Sonoma City Council
October 4, 2023

City Council:

Sandra Lowe, Mayor
John Gurney, Vice Mayor
Jack Ding
Patricia Farrar-Rivas
Ron Wellander
This meeting of the City Council will be conducted in person, and telephonically through Zoom. The City Council will attend the meeting in person. The public is encouraged to attend either in person or remotely through Zoom. The meetings will continue to be live streamed on the City’s CivicWeb Portal (sonomacity.civicweb.net) and YouTube Channel. Please see the agenda below for information on public participation.

REGULAR MEETING AGENDA

OF THE SONOMA CITY COUNCIL
City Council Chambers, 177 First Street West
Wednesday, October 4, 2023
https://us06web.zoom.us/j/84876986131
6:00 PM Regular Meeting
Be Courteous - TURN OFF your cell phones and watches while the meeting is in session.

The City Council may discuss and/or take action on any or all of the items listed on the agenda irrespective of how the items are described.

No new items will begin after 9:00pm unless a majority of the members present vote to allow the items to be heard.

Page
6:00 P.M. – REGULAR MEETING

CONVENE, CALL TO ORDER & PLEDGE OF ALLEGIANCE
ROLL CALL (Gurney, Wellander, Ding, Farrar-Rivas, Lowe)

PUBLIC PARTICIPATION USING ZOOM
Public Comment Process for ZOOM Attendance at Meetings

REPORT ON CLOSED SESSION

APPROVAL OF AGENDA

1. MEETING DEDICATIONS

2. COUNCILMEMBERS’ REPORTS AND COMMENTS

7.1: Committee Reports - Council Members are appointed to various boards and committees - local, county-wide and regional. Any updates from a council member will shared at this time. A list of all appointments is available on our City Website for easy reference.

3. CITY MANAGER COMMENTS AND ANNOUNCEMENTS

4. CITY ATTORNEY COMMENTS

5. PRESENTATIONS

5.1: Proclamation Proclaiming October 2023 as Domestic Violence Awareness Month in the City of Sonoma

5.2: Proclamation Proclaiming October 8–14, 2023, as Fire Prevention Week in the City of Sonoma

6. CONSENT CALENDAR – CITY COUNCIL

All items listed on the Consent Calendar are considered to be routine and will be acted upon by a single motion. There will be no separate discussion of these items unless members of the Council or staff request specific items to be removed for separate action.

6.1: Waive further reading and Authorize Introduction and/or Adoption of Ordinances by Title Only. (Standard procedural action - no backup information provided)

6.2: Adopt a Resolution to Accept a Monetary Donation From By the Bay Health to Cover Expenses Associated with Their Requested Electrical Installation and Upgrade to Accommodate the Lighting of the Hospice Tree Located in the Southeast Quadrant of the Sonoma Plaza (Lisa Janson, Senior Management Analyst)
RECOMMENDATION: Adopt a resolution accepting the cash donation to the City of Sonoma to cover the installation of electricity to the new Hospice Tree located in the Southeast quadrant of the Sonoma Plaza, being made By the Bay health, formerly Hospice By the Bay.

Agenda Report - By the Bay Health Donation - Pdf
4 - 16

6.3: Receive Minutes from the Regular Meeting of September 18, 2023 (Rebekah Barr, MMC, City Clerk)
RECOMMENDATION: Receive Minutes.

09.18.2023 Regular Meeting Minutes
17 - 19

7. PUBLIC HEARING

7.1: Public Hearing, Discussion, Consideration, and Possible Action to Adopt a Resolution Adopting the 2018 Water Rate Study Final Report, Adopting Water Utility Rates, and Making Findings. (Mike Berger, Public Works Director) RECOMMENDATION: It is recommended the City Council adopt a resolution adopting the 2023 Water Rate Study Final Report, adopting Water Utility Rates effective December 1, 2023, and making CEQA findings.

Agenda Report - Resolution Approving 2023 Water Rates - Pdf 20 - 102

8. REGULAR CALENDAR – CITY COUNCIL
(Matters requiring discussion and/or action by the City Council)

8.1: A Resolution Establishing a Disclosure of Ex Parte Communications Policy (Jennifer Gates, AICP, Community Development Director)
RECOMMENDATION: Adopt the resolution establishing a disclosure of ex parte communications policy.

Agenda Report - Ex Parte Communications - Pdf
103 - 107

8.2: FY 23-24 Planning Commission Annual Work Plan (Jennifer Gates, AICP, Community Development Director)
RECOMMENDATION: Approve the proposed FY 2023-24 Planning Commission Work Plan.

Agenda Report - PC Work Plan - Pdf
108 - 113

9. COMMENTS FROM THE PUBLIC
At this time, members of the public may comment on any item not appearing on the agenda. It is recommended that you keep your comments to three minutes or less. Under State Law, unless otherwise permitted under the Ralph M. Brown Act, the merits of the matters presented under this item cannot be discussed or acted upon by the City Council at this time. For items appearing on the agenda, the public will be invited to make comments at the time the item comes up for Council consideration. Upon being acknowledged by the Mayor, please step to the podium and speak into the microphone. Begin by stating and spelling your name.

10. ADJOURNMENT

I do hereby certify that a copy of the foregoing agenda was posted as legally required. Monique Saviez, Deputy City Clerk.
*********************************************************************************************************************************** City of Sonoma's current Commission and Committee Roster: Commission & Committee Roster_Updated_Sept_27_2023 Copies of all staff reports and documents subject to disclosure that relate to any item of business referred to on the agenda are normally available for public inspection the Wednesday before each regularly scheduled meeting at City Hall, located at No. 1 The Plaza, Sonoma CA. Any documents subject to disclosure that are provided to all, or a majority of all, of the members of the City Council regarding any item on this agenda after the agenda has been distributed will be made available for inspection at the City Clerk’s office, No. 1 The Plaza, Sonoma CA during regular business hours.

If you challenge the action of the City Council in court, you may be limited to raising only those issues you or someone else raised at the public hearing described on the agenda, or in written correspondence delivered to the City Clerk, at or prior to the public hearing.

The City Council may discuss and/or take action on any or all of the items listed on the agenda irrespective of how the items are described.

APPOINTMENTS TO COMMITTEES: The Council may establish and make appointments to a Council committee (made up of two Council Members) with respect to any item appearing on this agenda.

CLOSED SESSION: If action is taken during a Closed Session meeting which is required to be reported out at this meeting, the Council will return to Open Session and report out immediately. However, if the Council is unable to do so due to time constraints, it will report out at the immediately following Regular Council Meeting under "REPORT ON CLOSED SESSION".

MOTION FOR RECONSIDERATION: A Council Member voting with the majority on any item appearing on this agenda may move for reconsideration of that vote provided the motion is in conformance with the rules adopted by the Council governing such motions.

In accordance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the City Clerk (707) 933-2216. Notification 48-hours before the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting.

City of Sonoma
Agenda Item Summary
Meeting: City Council - 04 Oct 2023
Department
Administration
Staff Contact
Lisa Janson, Senior Management Analyst
Agenda Item Title
Adopt a Resolution to Accept a Monetary Donation From By the Bay Health to Cover Expenses Associated with Their Requested Electrical Installation and Upgrade to Accommodate the Lighting of the Hospice Tree Located in the Southeast Quadrant of the Sonoma Plaza
Summary
For thirty-seven years, By the Bay Health, formally Hospice by the Bay, has coordinated the annual Lights of Remembrance Tree Lighting at the Sonoma Plaza, utilizing the very large Coastal Redwood (Memorial Redwood planted in 1949 dedicated to General Vallejo) located in the southwest quadrant. The lighting of this tree is proving troublesome and expensive; the sheer size of the tree requires specialized lifts and lots of extra light strings. Each year at their own expense, By the Bay Health coordinates with the same lighting company, which is used for the Plaza holiday lights, to string the lights in this enormous tree. Ten years ago, By the Bay Health approached the City with a request to plant a new Redwood tree which could be used for future lighting events. When the tree was planted in the southeast quadrant electricity was not run to the tree to accommodate the future lighting installation. By the Bay Health approached City staff in early 2023 with the desire to look at the costs associated with extending electricity to the tree. The Public Works department has provided a detailed scope of work and estimate to By the Bay Health, who would like to proceed with the work.

In September 2020, the City Council adopted, by resolution, the Memorials and Donated Improvements Acceptance Policy, which is attached as Exhibit A. The purpose of this policy is to establish guidelines, standards, and procedures for the installation and care of memorials such as park benches or plaques, and donated park and facility improvements in the City of Sonoma. The policy was established to ensure that appropriate oversight is provided in preserving our City parks.

In accordance with the City's policy, By the Bay Health has completed the appropriate application (Exhibit B) and staff has fully vetted the cost associated with the request, which was supplied to and agreed to by the applicant (Exhibit C). If approved by City Council, City staff will be responsible for contracting with the electrical contractor, who will be responsible for ensuring the installation and compliance with building codes. This donation is categorized as park enhancement and meets the parameters outlined within the attached policy. Care will be taken to minimize damage to the grassy area within the work area and the work will be scheduled around planned events. If approved by City Council City staff will try to coordinate and complete the work prior to the December 3, 2023 event, but it is contingent on receiving the electrical panel, which due to supply chain problems could pose an issue/delay. City staff will continue to work with By the Bay Health to ensure they have a viable tree lighting option in 2023, which might include utilizing the older Redwood tree in the Southwest quadrant one last time.

Recommended Council Action
Agenda Item #6.2:

Adopt a resolution accepting the cash donation to the City of Sonoma to cover the installation of electricity to the new Hospice Tree located in the Southeast quadrant of the Sonoma Plaza, being made By the Bay health, formerly Hospice By the Bay.

Alternative Actions
Council discretion.

Financial Impact
If the Council accepts the donation the financial impact will be covered by By the Bay Health's donation. It will cover the full amount of the installation which includes City staff time and the professional electrical contractors invoice.

Environmental Review Status
Environmental Impact Report
Negative Declaration
Exempt
Not Applicable
Approved/Certified
No Action Required
Action Requested
Attachments
Resolution Accepting By the Bay Healths Donation_
EXHIBIT A _City of Sonoma Memorials and Donated Improvements Acceptance Policy EXHIBIT B_Donor Application_By the Bay Health
EXHIBIT C _ Cost Estimate_Hospice Tree Electrical Work
Alignment with Council Goals:

Compliance with Climate Action 2020 Target Goals:

CC:

Jennifer Christian, Events Planner
Agenda Item #6.2:

City of Sonoma
RESOLUTION # _______ - 2023

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SONOMA ACCEPTING A

MONETARY DONATION FROM BY THE BAY HEALTH TO COVER THE EXPENSES

ASSOCIATED WITH INSTALLING ELECTRICAL POWER TO A REDWOOD TREE LOCATED

IN THE SOUTHEAST QUADRANT OF THE SONOMA PLAZA TO ACCOMMODATE THE

LIGHTING OF THE HOSPICE TREE
WHEREAS, By the Bay Health has been coordinating and hosting the annual Lights of Remembrance Tree Lighting on the Sonoma Plaza for 37 years; and WHEREAS, the giant Sequoia sempervierns in the southwest quadrant of the Sonoma Plaza, which has been used for the past 37 years is proving to be difficult and costly to string lights for the event, due to its size; and
WHEREAS, in anticipation of needing a new tree to utilize for the Hospice Tree Lighting event, By the Bay Health planted a new Sequoia in the Southeast quadrant of the Plaza 10 years ago, which has now grown and can now adequately display the lights for the Lights of Remembrance Tree Lighting event; and
WHEREAS, By the Bay Health is now requesting electrical to be extended to the new tree, to accommodate the lights, City staff has worked with a local electrical contractor to develop a quote for services, and By the Bay Health has agreed to pay for the service and staff time necessary to coordinate the electrical installation; and
WHEREAS, the City Council of the City of Sonoma adopted the revised Memorial and Donor Acceptance Policy contained in Exhibit A on September 21, 2020; and WHEREAS, the revised policy established a uniform policy and set of procedures for the acceptance of capital gifts to the City, including memorials, recognition items, and other capital improvements; and
WHEREAS, the policy provides a formal process for acceptance and documentation of donations including memorials and other capital gifts made to the City of Sonoma and confirm that the City has relevant and adequate resources to administer such donations; and WHEREAS, the policy also ensures that the placement of capital projects, memorials, plaques or other recognition items are suitable for the location proposed, in terms of overall number of such items, correlation with existing or future City plans or projects, and correspondence with existing or planned streetscapes; and
WHEREAS, the policy ensures that memorials or other capital gifts are appropriate for the City and can be maintained properly so as to provide a long-term asset to the City; WHEREAS, City staff has reviewed the request to ensure that it complies with the City of Sonoma’s Memorial and Donor Acceptance Policy to ensure that it is appropriate for the City and can be maintained properly so as to provide a long-term asset to the City.

