 $17.37 30%
5 High Use (75th percentile) 14 $84.19 $66.64 $17.55 26% 6 Very High Use (90th percentile) 25 $115.54 $100.88 $14.66 15% 156
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52 5. WATER SHORTAGE RATES

5.1 WATER SHORTAGE RATE DESIGN METHODOLOGY
In addition to the base water rates developed in the prior section of the report, water shortage rates were developed to be implemented during periods of constrained water supply and during drought emergencies. The key steps in determining the water shortage rates are as follows:
 Evaluate financial risks: the City faces different risks based on two main water shortage conditions – a constrained year water supply (when water supply is low and more expensive to purchase) and a drought emergency (when government-mandated usage cutbacks reduce the City’s consumption charge revenues).
 Determine cost impact: the cost impact is dependent upon the water shortage condition.

Constrained water supply results in higher costs to purchase water for the City to meet its customer demand. Drought emergencies result in lost revenues from consumption charges when customers use less water.
 Calculate water shortage rates: the resulting cost impact is then used to calculate two different water shortage rates. The first is a water supply cost surcharge, to be implemented during years of constrained water supply. The second is a drought rate, to be implemented during drought emergencies and which vary based on drought stages (from the City’s Water Shortage Contingency Plan).

5.2 RISKS RELATED TO WATER SHORTAGES

CONSTRAINED WATER SUPPLY YEARS
The City relies solely on imported water purchases from CVP, ACID, and McConnell to meet its customer water demand. However, these sources of supply are subject to cost increases during years with constrained water supply. This poses a financial risk for the City since constrained year costs can be double those of non-constrained years.

DROUGHT EMERGENCIES
In addition to the risk of water supply cost increases during constrained years, the City also faces risks related to government-mandated cutbacks in water usage. The City’s WSCP includes six stages of drought, which all require a different level of usage reduction from the City’s customers. When customers reduce their usage, the City’s rate revenues are directly impacted. Some of the financial risk of drought is mitigated by the increase in fixed revenue recovery, but consumption charge revenues are still a significant portion of the City’s water rate revenues. When drought emergencies occur, especially during more severe drought stages, the amount of lost revenue can significantly impact the City’s ability to meet its operating, capital, and reserve requirements. 157
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53 5.3 PROPOSED WATER SUPPLY COST SURCHARGES

CONSTRAINED YEAR SUPPLY COSTS
WRE worked with City staff and the City’s Ad Hoc Committee to determine the potential constrained year water supply costs, shown in Table 5-1. The cost of McConnell and ACID water are primarily affected by constrained years. The City provided the maximum amount purchased and maximum supply cost for McConnell; the costs for ACID are based on the amount of water purchased from the past three years and the cost of ACID water during the last constrained year.

The constrained year cost (Line 3) for each source of supply is calculated by multiplying the maximum amount purchased in AF by the maximum cost less the FY 2025 budgeted cost for non-constrained water purchases (Table 2-9, Line 20-21), which have already been accounted for in the base rates.

The incremental cost associated with each source represents the additional cost the City must recover to pay for water supply during constrained years.

Table 5-1: Constrained Year Water Supply Costs
Line Water Supply Cost Surcharges McConnell ACID Combined 1 Maximum Amount Purchased (AF) 400 1,180 1,580
2 Maximum Supply Cost ($/AF) $350 $377 $370
3 Constrained Year Cost $140,000 $444,813 $584,813
4 Less FY 2025 Budgeted Cost ($4,008) ($256,691) ($260,699) 5 Additional Cost for Constrained Year $135,992 $188,122 $324,114

PROPOSED WATER SUPPLY COST SURCHARGES
Table 5-2 shows the proposed water supply cost surcharge calculation. The additional cost for constrained year water supply (Line 1) is from Table 5-1. The annual usage (Line 2) is from Table 2-5 for FY 2025. The unit cost for each source of supply is combined to form the proposed water supply cost surcharge. The surcharge represents the maximum rate that the City can choose to implement during constrained years; depending on the financial situation, the City’s policymakers may choose to implement a surcharge that is lower than the rate shown.

Table 5-2: Proposed Water Supply Cost Surcharges
Line Water Supply Cost Surcharges McConnell ACID Combined 1 Additional Cost for Constrained Year $135,992 $188,122 $324,114 2 Annual Usage (hcf) 804,232 804,232 804,232
3 Unit Cost ($/hcf) $0.17 $0.24 $0.41

5.4 PROPOSED DROUGHT RATES

USAGE REDUCTIONS BY DROUGHT STAGE
The proposed drought rates are designed to recover lost consumption charge revenue during drought emergencies that require water usage cutbacks. The drought rates are based on the six drought stages defined in the City’s WSCP. Table 5-3 shows the estimated water usage in FY 2024 for all customers in each drought stage based on the usage reduction percentages from the WSCP. 158
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54 Table 5-3: Water Usage Reductions by Drought Stage
Line Drought Stages Max Usage
Reduction
Total Water
Consumption
Difference from
Baseline
1 Baseline 0% 804,232 0
2 Stage 1 10% 723,809 (80,423)
3 Stage 2 20% 643,386 (160,846)
4 Stage 3 30% 562,963 (241,270)
5 Stage 4 40% 482,539 (321,693)
6 Stage 5 50% 402,116 (402,116)
7 Stage 6 60% 321,693 (482,539)

CONSUMPTION REVENUE LOSS
Table 5-4 shows the consumption revenue loss by drought stage for FY 2025, the first year of proposed water rates (Table 4-10). The proposed FY 2025 uniform consumption charge is multiplied by the estimated usage in each stage (Table 5-3) to determine the consumption revenues by stage.

The difference from baseline, or the “no drought” scenario, represents the revenue loss during each drought stage.