Agenda Item #6.2:

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Sonoma accepts the financial donation outlined in Exhibit B the Donor Agreement.

PASSED, RESOLVED, AND, ADOPTED, at a Regular Meeting of the City of Sonoma City Council on this 4th day of October 2023 by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
_________________________________
Sandra Lowe, Mayor
ATTEST:
_________________________________
Rebekah Barr, MMC, City Clerk
Agenda Item #6.2:

Exhibit A
City of Sonoma
Memorials and Donated Improvements Acceptance Policy
POLICYPURPOSE:To establish guidelines, standards and procedures for the installation and care of memorials such as park benches or plaques, and donated park and facility improvements in the City of Sonoma. This policy has been established to ensure that appropriate oversight is provided in preserving our City parks.

POLICYSTATEMENT: Public parks and recreation facilities are the property of the City and maintained for the benefit of all City residents. The City desires to encourage donations while at the same time managing aesthetic impacts, mitigating ongoing maintenance costs and balancing the overall value of public space. The placement of any memorial item or other recognition as the result of a donation or other contribution must be approved by the City and provide benefit to City residents and all users of the facilities while not negatively impacting City resources. Each donation is unique and the City Council has the authority to determine ifthe donation is in the City's interest.

I. PARAMETERS
A. Donations may be accepted from public and private sources for the purposes of enhancing City parks and facilities. Donations might be a financial contribution and/or a donation of a direct amenity/physical property.

The City and the community have a high interest in ensuring that park elements be of high quality related to style, appearance, durability, and ease of maintenance.

The City has an interest in ensuring the best appearance and aesthetic quality of their public facilities. Park and facility elements and/ortheir associated donation acknowledgements should reflect the character of the park or facility. Allpark or facility elements will be installed in such a manner that willnot substantially change the character or aesthetics of a park or facility and its intended use. Allcosts associated with the donation request, including asset materials, installation labor and materials, and administration and maintenance costs for useful life or designated period of time will be covered by the donor.

These donations may include, but are not limited to, park benches, plaques, donated amenities, and other types of park or facility accessories or enhancements. Acceptable donations are dependent upon the specific needs of the City of Sonoma.

Donations will be subject to the approval process outlined below.

PARKAND FACILITYIMPROVEMENT DONATIONS
A. Applications for a memorial park and facility improvement will be received and reviewed by the City Manager or his/herdesignee, with site selection review by the Public Works Department. The Public Works Department may coordinate with other City departments as needed or designate other departments to oversee certain aspects of the donation.

Agenda Item #6.2:

B. For unique donations or contributions such as statues and pavilions, or funding for new or upgraded park amenities, the City Council will review and determine the level of interest.

Before proceeding, the City and the interested individual or organization willenter into a Donor Agreement to create clarity of expectations for costs, donation, maintenance, plaques, and other items. This Donor Agreement willbe reviewed and approved by the City Council as part of their action regarding the donation.

Guidelines established by this policy apply toall donations made after the effective date of this policy. Donations made prior to the adoption of this policy shall be subject to applicable sections of this policy.

Standards established by this policy apply to purchased equipment, installation techniques, donation acknowledgements, and long-term care of all donations made afterthe adoption of this policy.
lll. MEMORIAL BENCHDONATIONS
A. Approved Sites
The Public Works Department willdetermine the approved sites for all park bench donations. Some sites may be deemed inappropriate for memorial benches. The approval process and administrative procedures for obtaining a memorial bench and/orplaque will be established by the Public Works Department in accordance with this policy.

1. Plaza Park: Memorial benches and plaques are not permitted in Plaza Park.

2. City-Owned Bike Paths and Neighborhood Parks: The Public Works Department allows for the donation of funds for a memorial bench to be placed along City-owned bike paths, City—maintained bike paths, or other approved City-owned park or facility, subject to the conditions contained herein.

3. Montini Preserve:
a) A limited number of locations are available in the Montini Preserve along the trail or at the entrance for placement of a stone masonry memorial bench, consistent with the Sonoma County Agricultural Preservation and Open Space District Management Plan for the Montini Preserve. The bench design shall be consistent with similar benches located on the Overlook Trail.

Applications for a memorial bench on the Montini Preserve must be submitted in writing to the City Manager and will be considered in the order received until all available sites have been taken.

The term for donation of a memorial bench on the Montini Preserve will be ten years. At the end of the ten~year term, if current contact information is available, donors willbe given one opportunity to renew their donation for an additional ten~ year term. Ifthe donor cannot be reached or does not wish to renew the donation, the bench may be made available for others and the City will attempt to return the memorial plaque to the donor.

Allcosts for installation materials and labor and estimated maintenance costs, including any staff time for installation and design review and consultant costs for Agenda Item #6.2:

administration of the Montini Preserve bench program, will be included in the donated amount for the bench.

The City reserves the right to determine if certain bench locations are appropriate for more than one memorial plaque to provide for greater equity in distribution, and/orto provide the opportunity to lower the cost per individual donation.

4.Sonoma Overlook Trail:
a) Memorial benches currently exist at all approved locations along the Sonoma Overlook Trail.
b) Memorial benches along the Overlook Trail will be managed by the Overlook Trail Stewards and are not covered by this policy.

Approved Conditions

1.Thedonation term for a bench and/ora plaque is 10 years or the useful life of the bench, whichever comes first. This term applies to existing memorial bench donations as well as to future donations. At the end of the donation term, if current contact information is available the donor will be given the opportunity to renew their donation for one additional term. Ifthe City is unable to locate the current donor, or ifthe current donor chooses not to renew the donation, the bench or plaque may be removed to allow for other donations. The family may request to have the memorial plaque returned to them by contacting:

City of Sonoma
PublicWorks Department
No.1 The Plaza
Sonoma, CA95476
To the extent practicable, the Donor may be contacted at the end of the donation term to ascertain whether the donor would like the plaque returned.

2.Al| benches willmeet the standards of the City for design, durability, and construction. Once the donation has been received and approved, the Department will purchase and install the bench (by contract or City staff). No custom benches willbe allowed.

3.Donated improvement amenities and/ortheir associated donation acknowledgements become City property. The City will provide for normal maintenance and repair of the bench during its donation term or useful life. if bench removal is required during the donation term, due to deterioration or severe vandalism, the City is not responsible for replacement of the bench. The plaque will either be installed on another bench or returned to the Donor if current contact information is available. Additionally, the City reserves the right to relocate the bench if unforeseen circumstances arise due to its location or setting.

4.Memorial plaques shall meet the following restrictions:
a) No listing life span (birth and death dates)
b) No profanity, obscenities, hate speech, or inappropriate references c) No symbols or pictures
d) English or Spanish language only, unless a verified translation is provided Agenda Item #6.2:

lV.
e) Allplaques shall be the City standard
f) No custom plaques

5.The City will procure and install a small metal plaque on a Memorial Bench to honor the individual memorialized. The plaque size, font, and design specifications as well as approval of the message, willbe at the discretion ofthe PublicWorks Director or his/herdesignee.

6.0nly individuals or pets may be honored with a memorial bench; organizations and groups willnot be considered.

7.The donation amount for each bench will be based on the type of bench and location. a) Bike Path and Neighborhood Park Benches --The donation amount per bench covers the cost of the bench, installation, administration and maintenance. Each standard bench can support three memorial plaques. Donors have the option of sharing in the cost of a bench by contributing a share of the bench donation amount, or they may donate for the entire bench with just one memorial plaque. Ifthe donor wishes to contribute a plaque on a shared bench, the City willwait until the full bench donation amount is received before purchasing and installing the bench. b) Montini Preserve Bench -— The donation amount per bench covers the cost of the bench, installation, administration and maintenance. Each bench can support one or more memorial plaques. Donors have the option of sharing in the cost ofa bench. ifthe donor wishes to contribute to a shared bench, the City willwait until there are the identified number of donors before purchasing and installing the bench and memorial plaques. C

8.The donation must be received in full before the City will initiate the bench and/orplaque ordering process.

OTHER UNIQUEDONATIONS
There may be additional possible donations other than those expressly listed or contained within this policy. The City willconsider those donations subject to a review by the appropriate City commissions or committees, and approval by the City Council.

A. Conditions
The City of Sonoma reserves the right to remove and/orrelocate donated park elements and their associated donation acknowledgements/memorial plaques if and when they interfere with site safety, maintenance, or construction activities. it shall be the responsibility of the donor to provide the City with current contact information for purposes of notification regarding their donation. The City will attempt to contact each identifiable donor notifying the donor of any action related to the disposition of the donation. In certain circumstances, such as safety or emergency situations, the notification may be made after Agenda Item #6.2:

the action is taken. In the event a donation must be permanently removed, the City willseek an alternative location consistent with this policy.

Approval Process for Unique Donations and Donor Agreement Applications for donation of capital projects willbe received by the City Manager or his/herdesignee. Ifthe City Manager deems the application appropriate for further consideration, he/shewill designate the appropriate staff person for site and project review.

City Council will provide the final approval or disapproval for such projects.

Allapplications will be subject to the regular permit requirements of the City of Sonoma unless waived by the City Council.

Allcosts, including any staff time for review and installation, will be included in the donor agreement amount.

Allsuch capital assets become the property of the City of Sonoma, unless otherwise designated. As such, these assets may be removed ifsaid asset is not included in future City plans or capital improvement projects.

Maintenance of such capital assets may become the responsibility of the City of Sonoma. A financial contribution for future maintenance may be required. in considering a request for the approval and acceptance of memorials and other capital gifts to the City, Council shall weigh the following policy considerations: a. Compatibility with City infrastructure, with existing or future projects, and with existing or planned streetscapes;
Maintenance needs for the gift being donated;
Contribution of the individual or organization to the well—beingof the City and the overall community;
Number and type of other memorials or other capital gifts in the immediate area or the community at large.

A written Donor Agreement will be required that formalizes the project sponsor's requirements and responsibilities.

During construction, the City willinspect the project to ensure that it is being constructed as per specifications. Upon completion of the project, the City will conduct a final inspection and provide a punch list to the project sponsor. After completion of punch list items, the project will be accepted by the City.

Agenda Item #6.2:

EXHIBIT B
City ofSonoma
No. 1 The Plaza
Sonoma CA95476

DONOR APPLICATION
[:]EXlSTINGDONOR [21NEW DONOR
DONOIIICONTACT PERSON: By the Bay Health, Jennifer Christian, Events Planner DONOR MAIIINC ADDRESS: 17 E. Sir Francis Drake Blvd Larkspur CA 94939 Street or P.0. Box City State Zip
DAYTIME PIIONE: (415) 526.5591 CELLPHONE: (415) 559.9123 EMAIL: jchristian@bythebayhea|th.org
DOLLAR AMOUNT OF DONATION: $15’122'96
SPECIFIC USE OF TIINDSIThe donated funds are for the costs associated with running electricity to our Hospice Tree in the Southeast section of Sonoma Plaza so that we may light it for our annual tree—|ighting event called "Lights of Remembrance." It is held the first Sunday of December.