Table 5-4: Consumption Revenue Loss by Drought Stage
Line Drought Stages
Proposed FY 2025
Consumption
Charge
Total Water
Consumption
Consumption
Revenues
Difference from
Baseline
1 Baseline $2.85 804,232 $2,292,062 $0
2 Stage 1 $2.85 723,809 $2,062,856 ($229,206)
3 Stage 2 $2.85 643,386 $1,833,650 ($458,412)
4 Stage 3 $2.85 562,963 $1,604,443 ($687,619)
5 Stage 4 $2.85 482,539 $1,375,237 ($916,825)
6 Stage 5 $2.85 402,116 $1,146,031 ($1,146,031)
7 Stage 6 $2.85 321,693 $916,825 ($1,375,237)

PROPOSED DROUGHT RATES
Table 5-5 shows the calculated drought rates by stage for FY 2025. The revenue loss from baseline (Table 5-4) is divided by the total water consumption in each stage (Table 5-3) to calculate the drought rate for each stage. Drought rates can be implemented by the City after its policymakers adopt a drought declaration for a particular drought stage. The resulting drought rates for FY 2025 represent the maximum amount that the City may implement during drought, although the City’s policymakers may elect to implement a lower rate depending on its financial situation and policy objectives.
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55 Table 5-5: Proposed Drought Rates by Drought Stage for FY 2025 Line Drought Stages Revenue Loss
from Baseline
Total Water
Consumption
Drought Rate
($/hcf)
1 Baseline $0 804,232 $0.00
2 Stage 1 $229,206 723,809 $0.32
3 Stage 2 $458,412 643,386 $0.72
4 Stage 3 $687,619 562,963 $1.23
5 Stage 4 $916,825 482,539 $1.90
6 Stage 5 $1,146,031 402,116 $2.85
7 Stage 6 $1,375,237 321,693 $4.28

5.5 PROPOSED WATER SHORTAGE RATE SCHEDULE

PROPOSED FIVE-YEAR REVENUE ADJUSTMENTS
Table 5-6 shows the revenue adjustments based on the proposed financial plan and their effective date. Note that the proposed revenue adjustments only apply to the drought rates for future years; the water supply cost surcharges will stay the same throughout the period based on direction from the Ad Hoc Committee.

Table 5-6: Proposed Revenue Adjustments
Line Fiscal Year Revenue
Adjustments
Effective
Date
1 FY 2025 25.0% 7/1/2024
2 FY 2026 6.0% 7/1/2025
3 FY 2027 6.0% 7/1/2026
4 FY 2028 6.0% 7/1/2027
5 FY 2029 6.0% 7/1/2028

PROPOSED FIVE-YEAR WATER SHORTAGE RATE SCHEDULE
Table 5-7 shows the proposed five-year water shortage rate schedule, which includes the water supply cost surcharge (that stays constant throughout the study period) and the drought rates (which are adjusted based on the proposed financial plan revenue adjustments in Table 5-6).

Table 5-7: Proposed Five-Year Water Supply Cost Surcharges and Drought Rates Line Water Shortage Rates Effective
7/1/2024
Effective
7/1/2025
Effective
7/1/2026
Effective
7/1/2027
Effective
7/1/2028
1 Water Supply Cost Surcharge ($/hcf) $0.41 $0.41 $0.41 $0.41 $0.41 2 3 Drought Rates ($/hcf)
4 Stage 1 - 10% Reduction $0.32 $0.34 $0.37 $0.40 $0.43 5 Stage 2 - 20% Reduction $0.72 $0.77 $0.82 $0.87 $0.93 6 Stage 3 - 30% Reduction $1.23 $1.31 $1.39 $1.48 $1.57 7 Stage 4 - 40% Reduction $1.90 $2.02 $2.15 $2.28 $2.42 8 Stage 5 - 50% Reduction $2.85 $3.03 $3.22 $3.42 $3.63 9 Stage 6 - 60% Reduction $4.28 $4.54 $4.82 $5.11 $5.42 160
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56 5.6 WATER SHORTAGE IMPACTS

RESIDENTIAL CUSTOMER IMPACTS
Table 5-8 shows the Residential water shortage impacts for a customer with a 5/8” meter using 11 hcf during no drought conditions (11 hcf is the average monthly usage for a Residential customer in the City’s water system).
 During non-constrained years with no drought, this customer’s water bill is $75.64.  During non-constrained years during a Stage 2 drought, this customer’s water bill is $83.56 if they do not reduce their water usage; this is an increase of $7.92.  If the same customer during a non-constrained year and Stage 2 drought does reduce their water usage by the 20% required by Stage 2, they will use approximately 9 hcf of water instead. With their reduced water usage, this customer’s water bill is $76.42, which is similar to their water bill during no drought. The proposed drought rates are designed to minimize impacts to customers that reduce their water according to the appropriate drought stage.  The last scenario shows the same customer during a constrained year and Stage 2 drought, with a 20% reduction in use. The water supply cost surcharge is added to the total water bill to recover higher costs related to constrained year supply. Their water bill will be $80.11.