This year is our 38th year offering Lights of Remembrance to the Sonoma community.

SUPPORTING DOCUMENTATION INCLUDED: YES E] No
Letter of Request to Sonoma City Council
Please make checks payable to "City of Sonoma". Credit card payments can be made in-person at the City Hall during normal business hours. If the donation opportunity is not approved by City Council, a full refund will be issued. I understand that submittal of this application does not guarantee approval. APPIICAHCS SIgnaIm.e: Jennifer Christian Date: September 27, 2023 DONOR AGREEMENT Page 1 of1
Agenda Item #6.2:

By the Bay
ll liflliii
An Affiliate of UCSF Health‘
September 26, 2023
Sonoma City Council
No.1 The Plaza
Sonoma, CA95476
Dear Sonoma City CouncilMembers,
By the Bay Health, formerly Hospice by the Bay, requests approval to run electricity to our Hospice Tree in the Southeast section of Sonoma Plaza so that we may light it for our Annual Lights of Remembrance event held the first Sunday of December. We understand the costs associated and are willingto pay to cover the cost of the electrical installation.

Sonoma Plaza has been the perfect venue over the past 37 years for Bythe Bay Health to host our Lights of Remembrance ceremony. We plan to continue to offer this special event for the Sonoma community to come together annually and honor the memory of friends and relatives. The short service features inspiring messages, candle lighting, music and reflection. it is a free event to which all are welcome.

The tree we have been lighting is in the Southwest section of the Plaza that has become exceptionally large and expensive to string with lights. The Hospice Tree we planted over 10 years ago with the intention of lighting, once it grew large enough, is now ready for our tree lighting event. We ask that you allow us to run electricity to the Southeast section so that we may light our Hospice Tree for the 38” Annual Lightsof Remembrance.

Sincerely,
Events JChritian@b\Lthebayhea|th.org (415) 526.5591Marin County 17 East Sir Francis Drake Blvd. Larkspur. CA 94939 (415) 927.2273 FAX (888) 204.4081 San Francisco and San Mateo Counties 180 Redwood Street. Suite 350 San Francisco. CA 94102 (415) 626.5900 FAX (415) 563.8749 Sonoma County, American Canyon, Napa and Valleio 355 West Nana Street, Suite 8 Sonoma, CA 95476 (707) 935.7504 FAX (707) 935.7590 bythebayhealthnrg Agenda Item #6.2:

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Agenda Item #6.2:

Item Cost Unit Qty Extended Cost
City-Provided #6 RHH Conductor (for 50A Main to Sub) $1.06 Foot 600 $636.00 City-Provided #8 RHH Conductor (Branch Circuits) $0.71 Foot 800 $568.00 City-Provided #10 RHH Conductor (Bonding/Equip. GND) $0.53 Foot 300 $159.00 City-Provided Non-Metallic Conduit Elbows/Sweeps $20.34 Ea 3 $61.02 Concrete (Pad for New Pedestal Sub-Panel) $6.97 80 lb Sack 2 $13.94 Bobcat Mini Excavator (Trenching for Branch Circuit Under Turf) $40.00 Hour 4 $160.00
Vacuum Truck (Evacuate Water from Existing Conduits,
Hydroexcavate @ Existing Underground Utility Conflicts in Turf $50.00 Hour 2 $100.00 Truck, Dump, On-Highway, 2 Axle (Trench Spoils) $50.00 Hour 4 $200.00 Light Truck $25.00 Hour 8 $200.00
Underground Service Alert Pre-Mark and Ticket $75.00 Hour 1 $75.00 Concrete Pad Form/Pour/Strip $75.00 Hour 4 $300.00
Sod Cutting/Trenching/Turf Restoration $75.00 Hour 16 $1,200.00 Conduit Installation/Conductor Pulls $75.00 Hour 6 $450.00 Licensed Electrical Contractor Labor, Contractor-Supplied 42CKT Main Dist. Panel, Install New 50A Feed to New Pedestal Sub-Panel at Tree, New NEMA Box on Tree and 4 New Duplex Receptacles in Tree $11,000.00 Lump Sum 1 $11,000.00
$15,122.96
Deposit/Donation Acct. No. 100-00000-000-*****
City of Sonoma Cost Estimate
Electrical Distribution Panel Expansion, Subpanel Installation, and New Receptacles Install on Redwood Hospice Tree, SE Quadrant, Plaza Park Prepared: 06/16/2023

FOR INTERNAL USE
Materials
Equipment
Labor
Electrical Contractor Labor/Materials
TOTAL:

Exhibit C
Agenda Item #6.2:

City Council:

Sandra Lowe, Mayor
John Gurney, Vice Mayor
Jack Ding
Patricia Farrar-Rivas
Ron Wellander

REGULAR MEETING MINUTES

OF THE SONOMA CITY COUNCIL
City Council Chambers
177 First Street West
Monday, September 18, 2023

6:00 PM Regular Meeting
6:00 P.M. – REGULAR MEETING

CONVENE, CALL TO ORDER, & PLEDGE OF ALLEGIANCE
Mayor Lowe called the meeting to order at 6:00 pm.

PUBLIC COMMENT PROCESS FOR ZOOM ATTENDANCE AT MEETINGS

ROLL CALL
PRESENT: Mayor Lowe, Council Member Ding, Vice Mayor Gurney, Council Member FarrarRivas, Council Member Wellander

REPORT ON CLOSED SESSION
There was no reportable action taken in Closed Session.

APPROVAL OF AGENDA
Motion by Council Member Farrar-Rivas, seconded by Vice Mayor Gurney, to approve the agenda as presented. Motion carried unanimously.

1. COMMENTS FROM THE PUBLIC
Robert Demler provided public comment.

2. MEETING DEDICATIONS
None.

3. COUNCILMEMBERS’ REPORTS AND COMMENTS
Vice Mayor Gurney had an opportunity to have a partnership meeting with Sonoma Splash. On September 13, 2023, Vice Mayor Gurney met with Supervisor Gorin to discuss community engagement around wellness surveys. He also attended a meeting of the Catalyst Fund. Additionally, Vice Mayor Gurney attended a Sonoma Tourism Improvement District meeting on September 14, 2023. Lastly, Vice Mayor Gurney attended the Valley Cemetery Clean-Up Day, which was held on Saturday, September 16, 2023.

Council Member Farrar-Rivas attended a State Route 37 Policy Committee meeting on August 23, 2023, on behalf of Mayor Lowe. Council Member Farrar-Rivas also attended a Sonoma Valley Citizens’ Oversight Commission meeting on August 23, 2023. She reminded everyone that the City still has two open seats available on this commission - a regular and an alternate position. She also shared that Vice Mayor Gurney, City Manager Guhin, and herself meet with a large group of women at the local golf course to discuss the community's current issues and the group general concerns.

Council Member Ding attended a Zero Waste Sonoma meeting on August 17, 2023. Mr. Ding also shared with the Council that the California State Water Resource Board approved $3.097M dollars for Sonoma Valley through the Sonoma Valley Groundwater Sustainability Committee.

Mayor Lowe hiked Jack London Park above the SDC ropes course to view the orchard in the area.

Mayor Lowe shared that she has received various communications from different Sister Cities thanking the City of Sonoma for continuing their support. Mayor Lowe attended the Plein Art Gala as the guest speaker, which was held from September 11-15, 2023. She also attended an event for the League of Historic Preservation in which she was asked to provide a short speech, a housing symposium in Boyes Hot Springs, and a legislative meeting with the local league of cities to review future legislative bills as well as a Local Agency Formation Commission (LAFCO) meeting. Mayro Lowe shared that there was also a kick-off meeting to bring back the Arts Walk in October. Mayor Lowe is a member of the Sonoma County Transportation Authority, and she announced that they have selected a new Executive Director. Mayor Lowe also proudly announced that City Manager Guhin has been chosen as an Awardee of the 2023 Grable Hedgepeth Housing Champion Award through Generation Housing for all his work as Assistant City Manager for the City of Santa Rosa during the 2017 wildfires.

4. CITY MANAGER COMMENTS AND ANNOUNCEMENTS
City Manager Guhin provided a brief review of the history of the Vintage Festival posters that are currently on display in the Council Chambers. Mr. Guhin expressed his gratitude for all the volunteers who showed up on Saturday, 9/16, to assist with the first Valley Cemetery Clean-Up Day. He reminded everyone that there are two more clean-up days coming up, and the next is scheduled for October 7, Agenda Item #6.3:

2023, at Mountain Cemetery. On September 15, 2023, the Governor's Office held a Regional Hearing for the California Truth and Healing Council at Sonoma Mission.

5. CITY ATTORNEY COMMENTS
City Attorney Ruderman informed Council that the Legislature did complete their 2023 Session on September 15, 2023, and those bills now need to be signed or vetoed by the Governor by October 14, 2023. At that time, there will be a thorough review of what bills were passed. City Attorney Ruderman also shared that he has been invited to be a member of the CalCities Legal Advocacy Committee.

6. PRESENTATIONS
Item 6.1: Proclamation Proclaiming September 26, 2023, as Sonoma Valley Museum of Art Day on the Occasion of Their 25th Anniversary

7. CONSENT CALENDAR – CITY COUNCIL
Motion by Council Member Farrar-Rivas, seconded by Council Member Wellander, to approve the Consent Calendar as presented. Motion carried unanimously.

Public Comment: Madolyn Agrimonti, Whiteny Evans, and Tom Deegan.

Item 7.1: Waive further reading and Authorize Introduction and/or Adoption of Ordinances by Title Only. (Standard procedural action - no backup information provided)
Item 7.2: Receive Minutes from the Regular Meeting of August 16, 2023 (Rebekah Barr, MMC, City Clerk)
Action: Minutes were received.

Item 7.3: Appoint Henri Montgomery-Yale as the Non-Voting Youth Member to the Traffic Safety Committee (TSC) and Maria Perez-Allen as the Alternate on the Parks, Recreation, & Open Space Commission (PROS) (Rebekah Barr, MMC, City Clerk) Action: Henri Montgomery-Yale was appointed as the non-voting youth member to the Traffic Safety Committee and Maria Perez-Allen was appointed as the alternate on the Parks, Recreation, and Open Space Commission.

Item 7.4: Authorize the Mayor to Sign Letter of Support for Care Partners Initiative Application to Dementia Friendly America (Rebekah Barr, MMC, City Clerk) Action: Letter of Support for CarePartners Initiative Application was authorized.

8. PUBLIC HEARING
Item 8.1: Public Hearing to Adopt a Resolution Amending the City of Sonoma Master Fee Schedule for Planning, Building, Public Works, and Special Events (Jennifer Gates, AICP, Community Development Director)
Action: Adopted as Resolution #61-2023.

Open Public Hearing: 6:41 PM
Public Comment: Kayla (no last name)
Closed Public Hearing: 6:43 PM
Motion by Vice Mayor Gurney, seconded by Council Member Farrar-Rivas, to adopt a resolution amending the City of Sonoma Master Fee Schedule for Planning, Building, Public Works, and Special Events. Motion carried unanimously.

9. REGULAR CALENDAR – CITY COUNCIL
Item 9.1: Resolution Accepting the Downtown Parking Management Plan (Jennifer Gates, AICP, Community Development Director and Kristina Tierney, Associate Planner) Action: Adopted as Resolution #62-2023.

Public Comment: Tom Conlon, Armando Zimmerman, and Calum Weeks.

Motion by Vice Mayor Gurney, seconded by Council Member Ding, to adopt the resolution accepting the Downtown Parking Management Plan. Motion carried unanimously.