Table 5-8: Residential Water Shortage Impacts
Line Residential Water
Shortage Impacts
No Drought
(NonConstrained)
Stage 2 Drought
w/ No Reduction
(NonConstrained)
Stage 2 Drought
w/ 20%
Reduction (NonConstrained)
Stage 2 Drought
w/ 20%
Reduction
(Constrained)
1 Residential Meter Size 5/8" Meter 5/8" Meter 5/8" Meter 5/8" Meter 2 Monthly Usage (hcf) 11 11 9 9
3 4 Monthly Service Charge $44.29 $44.29 $44.29 $44.29
5 Consumption Charge $31.35 $31.35 $25.65 $25.65
6 Drought Rate $0.00 $7.92 $6.48 $6.48
7 Water Supply Cost Surcharge $0.00 $0.00 $0.00 $3.69
8 Total Water Bill $75.64 $83.56 $76.42 $80.11
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57 6. APPENDICES

6.1 FINANCIAL PLAN APPENDICES
Table 6-1: (Appendix) Residential Customer Accounts
Line Residential Customer Accounts FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Residential
2 5/8" 3,162 3,162 3,162 3,162 3,162 3,162 3,162
3 1" 0 0 0 0 0 0 0
4 1.5" 0 0 0 0 0 0 0
5 2" 0 0 0 0 0 0 0
6 3" 0 0 0 0 0 0 0
7 4" 0 0 0 0 0 0 0
8 6" 0 0 0 0 0 0 0
9 8" 0 0 0 0 0 0 0
10 10" 0 0 0 0 0 0 0
11 12" 0 0 0 0 0 0 0
12 Subtotal - Residential 3,162 3,162 3,162 3,162 3,162 3,162 3,162 13 14 Lifeline
15 5/8" 491 491 491 491 491 491 491
16 1" 0 0 0 0 0 0 0
17 1.5" 0 0 0 0 0 0 0
18 2" 0 0 0 0 0 0 0
19 3" 0 0 0 0 0 0 0
20 4" 0 0 0 0 0 0 0
21 6" 0 0 0 0 0 0 0
22 8" 0 0 0 0 0 0 0
23 10" 0 0 0 0 0 0 0
24 12" 0 0 0 0 0 0 0
25 Subtotal - Lifeline 491 491 491 491 491 491 491
26 27 Multi-Family & Mobile
28 5/8" 81 81 81 81 81 81 81
29 1" 36 36 36 36 36 36 36
30 1.5" 2 2 2 2 2 2 2
31 2" 14 14 14 14 14 14 14
32 3" 0 0 0 0 0 0 0
33 4" 0 0 1 1 1 1 1
34 6" 0 0 0 0 0 0 0
35 8" 0 0 0 0 0 0 0
36 10" 1 1 1 1 1 1 1
37 12" 0 0 0 0 0 0 0
38 Subtotal - Multi-Family & Mobile 134 134 135 135 135 135 135 162
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58 Table 6-2: (Appendix) Non-Residential Customer Accounts Line Non-Residential Customer Accounts FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Commercial & Industrial
2 5/8" 94 94 94 94 94 94 94
3 1" 19 19 19 19 19 19 19
4 1.5" 8 8 8 8 8 8 8
5 2" 16 16 17 17 17 17 17
6 3" 0 0 0 0 0 0 0
7 4" 0 0 0 0 0 0 0
8 6" 1 1 1 1 1 1 1
9 8" 0 0 0 0 0 0 0
10 10" 1 1 1 1 1 1 1
11 12" 0 0 0 0 0 0 0
12 Subtotal - Commercial & Industrial 139 139 140 140 140 140 140 13 14 Commercial Irr. & Govt.
15 5/8" 19 19 19 19 19 19 19
16 1" 15 15 15 15 15 15 15
17 1.5" 4 4 4 4 4 4 4
18 2" 7 7 7 7 7 7 7
19 3" 1 1 1 1 1 1 1
20 4" 0 0 0 0 0 0 0
21 6" 0 0 0 0 0 0 0
22 8" 0 0 0 0 0 0 0
23 10" 0 0 0 0 0 0 0
24 12" 0 0 0 0 0 0 0
25 Subtotal - Commercial Irr. & Govt. 46 46 46 46 46 46 46 26 27 Schools
28 5/8" 2 2 2 2 2 2 2
29 1" 1 1 1 1 1 1 1
30 1.5" 0 0 0 0 0 0 0
31 2" 6 6 6 6 6 6 6
32 3" 0 0 0 0 0 0 0
33 4" 2 2 2 2 2 2 2
34 6" 0 0 0 0 0 0 0
35 8" 0 0 0 0 0 0 0
36 10" 0 0 0 0 0 0 0
37 12" 0 0 0 0 0 0 0
38 Subtotal - Schools 11 11 11 11 11 11 11
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59 Table 6-3: (Appendix) Operating Expense Budget Detail Line Operating Expenses FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Water Admin
2 Permits and Fees $50,000 $51,500 $53,045 $54,636 $56,275 $57,964 3 Travel, Meetings, Dues $11,500 $11,845 $12,200 $12,566 $12,943 $13,332 4 Insurance - General $85,000 $89,250 $93,713 $98,398 $103,318 $108,484 5 Services-Consulting $30,000 $30,900 $31,827 $32,782 $33,765 $34,778 6 Bad Debt $7,500 $7,725 $7,957 $8,195 $8,441 $8,695
7 Admin Fee Gen. Fund Allocation $686,058 $706,640 $727,839 $749,674 $772,164 $795,329 8 Motor Pool $26,509 $27,304 $28,123 $28,967 $29,836 $30,731 9 Subtotal $896,567 $925,164 $954,704 $985,219 $1,016,744 $1,049,313 10 11 Water Distribution
12 Office Supplies $1,000 $1,030 $1,061 $1,093 $1,126 $1,159 13 Distribution-Parts & Materials $42,500 $43,775 $45,088 $46,441 $47,834 $49,269 14 Meter Program $30,000 $31,500 $33,075 $34,729 $36,465 $38,288 15 Travel, Meetings, Dues $4,000 $4,120 $4,244 $4,371 $4,502 $4,637 16 Training $5,500 $5,665 $5,835 $6,010 $6,190 $6,376
17 Maintenance Agreements $32,000 $32,960 $33,949 $34,967 $36,016 $37,097 18 Computer Services & Repair $3,500 $3,605 $3,713 $3,825 $3,939 $4,057 19 Services-Consulting $12,000 $12,360 $12,731 $13,113 $13,506 $13,911 20 Small Tools & Equipment $4,000 $4,120 $4,244 $4,371 $4,502 $4,637 21 Labor Allocation - Motor Pool/PW $953,376 $981,977 $1,011,437 $1,041,780 $1,073,033 $1,105,224 22 Subtotal $1,087,876 $1,121,112 $1,155,376 $1,190,698 $1,227,114 $1,264,657 23 24 Water Treatment Plant
25 Salaries $429,830 $451,322 $473,888 $497,582 $522,461 $548,584 26 Benefits $298,797 $328,677 $361,544 $397,699 $437,469 $481,216 27 Water Purchases $620,000 $313,021 $328,672 $345,105 $362,361 $380,479 28 Office Supplies $1,000 $1,030 $1,061 $1,093 $1,126 $1,159 29 General Operating Supplies $3,000 $3,090 $3,183 $3,278 $3,377 $3,478 30 Chemicals $35,000 $36,050 $37,132 $38,245 $39,393 $40,575 31 Lab Supplies & Equipment $5,000 $5,150 $5,305 $5,464 $5,628 $5,796 32 CV Restoration Fund $35,000 $36,050 $37,132 $38,245 $39,393 $40,575 33 General Maintenance $20,000 $20,600 $21,218 $21,855 $22,510 $23,185 34 Utilities $50,000 $51,500 $53,045 $54,636 $56,275 $57,964 35 Water Conservation Program $20,000 $20,600 $21,218 $21,855 $22,510 $23,185 36 Lab Testing $18,000 $18,540 $19,096 $19,669 $20,259 $20,867 37 Telephone $1,500 $1,560 $1,622 $1,687 $1,755 $1,825
38 Generator Maintenance $8,500 $8,755 $9,018 $9,288 $9,567 $9,854 39 Alarms $1,000 $1,040 $1,082 $1,125 $1,170 $1,217
40 Maint., Equipment $35,000 $36,400 $37,856 $39,370 $40,945 $42,583 41 Travel, Meetings, Dues $8,500 $8,755 $9,018 $9,288 $9,567 $9,854 42 Training $5,000 $5,150 $5,305 $5,464 $5,628 $5,796
43 Safety $2,000 $2,060 $2,122 $2,185 $2,251 $2,319
44 Services-Consulting $18,000 $18,540 $19,096 $19,669 $20,259 $20,867 45 Services-Miscellaneous $20,000 $20,600 $21,218 $21,855 $22,510 $23,185 46 Labor Allocation $29,878 $30,774 $31,698 $32,648 $33,628 $34,637 164
City of Shasta Lake 2024 Water Rate Study
Water Resources Economics
60 Line Operating Expenses FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 47 Equipment Rental Fees $1,000 $1,030 $1,061 $1,093 $1,126 $1,159 48 Small Tools & Equipment $1,500 $1,545 $1,591 $1,639 $1,688 $1,739 49 Subtotal $1,667,505 $1,421,838 $1,503,178 $1,590,038 $1,682,854 $1,782,097 50 51 Total $3,651,948 $3,468,115 $3,613,257 $3,765,956 $3,926,711 $4,096,066