Item 9.2: Creation of a General Plan Update Task Force (Jennifer Gates, AICP, Community Development Director)
Action: Adopted as Resolution #63-2023.

Motion by Council Member Farrar-Rivas, seconded by Vice Mayor Gurney, to adopt a resolution, as amended, to create a General Plan Update Task Force. Motion carried unanimously.

Motion by Council Member Farrar-Rivas, seconded by Council Member Ding, to appoint the Vice Mayor and Mayor to the General Plan Update Task Force to work with staff to finalize the Task Force membership. Motion carried unanimously.

Agenda Item #6.3:

10. COMMISSION AND COMMITTEE ROSTER
One position and one alternate position are still vacant on the Sonoma Valley Citizens Advisory Commission.

The regular City Council meeting scheduled for Wednesday, September 6, 2023, has been canceled. The next regularly scheduled City Council meeting will be held on Monday, September 18, 2023.

11. ADJOURNMENT
Mayor Lowe adjourned the meeting at 7:58 pm.

I HEREBY CERTIFY that the foregoing minutes were duly and regularly adopted at a regular meeting of the Sonoma City Council on the 18th day of September 2023. ___________________________________
Rebekah Barr, MMC, City Clerk
Agenda Item #6.3:

City of Sonoma
Agenda Item Summary
Meeting: City Council - 04 Oct 2023
Department
Public Works
Staff Contact
Michael Berger, Public Works Director
Agenda Item Title
Public Hearing, Discussion, Consideration, and Possible Action to Adopt a Resolution Adopting the 2018 Water Rate Study Final Report, Adopting Water Utility Rates, and Making Findings.

Summary
The residents, visitors, and businesses in Sonoma and small neighboring areas count on the City to deliver high quality, reliable water for a variety of needs including indoor use, outdoor irrigation, and fire protection. Water rates cover the City’s costs of purchasing and delivering this water, including the ongoing operations, maintenance, repair and improvement of the City’s water storage and distribution system as well as the cost of water purchased wholesale from the Sonoma County Water Agency, and establishment and provision for prudent financial reserves. The City’s water storage and distribution system is composed of water storage tanks, groundwater wells, water treatment equipment, water mains, fire hydrants, water meters, and pumps. As each of these water system components reaches the end of its useful life, water rates cover the cost of replacing and upgrading these components to ensure the City continues to serve safe and reliable water into the future.

City water rates were last updated in 2018. Based on changing law regarding conservation tiers and a thorough review of the City’s direct and shared costs with the Water Utility, the City embarked on an update of its water rate study in 2023. The City held a public study session to learn and discuss water rates on July 19th, 2023. The City also completed a Cost Allocation Plan to determine the appropriate methodology and amount to charge for indirect costs for shared services with the General Fund.

Adopting water rates for implementation over 5 years will provide the stability that the City needs to move forward with multi-year projects to replace undersized and aging pipelines and to install new advanced water meters. The need to implement increased rates will be considered with each annual City budget as actual costs to the Water Utility for project implementation become known. At the time of each annual budget, staff will review costs and could recommend rates that are lower than the ceiling rates that the City Council may adopt, in compliance with Proposition 218. The City can charge its water customers only the cost to serve water.

On August 4th, 2023 City Council recommended proceeding with a 5% per year rate increase to the current rate schedule and approved staff to issue the Prop 218 notices to all customers.

Proposed monthly service charges would be as follows,
Agenda Item #7.1:

The California Environmental Quality Act (CEQA), Section 15273. Rates, Tolls, Fares, and Charges, states that CEQA does not apply to the establishment, modification, structuring, restructuring, or approval of rates, tolls, fares, or other charges by public agencies which the public agency finds are for the purpose of:
• Meeting operating expenses, including employee wage rates and fringe benefits; • Purchasing or leasing supplies, equipment, or materials; • Meeting financial reserve needs and requirements;
• Obtaining funds for capital projects, necessary to maintain service within existing service areas; or
• Obtaining funds necessary to maintain such intra-city transfers as are authorized by city charter.

Since the proposed water rates for the City of Sonoma are explicitly for the purposes above, as described in detail in the 2023 Water Rate Study Final Report, City Council action regarding the proposed water rates is statutorily exempt from CEQA. Capital projects proposed to be funded by the Water Utility Rates are necessary to maintain water service within the City’s existing service area, not to expand the City’s water system.

Future costs to water customers can be avoided by adjusting water rates to appropriate levels so the water utility is financially and operationally sustainable now and in the future. These future negative impacts could be due to: unexpected disruptions in water service; repair to damaged streets, underground utilities, and private properties after water main failures; extensive fire damage due to insufficient fire-fighting water flows; water losses due to unidentified leaks in service lines or in the public water system; and the lack of water fund reserves during emergencies.

Recommended Council Action
It is recommended the City Council adopt a resolution adopting the 2023 Water Rate Study Final Report, adopting Water Utility Rates effective December 1, 2023, and making CEQA findings.

Agenda Item #7.1:

Alternative Actions
Council discretion.

Financial Impact
None at this time. Proposed rate increases will provide additional funding for the Water Utility for services, capital projects and financial stability.

Environmental Review Status
Environmental Impact Report
Negative Declaration
Exempt
Not Applicable
Approved/Certified
No Action Required
Action Requested
Attachments
Resolution Adopting Water Rates 2023
Raftelis-SonomaWaterReport_Final_08102023
Sonoma_PublicHearing10042023_Final
Alignment with Council Goals:

Compliance with Climate Action 2020 Target Goals:

CC:
n/a
Agenda Item #7.1:

City of Sonoma
RESOLUTION # ______ - 2023
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SONOMA ADOPTING THE 2023 WATER RATE STUDY FINAL REPORT, ADOPTING WATER UTILITY RATES FOR FISCAL YEAR 2023-24 TO FISCAL YEAR 2028-29, AND MAKING FINDINGS UNDER THE CALIFORNIA ENVIRONMENTAL

QUALITY ACT
WHEREAS, the City’s water customers count on the City to deliver high quality, reliable water for a variety of community needs including indoor use, outside irrigation and fire protection; and WHEREAS, water rates pay for ongoing operations, maintenance, repair and improvements of the City’s Water Utility; and
WHEREAS, Water Utility costs include the purchase of water plus operation and maintenance of wells, water mains, fire hydrants, valves, meters, pumps and other infrastructure and projects to upgrade and replace aging water pipes and system components to ensure the City can continue to serve safe and reliable water into the future; and
WHEREAS, the City Council’s last action to adjust water rates for Sonoma’s Water Utility occurred in 2018; and
WHEREAS, current Sonoma Water Utility water rates do not generate sufficient revenue to fund the cost of sustainable, reliable water service; and
WHEREAS, in response to changing law regarding water rate tiers and a thorough review of the City’s direct and indirect Water Utility costs, the City retained Raftelis to examine the cost of providing water service and to prepare a 2023 Water Rate Study Update Report; and WHEREAS, the 2023 Water Rate Study recommends adjusting City of Sonoma Water Rates over 5 years, Fiscal Year 2023-24 through Fiscal Year 2028-29; and WHEREAS, on August 4th, 2023 the City Council received the final draft 2023 Water Rate Study, agreed that rate adjustments are needed to continue providing a reliable water supply, and directed staff to provide the 45-day notice of a public hearing required under Proposition 218 and tentatively set a date of October 4th, 2023 for the public hearing; and
WHEREAS, pursuant to Proposition 218, a notice of the public hearing to be held on October 4th, 2023 was mailed on August 10th, 2023 to all affected utility account holders and property owners; and WHEREAS, this public hearing notice included the amount of the proposed water rate adjustments, the basis upon which the amount of the rate adjustments were calculated, the reason for the proposed rate adjustments, and the date, time, and location of a public hearing on the proposed rates; and
WHEREAS, the City Council accepted and caused the tabulation of all written protests against the proposed water rates. Based upon the results of this tabulation, a majority protest against the water rates does not exist; and
WHEREAS, the City Council finds it necessary to adopt the proposed Water Utility Rates for the City of Sonoma; and
WHEREAS, the California Environmental Quality Act (CEQA), Section 15273. Rates, Tolls, Fares, and Charges, states that CEQA does not apply to the establishment, modification, structuring, restructuring, or approval of rates, tolls, fares, or other charges by public agencies which the public agency finds are for the purpose of:
(1) Meeting operating expenses, including employee wage rates and fringe benefits; Agenda Item #7.1:

2 (2) Purchasing or leasing supplies, equipment, or materials; (3) Meeting financial reserve needs and requirements;
(4) Obtaining funds for capital projects, necessary to maintain service within existing service areas; or (5) Obtaining funds necessary to maintain such intra-city transfers as are authorized by city charter; and WHEREAS, the proposed water rates for the City of Sonoma are explicitly for the purposes above, as described in detail in the Water Rate Study Final Report, and capital projects proposed to be funded by the rate increases are necessary to maintain water service within the City’s existing service area, not to expand the City’s water system.

NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Sonoma hereby declares the foregoing recitals are true and correct; and BE IT FURTHER RESOLVED that the City Council of the City of Sonoma hereby adopts the City of Sonoma 2023 Water Rate Study Final Report, including the recommended rate schedule for Fiscal Years 2023-24 through 2028-29 prepared by Raftelis and dated August 10, 2023; and BE IT FURTHER RESOLVED that the City Council of the City of Sonoma hereby adopts the water rates for the City of Sonoma Water Utility set forth in Exhibit A; and BE IT FURTHER RESOLVED that the City Council of the City of Sonoma hereby determines all rates and charges set forth in this Resolution shall become effective on December 1, 2023 and shall remain in effect until changed by the City Council; and BE IT FURTHER RESOLVED that the City Council of the City of Sonoma hereby determines all other rates, charges, fees, penalties, etc. not provided for herein which are presently charged in connection with operation of the City of Sonoma Water Utility shall remain unchanged; and BE IT FURTHER RESOLVED that the City Council of the City of Sonoma hereby finds that: a) the water rates are for the purpose of: meeting operating expenses, including employee wage rates and fringe benefits; purchasing or leasing supplies, equipment, or materials; meeting financial reserve needs and requirements; obtaining funds for capital projects, necessary to maintain service within existing service areas; and obtaining funds necessary to maintain such intra-city transfers as are explicitly for the purposes listed above; b) that capital projects proposed to be funded by the rate increases are necessary to maintain water service within the City’s existing service area, not to expand the City’s water system; and c) the changes in rates and charges set forth in Exhibit A are statutorily exempt from the provisions of the California Environmental Quality Act under Section 15273 of the State CEQA Guidelines.

PASSED, RESOLVED, AND ADOPTED, at a Regular Meeting of the City of Sonoma City Council on this 4th day of October 2023 by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
_____________________________
Sandra Lowe, Mayor
ATTEST:
_____________________________
Rebekah Barr, MMC, City Clerk
Agenda Item #7.1:

3 EXHIBIT A
Monthly Service Charge Rates
Elevation Charge Rates, Zone 2
Volumetric Charge Rates
Drought Charge Rates
Agenda Item #7.1:

4 Pass-Through Rates
Water Consumption Rates may be adjusted annually in accordance with California Government Code Section 53756 to provide pass-through adjustments for increases in wholesale water costs in excess of those projected in the 2023 Water Rate Study.

All Other Charges
All other rates, charges, fees, penalties, etc. not provided for herein shall be based on Resolution No. 56-2014 until updated by subsequent action.