165
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Water Resources Economics
61 6.2 COST-OF-SERVICE ANALYSIS APPENDICES
Table 6-4: (Appendix) Operating Cost Function Detail
Line Operating Expenses FY 2024 Budget Cost Function
1 Water Admin
2 Permits and Fees $50,000 General
3 Travel, Meetings, Dues $11,500 General
4 Insurance - General $85,000 General
5 Services-Consulting $30,000 General
6 Bad Debt $7,500 General
7 Admin Fee General Fund Allocation $404,667 General
8 Admin Fee - Customer Billing $281,391 Billing & Admin 9 Motor Pool $26,509 General
10 Subtotal $896,567
11 12 Water Distribution
13 Office Supplies $1,000 Distribution
14 Distribution-Parts & Materials $42,500 Distribution
15 Meter Program $30,000 Meter
16 Travel, Meetings, Dues $4,000 Distribution
17 Training $5,500 Distribution
18 Maintenance Agreements $32,000 Distribution
19 Computer Services & Repair $3,500 Distribution
20 Services-Consulting $12,000 Distribution
21 Small Tools & Equipment $4,000 Distribution
22 Labor Allocation - Motor Pool/PW $953,376 Distribution 23 Subtotal $1,087,876
24 25 Water Treatment Plant
26 Salaries $429,830 Treatment
27 Benefits $298,797 Treatment
28 Water Purchases $620,000 Supply
29 Office Supplies $1,000 Treatment
30 General Operating Supplies $3,000 Treatment
31 Chemicals $35,000 Treatment
32 Lab Supplies & Equipment $5,000 Treatment
33 CV Restoration Fund $35,000 Treatment
34 General Maintenance $20,000 Treatment
35 Utilities $50,000 Treatment
36 Water Conservation Program $20,000 Conservation
37 Lab Testing $18,000 Treatment
38 Telephone $1,500 Treatment
39 Generator Maintenance $8,500 Treatment
40 Alarms $1,000 Treatment
41 Maint., Equipment $35,000 Treatment
42 Travel, Meetings, Dues $8,500 Treatment
43 Training $5,000 Treatment
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City of Shasta Lake 2024 Water Rate Study
Water Resources Economics
62 Line Operating Expenses FY 2024 Budget Cost Function 44 Safety $2,000 Treatment
45 Services-Consulting $18,000 Treatment
46 Services-Miscellaneous $20,000 Treatment
47 Labor Allocation $29,878 Treatment
48 Equipment Rental Fees $1,000 Treatment
49 Small Tools & Equipment $1,500 Treatment
50 Subtotal $1,667,505
51 52 Total $3,651,948
Table 6-5: (Appendix) Capital Asset Function Detail
Line Asset Description Acquisition
Date
Original
Cost
Accum.

Depreciation RCLD Cost Function
1 LAND-WATER TREATMENT SITE 6/30/1970 $17,700 $0 $170,810 General 2 STATE LAND PURCHASE 6/30/1970 $184,325 $0 $1,778,783 General 3 WTR BLDG - PRIOR TO 1989 12/1/1972 $41,325 $41,325 $0 General 4 WTR DIST-PRIOR TO 1986 1/22/1976 $1,964,245 $1,964,245 $0 Distribution 5 WTR FILTRATION-PRIOR TO 1988 6/27/1976 $486,834 $486,834 $0 Treatment 6 WTR EQUIP-PRIOR TO 1989 1/1/1981 $1,729 $1,729 $0 General 7 WTR DIST-PRIOR TO 1988 12/21/1987 $61,637 $61,637 $0 Distribution 8 WTR DIST-PRIOR TO 1989 12/13/1988 $30,336 $30,336 $0 Distribution 9 WTR DIST-PRIOR TO 1989 6/30/1989 $64,478 $64,478 $0 Distribution 10 WTR DIST-PRIOR TO 1990 8/5/1989 $6,021 $6,021 $0 Distribution 11 RIDDLE RD DIST SYSTEM 3/30/1990 $251,127 $251,127 $0 Distribution 12 WTR FILTRATION-PRIOR TO 1991 12/31/1990 $10,201 $10,061 $396 Treatment 13 WTR FILTRATION & TREATMENT 12/31/1990 $1,506,708 $1,485,913 $58,566 Treatment 14 WASHINGTON AVE RELOCATION 9/30/1992 $10,002 $9,289 $1,908 Distribution 15 LAKE BLVD 8 LINE"" 12/16/1992 $12,733 $11,747 $2,636 Distribution 16 QUICK CONNECT GENERATOR 6/30/1998 $6,700 $6,700 $0 General 17 WATER RESOURCE STUDY 6/30/1998 $5,988 $5,988 $0 Distribution 18 FRONT ST WATER MAIN INSTALL 6/30/1998 $6,680 $5,066 $3,633 Distribution 19 FRONT ST WATER MAIN INSTALL 6/30/1998 $213,585 $161,988 $116,154 Distribution 20 PAINT WATER TANK #1 6/30/1999 $45,915 $45,915 $0 Distribution 21 SCADA SYSTEM 6/30/1999 $16,707 $16,707 $0 Distribution 22 PAINT WATER TANK #1 6/30/1999 $4,959 $4,959 $0 Distribution 23 PRESSURE VALVE - TOYON 6/30/2002 $26,712 $17,015 $19,765 Distribution 24 REDDING TO S.L. INTERTIE 6/30/2002 $12,449 $7,930 $9,212 Distribution 25 SHASTA PARK/FRONT ST WMAIN 6/30/2002 $14,950 $9,523 $11,062 Distribution 26 PAINT WATER TANKS AT PLANT 6/30/2000 $7,760 $7,760 $0 Distribution 27 1000' OF WATER LINE 6/30/2000 $19,390 $13,529 $12,557 Distribution 28 SOUTH CITY WATER MAIN 6/30/2000 $218,033 $152,121 $141,201 Distribution 29 PAVE ROAD - WATER PLANT 6/30/2001 $31,064 $20,730 $21,712 Distribution 30 WATER PARTICLE STUDY 6/30/2001 $29,090 $29,090 $0 Distribution 31 REDDING TO SL INTERTIE 6/30/2002 $60,322 $38,425 $44,634 Distribution 32 REDDING TO SL INTERTIE 6/30/2002 $122,999 $78,350 $91,012 Distribution 33 WATER TANK - MONTANA 6/30/2006 $1,454,456 $750,003 $1,211,230 Distribution 34 FRONT ST. 10 LINE EXT. 1500'"" 6/30/2003 $110,214 $66,862 $86,308 Distribution 167
City of Shasta Lake 2024 Water Rate Study
Water Resources Economics
63 Line Asset Description Acquisition
Date
Original
Cost
Accum.