Agenda Item #7.1:

CITY OF SONOMA
Water Rate Study
FINAL REPORT / AUGUST 10, 2023
Agenda Item #7.1:

Agenda Item #7.1:

445 S. Figueroa Street, Suite 1925, Los Angeles, CA 90071 www.raftelis.com
August 10, 2023
Mr. Mike Berger
Public Works Director
City of Sonoma
No. 1 The Plaza
Sonoma, CA 95476
Subject: Water Financial Plan and Rate Study Report
Dear Mr. Berger:

Raftelis is pleased to provide this Water Financial Plan and Rate Study report for the City of Sonoma (City) to develop a ten-year financial plan and to establish five years of water rates that are equitable and align with Proposition 218.

The major objectives of the study include the following:
 Develop a financial plan for the water enterprise to ensure financial sufficiency, meet operation and maintenance (O&M) costs, ensure sufficient funding for capital replacement and refurbishment (R&R) needs, and maintain the financial health of the enterprises  Review the reserve fund targets
 Perform a cost-of-service analysis to ensure a nexus between proposed rates and the cost of providing services to customers
 Update the rates for the water enterprise
 Design drought surcharge rates for times of declared water shortages The report summarizes the key findings and recommendations related to the development of the water enterprise financial plan and the development of the updated water rates.

It has been a pleasure working with you, and we thank you and the City staff for the support provided during the course of this study.

Sincerely,
Theresa Jurotich, P.E. (KS, WA), PMP
Manager
Agenda Item #7.1:

City of Sonoma / Water Rate Study - FINAL
Contents

1. Executive Summary ..................................................................... 9

1.1. Background of the Study ..............................................................................................9

1.2. Objectives of the Study ................................................................................................9

1.3. Study Process and Methodology .................................................................................9

1.4. Results and Recommendations ................................................................................. 10

1.4.1. Proposed Financial Plan ............................................................................................... 10

1.4.2. Proposed Water Rates .................................................................................................. 13

1.4.3. Typical Bill ..................................................................................................................... 14

1.4.4. Neighboring Agency Comparison .................................................................................. 14

1.4.5. Drought Surcharge ........................................................................................................ 15

2. Rate Setting Methodology.......................................................... 16

3. Water System ............................................................................. 18

3.1. Water System Background ......................................................................................... 18

3.2. Number of Accounts and Fire Lines .......................................................................... 19

3.3. Water Use ..................................................................................................................... 20

3.4. Inflationary Assumptions ........................................................................................... 21

4. Financial Plan ............................................................................. 23

4.1. Current Water Rate Revenue ...................................................................................... 23

4.1.1. Calculated Water Rate Revenues ................................................................................. 23

4.1.2. Non-Operating Revenue ............................................................................................... 25

4.2. Water Utility Expenses ............................................................................................... 26

4.2.1. Total Operations and Maintenance Budget ................................................................... 26

4.2.2. Capital Expenses .......................................................................................................... 28

4.2.3. Existing Debt Service .................................................................................................... 29

4.3. Financial Policies ........................................................................................................ 30

4.3.1. Debt Coverage Requirements ....................................................................................... 30

4.3.2. Reserve Policies ........................................................................................................... 30

4.4. Proposed Financial Plan and Revenue Adjustments ............................................... 30

5. Cost-of-Service Analysis ............................................................ 36

5.1. Cost-of-Service Calculations ..................................................................................... 37 Agenda Item #7.1:

City of Sonoma / Water Rate Study - FINAL

5.1.1. Revenue Requirement Determination ........................................................................... 37

5.1.2. Peaking Factors ............................................................................................................ 38

5.1.3. Functionalization of O&M Expenses .............................................................................. 39

5.1.4. Allocation of O&M Expenses to Cost Causation Components ....................................... 39

5.1.5. Functionalization of Assets ............................................................................................ 40

5.1.6. Allocation of Capital Expenses to Cost-Causation Components .................................... 40

5.1.7. Equivalent Meters ......................................................................................................... 41

5.1.8. Allocation of Public and Private Fire Protection Costs ................................................... 42

5.1.9. Unit Costs of Service ..................................................................................................... 43

6. Rate Design and Derivation ....................................................... 46

6.1. Proposed Fixed Charges ............................................................................................ 46

6.2. Volumetric Charge Rates ............................................................................................ 47

6.2.1. Supply Unit Cost ........................................................................................................... 48

6.2.2. Base Unit Cost .............................................................................................................. 49

6.2.3. Peaking Unit Cost ......................................................................................................... 49

6.2.4. Conservation Unit Cost ................................................................................................. 50

6.2.5. Derivation of Proposed FY 2024 Volumetric Charge Rates ........................................... 51

6.3. Elevation Charge Rate ................................................................................................ 52

7. Customer Bill Impacts and Neighboring Agency Comparison .. 53

7.1. Single-Family Bill Impacts .......................................................................................... 53

7.2. Neighboring Agency Comparison ............................................................................. 53

8. Drought Rates ............................................................................ 55 Agenda Item #7.1:

City of Sonoma / Water Rate Study - FINAL
Tables
Table 1-1: Proposed Revenue Adjustments ........................................................................................... 10 Table 1-2: Proposed Monthly Service Charges Through FY 2028 .......................................................... 13 Table 1-3: Proposed Volumetric Charge Rates Through FY 2028 .......................................................... 13 Table 1-4: Proposed Elevation Charge Through FY 2028 ...................................................................... 14 Table 1-5: Drought Surcharge by Percent Usage Reduction .................................................................. 15 Table 3-1: Current Water Rates ............................................................................................................. 18 Table 3-2: Water Accounts by Meter Size .............................................................................................. 19 Table 3-3: Fire Lines by Connection Size ............................................................................................... 20 Table 3-4: Water Use by Customer Class and Tier (kgal) ...................................................................... 21 Table 3-5: Zone 2 Projected Usage (kgal) .............................................................................................. 21 Table 3-6: Inflationary Assumptions ....................................................................................................... 22 Table 4-1: Projected Fixed Charge Revenues Under Current Rates ...................................................... 24 Table 4-2: Projected Fire Line Charge Revenue Under Current Rates ................................................... 24 Table 4-3: Volumetric Charge Revenue Projections ............................................................................... 25 Table 4-4: Projected Non-Operating Revenue ....................................................................................... 26 Table 4-5: Projected Purchased Water Cost Expenses .......................................................................... 27 Table 4-6: Projected O&M Expenses ..................................................................................................... 28 Table 4-7: Projected Capital Improvement Plan Costs Through FY 2028 ............................................... 29 Table 4-8: Existing Debt Service ............................................................................................................ 29 Table 4-9: Proposed Revenue Adjustments ........................................................................................... 30 Table 4-10: Water Utility Cashflow Detail ............................................................................................... 32 Table 5-1: FY 2024 Revenue Requirement Determination ..................................................................... 37 Table 5-2: System-wide Peaking Factors and Allocation to Cost-causation Components ...................... 38 Table 5-3: Max Day and Max Hour Capacity Factors by Class ............................................................... 39 Table 5-4: FY 2024 O&M Expenses by Functional Category ................................................................. 39 Table 5-5: Allocation of Functionalized O&M Expenses to Cost-Causation Components ....................... 40 Table 5-6: Current Asset Value by Functional Category ......................................................................... 40 Table 5-7: Allocation of Capital Expenses to Cost-Causation Components ............................................ 41 Table 5-8: Equivalent Meters ................................................................................................................. 42 Table 5-9: Equivalent Fire Connections ................................................................................................. 43 Table 5-10: Fire Service Share of Peaking Requirements ...................................................................... 43 Table 5-11: Units of Service ................................................................................................................... 44 Table 5-12: Total Adjusted Cost-of-Service Calculation ......................................................................... 44 Table 5-13: Unit Costs of Service ........................................................................................................... 45 Agenda Item #7.1:

City of Sonoma / Water Rate Study - FINAL
Table 6-1: Monthly Service Charge Derivation ($/mo) ............................................................................ 46 Table 6-2: Private Fire Protection Service Charge Derivation ($/mo) ..................................................... 47 Table 6-3: Proposed Monthly Service and Fire Line Charges Through FY 2028 .................................... 47 Table 6-4: Groundwater and SCWA Supply Unit Costs .......................................................................... 48 Table 6-5: SFR Usage by Tier and Source of Supply ............................................................................. 49 Table 6-6: Supply Unit Cost for SFR Tiered Rates ................................................................................. 49 Table 6-7: Derivation of Peaking Unit Costs ........................................................................................... 50 Table 6-8: Derivation of Conservation Unit Costs ................................................................................... 51 Table 6-9: Derivation of FY 2019 Volumetric Charge Rates ($/kgal) ...................................................... 51 Table 6-10: Proposed Volumetric Charge Rates through FY 2028 ($/kgal) ............................................ 52 Table 6-11: Proposed Elevation Charge ($/kgal) .................................................................................... 52 Table 8-1: Projected Water Demand by Percent Usage Reduction ........................................................ 55 Table 8-2: Estimated Cost Savings by Percent Usage Reduction .......................................................... 56 Table 8-3: Drought Surcharge by Percent Usage Reduction .................................................................. 56 Figures
Figure 1-1: Proposed Water Financial Plan ............................................................................................ 11 Figure 1-2: Proposed Water Financial Plan – Projected Ending Balances ............................................. 12 Figure 1-3: Water Capital Funding Sources ........................................................................................... 12 Figure 1-4: Single-Family Bill Comparison at Different Usage (kgal/mo) ................................................ 14 Figure 1-5: Neighboring Agency Comparison ......................................................................................... 15 Figure 4-1: Proposed Operating Financial Plan ...................................................................................... 33 Figure 4-2: Projected CIP and Funding Sources .................................................................................... 34 Figure 4-3: Projected Debt Coverage ..................................................................................................... 34 Figure 4-4: Total Reserve Ending Balance ............................................................................................. 35 Figure 7-1: Single-Family Residential Monthly Bill Impacts .................................................................... 53 Figure 7-2: Neighboring Agency Comparison ......................................................................................... 54 Appendices
Appendix A: City of Sonoma Service Area
Appendix B: Projected Water Demand by Percent Usage Reduction Agenda Item #7.1:

City of Sonoma / Water Rate Study - FINAL

THIS PAGE INTENTIONALLY LEFT BLANK
Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 9

1. Executive Summary

1.1. Background of the Study
In 2023, the City of Sonoma (City) engaged Raftelis Financial Consultants (Raftelis) to conduct a Water Rate Study for the City’s water utility. The study included the development of a ten-year financial plan, a cost-ofservice analysis, and the development of proposed water rates for five years beginning in fiscal year (FY) 20241. This report provides a detailed explanation of the rate setting process and serves as part of the administrative record of the City’s proposed changes to its water rates.

This executive summary describes the rate study process, methodology, and recommendations for the City’s water rates. The City strives to provide high quality, dependable water service to the community while maintaining financial stability, affordability, and adequate levels of investment in infrastructure. The City wishes to establish a five-year schedule of rates that:
 Meet the City’s water enterprise fiscal needs for operation and maintenance (O&M) costs, capital replacement and refurbishment (R&R) costs to maintain the system, reserve goals, and to maintain the financial health of the enterprise, and
 Fairly and equitably recover the costs of providing service and that align with Proposition 218.

1.2. Objectives of the Study
The major objectives of the study include the following:
 Develop a ten-year financial plan for the City’s water utility to ensure financial sufficiency, recover O&M costs, ensure sufficient funding for capital projects, and improve the financial health of the water utility
 Perform a cost-of-service analysis that calculates the cost to serve each customer class  Develop water rates for FY 2024 through FY 2028 that are fair, equitable, and in proportion to the cost of providing service to the City’s water customers  Design drought surcharge rates for times of declared water shortages

1.3. Study Process and Methodology
Raftelis first developed a financial plan for the City, which established the total revenue adjustments2 needed to meet capital investment, operational expenses, and debt service proposed during the study period (FY 2023-FY 2033). Raftelis worked with City staff to refine inputs and provide a recommended financial plan and associated water rates for the City Council’s consideration. After developing the financial plan, Raftelis performed a cost-of-service analysis to determine the water rates.