Depreciation RCLD Cost Function
35 DWR - INFRASTRUCTURE GRANT 6/30/2008 $5,578,893 $2,538,432 $4,876,080 Distribution 36 PHASE 2 IMPROVEMENT PROJ. 6/30/2008 $4,948,370 $2,251,540 $4,324,988 Distribution 37 WATER LINE GRAND RIVER 6/30/2013 $195,773 $59,399 $190,369 Distribution 38 REFURBISH TANK II 6/30/2013 $59,409 $29,776 $41,366 Distribution 39 WATER LINE PENSACOLA 6/30/2014 $70,879 $31,975 $52,874 Distribution 40 2013 WATER LINE IMPROVEMENTS 6/30/2014 $218,495 $98,567 $162,991 Distribution 41 TANTALUS UPGRADE 6/30/2014 $24,124 $21,711 $3,279 General 42 SYSTEM SERVER UPGRAD 6/30/2014 $11,096 $9,987 $1,508 General 43 CHLORINE ANALYZER 6/30/2014 $5,954 $2,686 $4,441 General 44 FILTER NO 2 MEDIA REPLACE 6/30/2016 $176,434 $37,485 $179,123 General 45 CHLORINE GAS DETECTOR MONITOR 6/30/2015 $5,730 $4,616 $1,479 General 46 WATER IMPROVEMENTS 2015 6/30/2015 $265,018 $42,441 $295,593 Distribution 47 WATER SYSTEM IMPROVEMENTS 6/30/2016 $7,903 $2,774 $6,612 General 48 MITSUBISHI AIR CONDITIONER 6/30/2016 $5,700 $5,700 $0 General 49 WTP RETAINING WALL 6/30/2016 $6,993 $1,486 $7,099 Treatment 50 DEWATERING CENTERFUGE 7/1/2017 $1,232,478 $224,087 $1,251,637 Treatment 51 RETAINING WALL (PHASE 2) 10/24/2017 $96,598 $16,665 $99,214 Treatment 52 BACKWASH SEPARATION TANK 4/18/2018 $145,999 $23,044 $148,130 Treatment 53 30 HP SCOUR AIR BLOWER 7/1/2017 $17,365 $5,210 $15,088 Treatment 54 VOLUTE SUBMERSIBLE PUMP 9/28/2017 $19,907 $5,746 $17,576 Treatment 55 SCADA UPGRADE 6/30/2018 $10,754 $10,754 $0 General
56 TURBIDITY METER 10/19/2017 $7,923 $7,923 $0 General
57 FILTERED WATER PUMP REBUILD 5/19/2019 $60,811 $25,162 $42,115 Pumping 58 SLUDGE PUMP #2 10/4/2018 $21,766 $5,161 $20,006 Pumping 59 SCADA UPGRADE 11/15/2018 $2,498 $2,329 $203 General
60 STATIC MIXER 6/20/2019 $13,429 $2,713 $12,659 General 61 Bella Vista Intertie Electric Upgrade 9/6/2019 $29,871 $3,470 $31,190 Distribution 62 Filter Electric Panels 6/22/2020 $242,555 $74,788 $194,997 General 63 WTP Pipeline Anchorage Project 3/17/2020 $172,462 $17,420 $180,206 Treatment 64 Particle counters 12/19/2019 $14,965 $2,681 $14,512 General 65 Virginia Ave PRV Replacement Project, 5/18/2021 $89,547 $5,879 $91,901 Distribution 66 Water Portable Office Bldg 8/31/2020 $145,090 $21,159 $144,046 General 67 Water Improvements 2020 - Pancake Hill 7/1/2021 $210,218 $12,740 $216,911 Distribution 68 Water Improvements 2021 8/21/2021 $639,363 $37,135 $661,493 Distribution 69 Onsite Chlorine Generation 9/1/2021 $200,579 $36,773 $179,927 Treatment 70 Tank 5 Security Fence 10/1/2021 $22,595 $1,977 $22,647 Storage 71 Tank 1 Security Fence 10/20/2021 $32,740 $2,865 $32,815 Storage 72 Onsite Chlorine Generatio 9/1/2021 $6,726 $1,233 $6,033 Treatment 73 Backwash Separation Tank #2 5/31/2023 $99,892 $505 $99,387 Treatment 74 PRV Replacement Project 6/30/2023 $27,849 $70 $27,778 Distribution 75 Pine Flat St Water Main Repl Proj 1/17/2023 $89,669 $1,359 $88,310 Distribution 168
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169

NOTICE OF PUBLIC HEARING TO INCREASE RATES OF WATER SERVICE FEES Tuesday, May 21, 2024 at 6:00 PM
Dear Water Customer,
The City of Shasta Lake (City) will consider the adoption of increases to the City’s water service fees for the next five years. As described below, the City Council will hold a public hearing on Tuesday, May 21, 2024, at 6:00PM to consider the proposed water rate increases.

WHY IS THE CITY PROPOSING RATE INCREASES?
The City is dedicated to maintaining affordable rates by maintaining lean staffing levels and utilizing reserves when necessary. However, similar to other utilities such as wastewater, electricity, and gas, the expenses associated with purchasing, pumping, treating, and delivering water, as well as maintaining the water system infrastructure, are continually increasing. To mitigate the impact on water utility customers, the City has actively pursued grant funding for essential capital projects. Recently, the City secured over $6.3 million in grants to construct a new

2.45 million gallon water tank at Centimudi. As a result, the City has not increased rates on our customers since 2021, even though inflation has increased approximately 18% during the threeyear period. Failure to adjust rates could lead to a deficit in the water fund by 2026, necessitating support from the General Fund, potentially resulting in cuts to vital services like law enforcement and parks.

Over the past few months, the City has conducted a thorough analysis of its water costs, revenues, and rates, engaging independent financial experts for an accurate assessment of water service costs and their impact on customer bills. Several factors have led to proposed adjustments in water rates and charges:
• Transition from a tiered water rate system to a uniform water rate as authorized by the City Council.
• Increase in the fixed revenue percentage from 46% to 54%. • Rising unfunded regulatory costs to meet federal and state compliance mandates include, but are not limited to, U.S. Environmental Protection Agency’s Lead and Copper Rule Revisions, where water suppliers are required to prepare and maintain an inventory of service line materials by October 16, 2024. Section 7584 of the California Code of Regulations requires that each public water system have a cross-connection control program by July 1, 2025. UCMR5 testing completion by January 2025 with an increase of base unit rates of 5.9% with a nominal increase in standard fees and surcharges on all samples at Pace Analytical Laboratory effective January 1, 2024. General operating supplies such as chemicals, reagents, analytical equipment services, replacement parts, and maintenance services have increased exponentially.
• Planned expenditure of $11 million over the next five years for capital projects addressing aging infrastructure, tank maintenance, and the addition of a new raw water tank at the City’s Water Treatment Plant. Improvements to the City’s distribution system include the replacement of water meter transmitters (city-wide), aging pressure-reducing valves, and aging water distribution mains.
170
• Increased rates and charges are needed to cover the water system’s fixed costs, which do not vary with water sales.
• The increased rates fund capital investment projects that maintain system reliability and water quality.
• Establishment of prudent long-term capital reserves aligned with industry standards. • Escalating wholesale water costs and unpredictable water supply, with the City relying entirely on Shasta Lake water due to the absence of groundwater.