The water rates presented in this executive summary were developed using cost-of-service principles set forth by the American Water Works Association M1 Manual titled Principles of Water Rates, Fees and Charges (AWWA M1 Manual). As stated in AWWA M1 Manual, “water rates and charges should be recovered from 1 The fiscal year begins on July 1 and runs through June 30. For example, FY 2024 is July 1, 2023 through June 30, 2024.
2 Revenue adjustments are defined as additions to gross rate revenues on an annual basis. Actual changes to rates are based on the revenue adjustment, cost-of-service allocations, and rate design.

Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 10
classes of customers in proportion to the cost of serving those customers.” Raftelis follows industry standard rate setting methodologies set forth by the AWWA M1 Manual to ensure this study aligns with Proposition 218 requirements and creates rates that do not exceed the proportionate cost of providing water services.

Throughout the report many tables are rounded and may not sum exactly due to extra decimals not shown for ease of reading.

1.4. Results and Recommendations

1.4.1. Proposed Financial Plan
With the assistance of City staff, Raftelis conducted a status quo cash flow analysis to evaluate whether existing water rates adequately fund the City’s various water-related expenses over the ten-year study period.

The analysis projected annual revenues, operation and maintenance expenses, debt service payments, and capital expenditures through FY 2033. Raftelis projects that with no rate increases over the study period, the City will fully deplete its reserves by the end of FY 2030. This projected outcome of depleted reserve funds demonstrates a need for water revenue adjustments now to avoid larger increases later.

Raftelis worked with City staff to develop proposed revenue adjustments over the five-year study period, plus a projection, for informational purposes only, for the last half of the 10-year financial plan (Table 1-1). The proposed water revenue adjustments were selected to ensure the water operating fund has sufficient funds to cover annual expenses and to maintain reserves at or above target levels. The total reserve target includes an operating reserve target of 2 months of annual operating expenses, a capital reserve target of the average of the 5-year capital improvement plan, and a rate stabilization reserve of 15 percent of the annual commodity revenue. The percentages shown in Table 1-1 are the annual changes in rate revenue required to maintain a financially viable water utility and to fully fund planned capital projects.

Table 1-1: Proposed Revenue Adjustments
The following items affect the City’s water utility revenue requirement (i.e., costs) and consequently its water rates. The City’s expenses include O&M expenses, capital expenses, and debt service.  Water Purchase Expense: The City obtains roughly 88 percent of its water supply from the Sonoma County Water Agency (SCWA). The rate set by the SCWA for water sold to the City is expected to increase by approximately 10 percent per year between FY 2024 and FY 2025. Water purchase Effective Date Revenue Adjustment
Dec. 1, 2023 5.0%
July 1, 2024 5.0%
July 1, 2025 5.0%
July 1, 2026 5.0%
July 1, 2027 5.0%
July 1, 2028 4.0%
July 1, 2029 4.0%
July 1, 2030 4.0%
July 1, 2031 4.0%
July 1, 2032 4.0%
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expenses represented approximately 49 percent of the City water utility’s total operating expenses in FY 2022 (most recent year of actuals).
 O&M Expenses: The City’s other O&M expenses are expected to increase at a rate of about

3.5 percent per year.
 Water System Capital Investment: The City anticipates an average of approximately $1.5 million (uninflated) in annual capital expenditures. This capital investment includes replacement of key water system infrastructure, investment in meter system upgrades to automated metering infrastructure, and other capital projects.

Figure 1-1 shows the proposed ten-year financial plan. Status Quo revenue is shown by the red line. Projected revenue is shown by the blue line. Annual expenditures are shown by the columns. Green bars above the Xaxis show the net cash to build up the reserves and green bars below the X-axis show withdrawals from reserves to fund costs. Current rates are neither sufficient to cover annual operating and maintenance expenses nor capital-related expenditures. Therefore, revenue adjustments are required to generate sufficient revenue to cover annual operating and maintenance costs, capital projects, and maintain reserves over the study period.

Figure 1-1: Proposed Water Financial Plan
Figure 1-2 shows projected operating and capital ending balances over the study period relative to the City’s total reserve targets under the proposed financial plan. Even with the planned revenue adjustments, reserves are drawn down each year, reaching the target level by the end of the study period.

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Figure 1-2: Proposed Water Financial Plan – Projected Ending Balances Figure 1-3 shows the proposed capital improvement plan (inflated dollars) and planned funding source over the study period. The proposed financial plan assumes that all capital projects over the study period will be cash funded through rate revenue.

Figure 1-3: Water Capital Funding Sources
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1.4.2. Proposed Water Rates
The City’s water rate structure includes a monthly fixed charge based on meter size, a tiered volumetric rate for single-family customers, and uniform volumetric rates by customer class for all other customer classes.

The City also has a monthly fixed charge for private fire service connections based on the diameter of the fire line. No changes are proposed for the water rate structure.

Table 1-2 shows the current and proposed monthly service charges and monthly fire line charges. These fixed charges are designed to primarily recover costs that are relatively fixed, such as customer service costs, meter servicing and maintenance costs, as well as costs associated with public and private fire protection.

Table 1-2: Proposed Monthly Service Charges Through FY 2028 Table 1-3 presents the current and proposed volumetric charge assessed per thousand gallons (kgal) of water consumed per month. This charge is designed to primarily recover the variable costs associated with operating the water utility, such as the cost of supplying water from SCWA as well as costs for delivering water during average demand conditions, system capacity costs, and conservation-relate costs.

Table 1-3: Proposed Volumetric Charge Rates Through FY 2028 Meter/ Connection
Size Current Charge FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 cost-of-service 5% Adjustment 5% Adjustment 5% Adjustment 5% Adjustment Monthly Service Charge
5/8" $30.46 $33.35 $35.02 $36.78 $38.62 $40.56
3/4" $30.46 $33.35 $35.02 $36.78 $38.62 $40.56
1" $30.46 $33.35 $35.02 $36.78 $38.62 $40.56
1 1/2" $50.19 $57.86 $60.76 $63.80 $66.99 $70.34
2" $73.86 $87.28 $91.65 $96.24 $101.06 $106.12
3" $136.98 $165.72 $174.01 $182.72 $191.86 $201.46
4" $207.99 $253.97 $266.67 $280.01 $294.02 $308.73
6" $405.24 $499.11 $524.07 $550.28 $577.80 $606.69
Fire Line Charge
2" $0.82 $14.08 $14.79 $15.53 $16.31 $17.13
4" $4.98 $41.28 $43.35 $45.52 $47.80 $50.19
6" $14.41 $103.09 $108.25 $113.67 $119.36 $125.33
8" $30.72 $209.70 $220.19 $231.20 $242.76 $254.90
10" $55.21 $370.06 $388.57 $408.00 $428.40 $449.82
Class Current FY 2024 FY 2025 FY 2026 FY 2027 FY 2028
Charge cost-of-service 5% Adjustment 5% Adjustment 5% Adjustment 5% Adjustment SFR Tier 1 $6.19 $6.13 $6.44 $6.77 $7.11 $7.47
SFR Tier 2 $8.37 $8.06 $8.47 $8.90 $9.35 $9.82
SFR Tier 3 $9.86 $9.86 $10.36 $10.88 $11.43 $12.01
MFR $8.16 $7.98 $8.38 $8.80 $9.24 $9.71
Comm $7.93 $7.98 $8.38 $8.80 $9.24 $9.71
Municipal $8.16 $8.40 $8.82 $9.27 $9.74 $10.23
Irrigation $8.69 $9.15 $9.61 $10.10 $10.61 $11.15
Construction (Hydrant) (1) $10.74 $14.42 $15.15 $15.91 $16.71 $17.55 (1) Private fire water use is also charged at this rate.

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City of Sonoma / Water Rate Study – FINAL 14
Table 1-4 shows the current and proposed elevation charge for Zone 2. This charge is designed to recover the cost of pumping water to customers residing in a higher elevation zone (Zone 2, shown in the City’s Water Master Plan Figure 1-1, and copied in Appendix A). Customers residing inside the lower elevation zones do not pay a surcharge.

Table 1-4: Proposed Elevation Charge Through FY 2028

1.4.3. Typical Bill
Figure 1-4 shows a comparison of single-family water bills at different water usage levels and on a 1-inch meter.

Figure 1-4: Single-Family Bill Comparison at Different Usage (kgal/mo)

1.4.4. Neighboring Agency Comparison
Figure 1-5 shows a comparison of monthly water bills for a single-family customer on a 1-inch meter using

7.5 kgal/mo. The comparison shows current FY 2023 rates and adopted or proposed rates for FY 2024 and FY 2025.

Zone Current Charge FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 cost-of-service 5% Adjustment 5% Adjustment 5% Adjustment 5% Adjustment Zone 2 $2.40 $3.22 $3.39 $3.56 $3.74 $3.93
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City of Sonoma / Water Rate Study – FINAL 15
Figure 1-5: Neighboring Agency Comparison

1.4.5. Drought Surcharge
In periods of drought when water sales are reduced, the City will lose revenue and fail to cover its expenses.

Raftelis developed drought surcharges to supplement revenues due to drought by recovering the net revenue loss. The projected losses and revenue shortfall, by reduction level, is shown in Table 1-5.

Table 1-5: Drought Surcharge by Percent Usage Reduction Town of
Windsor
City of
Rohnert
Park
City of
Santa
Rosa
City of
Petaluma
City of
Cotati
City of
Sonoma
North
Marin
WD -
Novato
Valley of
the Moon
WD
Marin
Water
FY 2023 $44.92 $65.73 $78.89 $77.67 $81.20 $89.67 $87.99 $92.89 $97.23 FY 2024 $47.18 $69.01 $81.29 $84.33 $86.05 $90.89 $92.39 $99.38 $119.14 FY 2025 $49.54 $72.46 $84.51 $86.37 $91.21 $95.48 $96.98 $106.34 $137.04 $0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
Single Family, 7.5 kgal/mo, 1" Meter
FY 2024
0 - 10%
Reduction
10 - 20%
Reduction
20 - 30%
Reduction
30 - 40%
Reduction
40 - 50%
Reduction
Projected Potable Variable Revenue $4,549,587 $4,083,190 $3,704,370 $3,193,830 $2,702,152 $2,304,365 Revenue Shortfall ($466,396) ($845,217) ($1,355,756) ($1,847,434) ($2,245,222) Cost Savings $240,116 $443,881 $709,102 $970,338 $1,180,106 Net Revenue Shortfall to be Recovered ($226,280) ($401,336) ($646,654) ($877,096) ($1,065,116) % Revenue Shortfall 6% 11% 20% 32% 46%
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2. Rate Setting Methodology
This study was conducted using industry-standard principles outlined in the AWWA Manual M1. The process and approach Raftelis utilized in the study to determine water rates is informed by the City’s policy objectives, the current water system and rates, and the legal requirements in California (namely, Proposition 218). The resulting financial plan, cost of service analysis, and rate design process follows five key steps, outlined below, to determine proposed rates that achieve the City’s objectives, meet industry standards, and align with relevant regulations.

1. Financial Plan - Projections: The first step is to develop a multi-year financial plan that projects the City’s revenues, expenses, capital project financing, annual debt service, and reserve funding. The financial plan is used to determine the revenue adjustment, which allows the City to recover adequate revenues to fund expenses and reserves.

2. Financial Plan - Revenue Requirement Determination: After completing the financial plan, the ratemaking process begins by determining the revenue requirement for the test year, also known as the rate-setting year. The test year for this study is FY 2024. The revenue requirement should sufficiently fund the City’s operating costs, annual debt service (including coverage requirements), capital expenditures, and reserve funding as projected based on the annual budget estimates.

3. Cost-of Service-Analysis: The annual cost of providing water service, or the revenue requirement, is then distributed to customer classes commensurate with their use of and burden on the water system.

A cost-of-service analysis involves the following steps:
a. Functionalize costs – the different components of the revenue requirement are categorized into functions such as supply, transmission/distribution, storage, customer service, etc. b. Allocate to cost causation components – the functionalized costs are then allocated to costcausation components such as supply, base delivery, peaking, etc. c. Develop unit costs – unit costs for each cost-causation component are determined using units of service, such as total use, peaking units, equivalent meters, number of customers, etc., for each component.
d. Distribute cost components – the cost components are allocated to each customer class using the unit costs in proportion to their units of service (demand and burden on the system).

A water cost-of-service analysis also considers both the average water demand and peak demand.

Peaking costs are incurred during periods of peak consumption, most often coinciding with summer water use and irrigation needs. There are additional capacity-related costs associated with designing, constructing, operating, maintaining, and replacing facilities to meet peak demand. Peaking imposes additional costs on a water utility and are used to determine the cost burden on peaking-related facilities.

4. Rate Design: After allocating the revenue requirement to each customer class, the project team designs and calculates rates. Rates do more than simply recover costs; within the legal framework and industry standards, properly designed rates should support and optimize the City’s policy objectives.

Rates also act as a public information tool in communicating these policy objectives to customers.

This process also includes a rate impact analysis and sample customer bill impacts. Additionally, where tiered rates are developed, the project team determines the cost to serve each tier as a sub-class, to ensure a nexus to costs incurred.

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City of Sonoma / Water Rate Study – FINAL 17

5. Administrative Record Preparation and Rate Adoption: The final step in a rate study is to develop the administrative record (report) in conjunction with the rate adoption process. This report serves as the administrative record for this study. The administrative record documents the study results and presents the methodologies, rationale, justifications, and calculations used to determine the proposed rates. A thorough and methodological administrative record serves two important functions:
maintaining defensibility in a stringent legal environment and communicating the rationale for revenue adjustments and proposed rates to customers and key stakeholders.

Values shown in report tables and figures are rounded to the digit shown. Therefore, any manual reproduction of the calculations shown may not match the precise results displayed in the report.

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3. Water System
This section briefly describes the City’s water system and ratepayer base. The City provided customer account and water use data for FY 2021, FY 2022, and partial FY 2023. Raftelis developed a water rate model in Microsoft Excel to project financial and rate calculations over a ten-year study period through FY 2033. The City’s fiscal year spans from July 1 through June 30. Projections in future years were generally made based on actual or budgeted FY 2022 or FY 2023 data using key assumptions outlined below. All assumptions were discussed with, and reviewed by, City staff to ensure that the City’s unique characteristics were incorporated.

Note that most table values shown throughout this report are rounded to the last digit shown and, therefore, may not calculate precisely to the values shown.

3.1. Water System Background
The City provides water services to approximately 4,500 connections that serve residential, commercial, municipal, and irrigation customers as well as private fire lines. Most of the City’s water supply is purchased wholesale from the Sonoma County Water Agency (SCWA). SCWA’s wholesale water rates are projected to increase 10.6 percent between FY 2023 and FY 2024 and another 10 percent between FY 2024 and FY 2025.

The financial plan assumes that SCWA costs will continue to increase by 7.6 percent annually, based on the historical and anticipated increases between FY 2021 and FY 2025. The City supplements its water supply purchases with groundwater produced by seven City-owned wells (not all the wells are currently operational).

The City’s existing rate structure is based on a rate study completed in 2018. The most recent water rate increase went into effect on July 1, 2022 and is shown in Table 3-1.

Table 3-1: Current Water Rates
Charge Type Current Charge Type Current
Monthly Service Charges Volumetric Charges, $/kgal
5/8" $30.46 Residential Volumetric Charges
3/4" $30.46 Tier 1: 0-2 kgal $6.19
1" $30.46 Tier 2: 2 - 7 kgal $8.37
1 1/2" $50.19 Tier 3: > 7kgal $9.86
2" $73.86 Other Classes
3" $136.98 Multi-Family Residential $6.56
4" $207.99 Commercial $6.37
6" $405.24 Municipal $6.56
Fire Line Fixed Charges Irrigation $6.98
2" $0.82 Fire & Hydrant $8.64
4" $4.98 Elevation Charges, $/kgal
6" $14.41 Zone 2 $1.92
8" $30.72
10" $55.21
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City of Sonoma / Water Rate Study – FINAL 19

3.2. Number of Accounts and Fire Lines
Table 3-2 shows the actual number of potable water accounts by meter size for FY 2022 and the projected number of accounts through the study period. Based on discussions with City staff, the total number of accounts is projected to increase at 0.5 percent per year. The number of accounts is used to forecast the amount of fixed revenue the City will receive from the monthly meter charge as well as to forecast the annual water use.

Table 3-2: Water Accounts by Meter Size
Table 3-3 shows the number of fire lines by connection size for FY 2023. Raftelis projected the number of fire lines and forecasted the amount of fixed revenue that the City will collect from the fire line fixed charge using the same methods described above for water accounts. For reference: fire lines are private sprinkler connections or hydrants that provide additional fire suppression as a standby service.

Meter Size FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 5/8" 253 252 253 254 256 257
3/4" 2,568 2,554 2,566 2,579 2,591 2,603
1" 1,249 1,256 1,262 1,268 1,274 1,280
1 1/2" 143 144 145 145 146 147
2" 106 106 107 107 108 108
3" 22 22 22 22 22 22
4" 9 9 9 9 9 9
6" 1 1 1 1 1 1
Total 4,351 4,344 4,365 4,385 4,406 4,427
Meter Size FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 5/8" 258 259 260 262 263 264
3/4" 2,616 2,628 2,641 2,653 2,666 2,679
1" 1,286 1,292 1,298 1,305 1,311 1,317
1 1/2" 148 148 149 150 150 151
2" 109 109 110 110 111 111
3" 23 23 23 23 23 23
4" 9 9 9 9 9 9
6" 1 1 1 1 1 1
Total 4,448 4,469 4,491 4,512 4,533 4,555
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City of Sonoma / Water Rate Study – FINAL 20
Table 3-3: Fire Lines by Connection Size

3.3. Water Use
Table 3-4 shows actual and forecasted annual water use by customer class and tier based on individual customer consumption data provided by the City and analyzed by Raftelis. Based on discussions with City staff, the forecast presumes an approximate 6 percent increase in demand in FY 2024 due to water restrictions being lifted. Thereafter, increased water use is driven by the increase in customer accounts. A small portion of the total usage shown in Table 3-4 is from customers in Zone 2. Table 3-5 shows the projected Zone 2 usage. (remainder of page intentionally left blank)
Connection Size FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 2" 9 9 9 9 9 9
4" 74 76 76 77 77 78
6" 60 62 62 63 63 63
8" 20 20 20 20 20 20
10" 3 3 3 3 3 3
Total 166 170 171 172 172 173
Connection Size FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 2" 9 9 9 9 9 9
4" 78 78 79 79 80 80
6" 64 64 64 64 65 65
8" 21 21 21 21 21 21
10" 3 3 3 3 3 3
Total 174 175 176 176 177 178
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City of Sonoma / Water Rate Study – FINAL 21
Table 3-4: Water Use by Customer Class and Tier (kgal)
Table 3-5: Zone 2 Projected Usage (kgal)

3.4. Inflationary Assumptions
Inflationary assumptions shown in Table 3-6 were used to project O&M expenses beyond the FY 2023 budget. To ensure that future costs are reasonably projected, Raftelis worked with the City to generate assumptions regarding inflationary factors including general and salary inflation and water cost inflation. The inflationary factors were then applied to the FY 2023 budgeted cost estimates to develop the FY 2024 and subsequent year estimates.

Customer FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Residential Volumetric Consumption
Tier 1 79,363 78,600 83,309 83,707 84,107 84,509
Tier 2 117,540 110,600 117,226 117,786 118,349 118,915
Tier 3 115,077 107,500 113,940 114,484 115,031 115,581
Other Uniform Volumetric Consumption
Multi-Family 85,973 82,900 87,866 88,286 88,708 89,132
Commercial 69,344 65,900 69,848 70,182 70,517 70,854
Municipal 36,876 32,900 34,871 35,038 35,205 35,373
Irrigation 42,957 41,800 44,304 44,516 44,729 44,943
Construction 780 900 954 959 964 969
Private Fire 309 300 318 320 322 324
Total, kgal 548,220 521,400 552,636 555,278 557,932 560,600 Customer FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 Residential Volumetric Consumption
Tier 1 84,913 85,319 85,727 86,137 86,549 86,963
Tier 2 119,483 120,054 120,628 121,204 121,783 122,365
Tier 3 116,133 116,688 117,246 117,806 118,369 118,935
Other Uniform Volumetric Consumption
Multi-Family 89,558 89,986 90,416 90,848 91,282 91,718
Commercial 71,193 71,533 71,875 72,218 72,563 72,910
Municipal 35,542 35,712 35,883 36,054 36,226 36,399
Irrigation 45,158 45,374 45,591 45,809 46,028 46,248
Construction 974 979 984 989 994 999
Private Fire 326 328 330 332 334 336
Total, kgal 563,280 565,973 568,680 571,397 574,128 576,873 Customer FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Zone 2, kgal 5,990 5,500 5,829 5,857 5,885 5,913
Customer FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 Zone 2, kgal 5,941 5,969 5,998 6,027 6,056 6,085
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City of Sonoma / Water Rate Study – FINAL 22
Table 3-6: Inflationary Assumptions
Interest earnings on cash reserves are projected assuming a 1 percent annual interest rate. Revenues from late fees and shutoffs are projected to increase at 0.5 percent per year. Other miscellaneous revenue is forecast to remain flat.

Category FY 2024 FY 2025 FY 2026 FY 2027 FY 2028+
General 3.0% 3.0% 3.0% 3.0% 3.0%
Salary 8.0% 3.0% 3.0% 3.0% 3.0%
Benefits 8.0% 8.0% 8.0% 8.0% 8.0%
Utilities 6.0% 5.0% 4.0% 3.0% 3.0%
Construction 6.0% 5.0% 4.0% 3.0% 3.0%
Insurance 3.0% 3.0% 3.0% 3.0% 3.0%
Professional Services 3.0% 3.0% 3.0% 3.0% 3.0%
Water Purchase Cost * 10.0% 7.6% 7.6% 7.6%
* Using SCWA's planned rate for FY 2024.

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City of Sonoma / Water Rate Study – FINAL 23

4. Financial Plan
This section describes the ten-year financial plan. The proposed financial plan is used to determine the overall revenue adjustments and total amount of revenue required from rates. The revenue covers O&M expenses, capital expenses, any debt service, and reserve funding. Revenue adjustments represent the average rate-based revenue increase for the City as a whole; rate changes for individual customers will depend on the cost-ofservice analysis and rate design.

To develop the financial plan, Raftelis projected annual expenses and revenues, existing debt service, modeled reserve balances and transfers between funds, and accounted for planned capital expenditures. This section of the report provides a discussion of projected revenue, O&M expenses, debt service, the capital improvement plan (CIP), reserve funding under existing rates, and the revenue adjustments required to ensure fiscal sustainability. The financial plan starts with current account data and water use as well as current rates to determine if the current rates are adequately meeting the revenue requirements.

4.1. Current Water Rate Revenue
The City’s revenues consist of rate revenues, interest earnings on cash reserves, and other miscellaneous revenues. The rate revenue projections shown below assume that current FY 2023 (Table 3-1) rates are effective throughout the study period; and, therefore, represent estimated revenues in the absence of any rate increase. This status quo scenario provides a baseline from which Raftelis evaluates the need for revenue adjustments.