The City of Shasta Lake is subject to the California Water Code and Proposition 218 and therefore is required by law to charge its customers only what is necessary to provide water services.

PUBLIC HEARING AND PROTEST PROCEEDINGS:

Pursuant to State law, protests may be provided by any City customer, or owner of property subject to the proposed rate changes, against the proposed rate changes described in this Notice.

Written protests may be submitted in person to the City Council at the Public Hearing. They may also be submitted by mail addressed to the City of Shasta Lake, Office of the City Clerk, at P.O.

Box 777, 4477 Main Street, Shasta Lake, CA 96019. Both in person and mailed written protests must be received prior to the close of the public hearing on May 21, 2024. Each written protest must clearly identify the property or account (by assessor’s parcel number or street address), reference the proposed water rate increase and must include the signature of the property owner or customer, as applicable. Due to the inability to verify the authenticity of each individual protest, protests received by telephone, electronic mail (e-mail), or via social media sites, including, but not limited to, Facebook or Twitter shall NOT be accepted. All interested parties are invited to attend the public hearing and present written protests and/or oral comments on the proposed rate increases referenced herein. Oral comments made at the public hearing will qualify as formal protests of the proposed rate increases if accompanied by a written protest setting forth the required information (as set forth above). If written protests are submitted by a majority of the affected property owners or customers, the proposed increase(s) will not be imposed. If approved, the rate changes will become effective with invoices for service beginning on or after July 1, 2024.

Pursuant to Government Code Section 53759, a judicial action to challenge any new, increased, or extended fee or charge must be brought within 120 days of the final approval of the fee or charge.

The City remains committed to providing reliable and safe drinking water from source to tap.

Recognizing that rate increases may pose financial challenges for some customers, various assistance programs such as Lifeline rates, SHHIP, SHARES, and LiHEAP are available.

Customers can inquire about these programs by contacting our customer service staff at 530- 275-7400.

Sincerely,
Jessaca Lugo
City Manager
For more information, scan the QR Code or visit cityofshastalake.org/2024WaterRates 171
PROPOSED WATER FEE:

The City is proposing an increase in the total revenue it receives from customers through its water service over the next five years. The annual revenue increase, as well as the cost-of-service analysis, which determines the nexus between the cost to serve each of the City’s customers and the rates charged to those customers, determine the proposed water rates shown in the tables below.

The City’s water rate structure will also be modified to include:
• A uniform water rate for all customers,
• An increase in fixed charge revenue recovery,
• A proposed water supply surcharge during periods of constrained year water supply, • A proposed drought rate to be implemented during each stage of drought as defined by the City’s Water Shortage Contingency Plan (WSCP)
• A Lifeline discount of $4 per month on the monthly service charge for eligible customers For non-constrained water supply years and non-drought years, the monthly service charges, monthly private fire charges, and consumption charges are in effect for all customers. The proposed water supply surcharge may be implemented during constrained water supply years, when the City’s water supply costs are higher. The proposed drought rates may be implemented during drought emergency declarations for each drought stage. The proposed water supply surcharge and proposed drought rates would be in addition to the base water rates.

Monthly Service
Charges
Current
7/1/2020
Proposed
7/1/2024
Proposed
7/1/2025
Proposed
7/1/2026
Proposed
7/1/2027
Proposed
7/1/2028
Lifeline $31.08 $40.29 $42.95 $45.77 $48.76 $51.93
5/8" $31.08 $44.29 $46.95 $49.77 $52.76 $55.93
1" $70.45 $108.89 $115.43 $122.36 $129.71 $137.50

1.5" $136.06 $216.55 $229.55 $243.33 $257.93 $273.41
2" $214.79 $345.75 $366.50 $388.49 $411.80 $436.51
3" $398.52 $647.23 $686.07 $727.24 $770.88 $817.14
4" $660.97 $1,077.89 $1,142.57 $1,211.13 $1,283.80 $1,360.83 6" $1,317.12 $2,154.57 $2,283.85 $2,420.89 $2,566.15 $2,720.12 8" $2,104.51 $3,446.57 $3,653.37 $3,872.58 $4,104.94 $4,351.24 10" $3,810.49 $6,245.90 $6,620.66 $7,017.90 $7,438.98 $7,885.32 12" $5,647.71 $9,260.58 $9,816.22 $10,405.20 $11,029.52 $11,691.30 Monthly Private Fire
Charges
Current
7/1/2020
Proposed
7/1/2024
Proposed
7/1/2025
Proposed
7/1/2026
Proposed
7/1/2027
Proposed
7/1/2028
2" or Less $5.53 $16.93 $17.95 $19.03 $20.18 $21.40
3" or Less $16.06 $46.17 $48.95 $51.89 $55.01 $58.32
4" or Less $34.22 $96.60 $102.40 $108.55 $115.07 $121.98 6" or Less $99.42 $277.62 $294.28 $311.94 $330.66 $350.50 8" or Less $211.86 $589.82 $625.21 $662.73 $702.50 $744.65 10" or Less $381.00 $1,059.43 $1,123.00 $1,190.38 $1,261.81 $1,337.52 12" or Less $615.41 $1,710.30 $1,812.92 $1,921.70 $2,037.01 $2,159.24 172
Consumption Charges
($/hcf)
Current
7/1/2020
Proposed
7/1/2024
Proposed
7/1/2025
Proposed
7/1/2026
Proposed
7/1/2027
Proposed
7/1/2028
Residential
Tier 1 $2.44 $2.85 $3.03 $3.22 $3.42 $3.63
Tier 2 $2.79 $2.85 $3.03 $3.22 $3.42 $3.63
Tier 3 $3.50 $2.85 $3.03 $3.22 $3.42 $3.63
Multi-Family & Mobile $2.58 $2.85 $3.03 $3.22 $3.42 $3.63 Commercial & Industrial $2.63 $2.85 $3.03 $3.22 $3.42 $3.63 Commercial Irr. & Govt. $2.86 $2.85 $3.03 $3.22 $3.42 $3.63 Schools $3.07 $2.85 $3.03 $3.22 $3.42 $3.63
Water Supply Surcharges ($/hcf) Proposed
7/1/2024
Water Supply Surcharge on Constrained Years $0.41
Drought Rates ($/hcf) Proposed
7/1/2024
Proposed
7/1/2025
Proposed
7/1/2026
Proposed
7/1/2027
Proposed
7/1/2028
Stage 1 - 10% Reduction $0.32 $0.34 $0.37 $0.40 $0.43
Stage 2 - 20% Reduction $0.72 $0.77 $0.82 $0.87 $0.93
Stage 3 - 30% Reduction $1.23 $1.31 $1.39 $1.48 $1.57
Stage 4 - 40% Reduction $1.90 $2.02 $2.15 $2.28 $2.42
Stage 5 - 50% Reduction $2.85 $3.03 $3.22 $3.42 $3.63
Stage 6 - 60% Reduction $4.28 $4.54 $4.82 $5.11 $5.42
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174
Report and Recommendations 8.1 Reviewed and Approved

City Manager

AGENDA ITEM
City Council
TO: Mayor and City Council Members
FROM: Jessaca Lugo, City Manager

DATE: May 21, 2024
SUBJECT: CONSIDERATION AND POTENTIAL ALLOCATION OF $25,000 FOR

REVENUE GUARANTEE SUPPORTING REDDING TO DENVER AIR

SERVICE
FILE NO.: A-070-180-835
RECOMMENDATION:

The staff requests that the City Council discuss a request from the City of Redding to allocate $25,000 to support the establishment of an airline route connecting Redding to Denver.

BACKGROUND:

The Redding Regional Airport (RDD) is a full-service airport offering direct flights to San Francisco (SFO), Los Angeles (LAX), Burbank (BUR), and Seattle (SEA). A recent addition is the Avelo Airlines Burbank Flight, providing direct service starting as low as $158.00 roundtrip, this is considered affordable for flights. Currently, RDD is progressing with its Airport Master Plan and is in the process of securing a $30 million Federal Aviation Administration Airport Improvement Grant for a runway rehabilitation project anticipated to commence in 2025. The airport has experienced significant growth in services, benefiting the entire region.

United Airlines has long sought an eastbound direct flight to Denver from RDD, and recent talks indicate that a deal is near. United is requesting a $2M revenue guarantee, a standard practice for non-hub airports. The City of Redding is actively engaging with local entities and business partners to bridge this funding gap. So far, the city has secured a $760,000 FAA grant and allocated over $100,000 in additional city funding. The city is aiming to raise $1M from various sources (such as Dignity Health, SPI, Bethel, etc.). It also hopes for contributions from government agencies, similar to the support provided in 2018 when the city offered a $25,000 revenue guarantee for the Los Angeles (LAX) flight, which remains operational today. 175
The economic impact of RDD on the region is substantial, serving commercial passengers and various aviation sectors including air ambulance services, US Forest Service operations, Cal Fire support, business aviation, and general aviation. The airport's master plan estimates that RDD contributes to over 1,300 jobs and $72 million in annual payroll. Passenger numbers at RDD have grown significantly, with a total of 201,780 passengers (enplanements doubled) in 2022 compared to 61,472 in 2012, reflecting a large increase in regional visitation.

Redding is currently seeking verbal commitments for the revenue guarantee. Upon approval, this commitment can be incorporated into the upcoming two-year budget planning.

FISCAL IMPACTS:

General Fund $25,000.00 FY 2025 Budget appropriation
ATTACHMENTS:

None
DISTRIBUTION:

City Council
Finance Director
176
1 Jessaca Lugo
From: Tippin, Barry <[email protected]>
Sent: Tuesday, May 7, 2024 3:40 PM
To: David Rickert; Joey Forseth; Jessaca Lugo
Cc: Bade, Steve
Subject: Air Service Revenue Guarantee Funding
Follow Up Flag: Follow up
Flag Status: Flagged
Good Afternoon Dave/Jess/Joey:

You may be aware that we are very close to landing an eastbound flight to Denver via United. As part of the potential deal, United is requesting/requiring a revenue guarantee of $2 million (very common in the industry for non-hub airports). I am writing to see if your respective entities may be willing to participate in the funding. To date, the City has received a grant from FAA for $750,000 and identified additional City funding just over $100,000. Therefore, we are looking for about $1 million from many entities in the community (Bethel, SPI, Dignity etc.).

The last time we did this was for the United LA bound flight. For that effort, Shasta County provided $50,000 and Shasta Lake contributed $25,000 and Anderson contributed $25,000.

We are trying to complete this effort (at least with verbal commitment) this month so any information you can provide in May would be very, very helpful. Steve Bade, copied here, can provide you much more info if needed.

Thanks for your consideration.

Barry Tippin

THIS IS REDDING
https://www.youtube.com/watch?v=VktFkBbUeXc
City Manager
City of Redding
530-225-4060
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Shasta Lake City CouncilMay 21, 2024

Shasta Lake City Council
May 21, 2024