4.1.1. Calculated Water Rate Revenues
Raftelis projected water rate revenues from fixed meter charges, fire line charges, and volume charges for FY 2023 through FY 2033 based on current FY 2023 water rates, the projected number of water meters, projected private fire connections, and projected water use.

The City collects fixed monthly service revenue from its customers based on meter size. Table 4-1 shows projected fixed meter charge revenues under current rates over the study period. Fixed charge revenues are calculated by meter size in each year as follows based on current FY 2023 water rates (from Table 3 1) and the projected number of water meters (from Table 3 3). The following shows an example calculation for a 3/4" meter. This calculation is repeated for all meter sizes to determine the total fixed charge revenue in each fiscal year throughout the study period.

Annual Fixed Charge Revenue for ¾” meter =
[FY 2023 fixed monthly rate ¾” meter] × [Number of ¾” connections] × [12 Bills per year] Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 24
Table 4-1: Projected Fixed Charge Revenues Under Current Rates Revenues for fire line services under existing rates are calculated similarly to the fixed meter charge. The estimated revenues under current rates are shown in Table 4-2.

Table 4-2: Projected Fire Line Charge Revenue Under Current Rates Table 4-3 shows projected volume charge revenues under current rates over the study period. Volume charge revenues are calculated by customer class and tier in each year based on current FY 2023 water rates and projected water use (Table 3 5). The following shows an example calculation for a commercial customer. This Meter Size FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 5/8" $92,111 $92,550 $92,988 $93,427 $93,866 $94,304
3/4" $933,538 $937,997 $942,493 $946,989 $951,522 $956,054 1" $459,367 $461,579 $463,772 $466,001 $468,231 $470,461 1 1/2" $86,728 $87,150 $87,572 $87,993 $88,415 $88,836
2" $93,950 $94,393 $94,836 $95,279 $95,723 $96,166
3" $36,163 $36,327 $36,491 $36,656 $36,820 $36,985
4" $22,463 $22,463 $22,463 $22,463 $22,463 $22,463
6" $4,863 $4,863 $4,863 $4,863 $4,863 $4,863
Total $1,729,183 $1,737,322 $1,745,478 $1,753,672 $1,761,902 $1,770,131 Meter Size FY 2029 FY 2030 FY 2031 FY 2032 FY 2033
5/8" $94,743 $95,181 $95,620 $96,095 $96,570
3/4" $960,623 $965,229 $969,834 $974,476 $979,118
1" $472,690 $474,957 $477,223 $479,489 $481,792
1 1/2" $89,258 $89,679 $90,101 $90,523 $90,944
2" $96,609 $97,052 $97,495 $97,938 $98,382
3" $37,149 $37,313 $37,478 $37,642 $37,806
4" $22,463 $22,463 $22,463 $22,463 $22,463
6" $4,863 $4,863 $4,863 $4,863 $4,863
Total $1,778,398 $1,786,737 $1,795,077 $1,803,490 $1,811,939 Connection Size FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 2" $89 $89 $89 $89 $89 $89
4" $4,542 $4,566 $4,590 $4,613 $4,637 $4,661
6" $10,721 $10,773 $10,825 $10,877 $10,929 $10,980
8" $7,373 $7,410 $7,447 $7,483 $7,520 $7,557
10" $1,988 $1,988 $1,988 $1,988 $1,988 $1,988
Total $24,712 $24,824 $24,937 $25,050 $25,162 $25,275
Connection Size FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 2" $89 $89 $89 $89 $89
4" $4,685 $4,709 $4,733 $4,757 $4,781
6" $11,032 $11,084 $11,136 $11,188 $11,240
8" $7,594 $7,631 $7,668 $7,705 $7,741
10" $1,988 $1,988 $1,988 $1,988 $1,988
Total $25,388 $25,500 $25,613 $25,726 $25,838
Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 25
calculation is repeated for all classes and tiers to determine the total volumetric charge revenue in each fiscal year throughout the Study Period.

Commercial Volume Charge Revenue = [Commercial FY 2023 rate per kgal] × [Commercial Water Use in kgal] Table 4-3: Volumetric Charge Revenue Projections

4.1.2. Non-Operating Revenue
In addition to the rate-based revenue, the water utility also has several sources of non-operating revenue shown below in Table 4-4. Non-operating revenues are based on the City’s FY 2023 budget and are not escalated in subsequent years, with the exception of “Late Fees & Shut-Off” (which is assumed to increase consistent with the projected growth in accounts) and interest revenue, which is estimated beginning in FY 2023 based on estimated beginning fund balances, revenues and expenses, and the assumed interest rate.

Customer FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 Residential
Tier 1 $486,534 $515,683 $518,146 $520,622 $523,111 $525,611 Tier 2 $925,722 $981,182 $985,869 $990,581 $995,319 $1,000,073 Tier 3 $1,059,950 $1,123,448 $1,128,812 $1,134,206 $1,139,629 $1,145,071 Multi-Family $676,464 $716,987 $720,414 $723,857 $727,317 $730,793 Commercial $522,587 $553,895 $556,543 $559,200 $561,872 $564,560 Municipal $268,464 $284,547 $285,910 $287,273 $288,644 $290,023 Irrigation $363,242 $385,002 $386,844 $388,695 $390,555 $392,423 Construction $9,666 $10,246 $10,300 $10,353 $10,407 $10,461 Private Fire $3,222 $3,415 $3,437 $3,458 $3,480 $3,501
Zone 2 Surcharge $13,200 $13,990 $14,057 $14,124 $14,191 $14,258 Total $4,329,051 $4,588,394 $4,610,332 $4,632,370 $4,654,524 $4,676,775 Customer FY 2029 FY 2030 FY 2031 FY 2032 FY 2033
Residential
Tier 1 $528,125 $530,650 $533,188 $535,738 $538,301
Tier 2 $1,004,852 $1,009,656 $1,014,477 $1,019,324 $1,024,195 Tier 3 $1,150,544 $1,156,046 $1,161,567 $1,167,118 $1,172,699 Multi-Family $734,286 $737,795 $741,320 $744,861 $748,419 Commercial $567,257 $569,969 $572,689 $575,425 $578,176 Municipal $291,410 $292,805 $294,201 $295,604 $297,016
Irrigation $394,300 $396,186 $398,080 $399,983 $401,895 Construction $10,514 $10,568 $10,622 $10,676 $10,729
Private Fire $3,523 $3,544 $3,566 $3,587 $3,609
Zone 2 Surcharge $14,326 $14,395 $14,465 $14,534 $14,604 Total $4,699,135 $4,721,614 $4,744,174 $4,766,851 $4,789,643 Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 26
Table 4-4: Projected Non-Operating Revenue

4.2. Water Utility Expenses
The City’s water utility expenses include O&M expenses, capital expenses, and debt service payments.

4.2.1. Total Operations and Maintenance Budget

4.2.1.1. Water Purchase Cost
The City obtains most of its water from the SCWA and pays rates established by the SCWA for its wholesale water purchases. The City provided Raftelis with its budgeted SCWA purchased amount for FY 2023 and planned SCWA rates for FY 2024. For FY 2025, the City provided an estimated 10 percent increase to the SCWA rate. For FY 2026 onwards, Raftelis assumed a 7.6 percent annual increase in SCWA wholesale rates based on increases since FY 2021. The forecast assumes that the City obtains about 88 percent of its water from SCWA and the rest from groundwater wells. Costs associated with pumping groundwater from the City’s wells are included in the summary of O&M expenses in the following subsection. Additionally, the study assumes an 8.9 percent water loss factor, which increases the amount of water supply required. This loss factor was generated by comparing the totals of produced and purchased water versus total metered sales over the last four fiscal years. Water supply cost projections for FY 2024 – FY 2033 are calculated by multiplying the amount of water purchased from SCWA by the SCWA wholesale rate and are shown in Table 4-5. The City can purchase a maximum of 3,000 AF per year from SCWA, but the City is currently well below that maximum.

Line Item FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 Interest Income $90,849 $90,013 $86,593 $84,277 $82,239 $80,535 Finance Charges $2,665 $2,665 $2,665 $2,665 $2,665 $2,665 Late Fees & Shutoff $32,640 $32,796 $32,953 $33,111 $33,269 $33,428 Change in Account Fees $27,429 $27,429 $27,429 $27,429 $27,429 $27,429 Licenses & Permits $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 Total $154,584 $153,904 $150,641 $148,482 $146,602 $145,058 Line Item FY 2029 FY 2030 FY 2031 FY 2032 FY 2033
Interest Income $78,736 $76,384 $73,356 $69,486 $65,210 Finance Charges $2,665 $2,665 $2,665 $2,665 $2,665
Late Fees & Shutoff $33,588 $33,748 $33,909 $34,071 $34,234 Change in Account Fees $27,429 $27,429 $27,429 $27,429 $27,429 Licenses & Permits $1,000 $1,000 $1,000 $1,000 $1,000
Total $143,418 $141,227 $138,359 $134,652 $130,539
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City of Sonoma / Water Rate Study – FINAL 27
Table 4-5: Projected Purchased Water Cost Expenses

4.2.1.2. Pass-Through Rates
California Government Code Section 53756 allows for pass-through adjustments for unforeseen increases in wholesale water costs. Based on discussions with City staff, the financial plan assumes that wholesale water rates will increase by 10 percent in FY 2025 and then approximately 7.6 percent per year for the duration of the study period. Should the costs of wholesale water exceed the estimated increase due to drought conditions or for any other reason, the City may choose to pass-through any wholesale water rate increases imposed on the City by SCWA that are greater than the average annual increase already included in the financial plan assumptions.

4.2.1.3. Operating and Maintenance Expenses
The City provided Raftelis with its water utility budget for FY 2023. Raftelis used the escalation percentages shown in Table 3-6 to project expenses for the financial plan. A summary of the City’s projected O&M budget is shown by fiscal year in Table 4-6. Note that water supply costs from Table 4-5 are included in the total O&M shown in Table 4-6.

Line Item FY 2024 FY 2025 FY 2026 FY 2027 FY 2028
Water Sales 1,696 1,704 1,712 1,720 1,729
Total Supply Required (1) 1,862 1,871 1,880 1,889 1,898 City Wells 238 238 238 238 238
SCWA 1,624 1,633 1,642 1,651 1,660
SCWA, $/AF $1,348 $1,483 $1,596 $1,717 $1,848
Total SCWA Costs $2,189,291 $2,421,421 $2,620,069 $2,835,011 $3,067,570 Line Item FY 2029 FY 2030 FY 2031 FY 2032 FY 2033
Water Sales 1,737 1,745 1,754 1,762 1,770
Total Supply Required (1) 1,907 1,916 1,925 1,935 1,944 City Wells 238 238 238 238 238
SCWA 1,669 1,678 1,687 1,697 1,706
SCWA, $/AF $1,989 $2,140 $2,303 $2,478 $2,667
Total SCWA Costs $3,319,195 $3,591,455 $3,886,011 $4,204,717 $4,549,554 (1) Inclues water loss.

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City of Sonoma / Water Rate Study – FINAL 28
Table 4-6: Projected O&M Expenses

4.2.2. Capital Expenses
Projected capital improvement plan (CIP) costs in the financial plan were provided by City staff through FY 2027. FY 2028 – FY 2033 estimated CIP is based on the average of the prior three years. Individual CIP project costs are shown in Table 4-7 and were escalated 6 percent in FY 2024, 5 percent in FY 2025, 4 percent in FY 2026, and 3 percent per year thereafter, based on recent increases in, and projected estimates of, construction cost inflation.

Line Item FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 Salary & Wages $712,877 $769,907 $793,004 $816,794 $841,298 $866,537 Employee Benefits $370,750 $400,410 $432,442 $467,038 $504,401 $544,753 Professional Services $463,135 $496,224 $502,201 $518,043 $534,430 $551,382 Property Services $159,700 $174,266 $183,365 $191,137 $197,359 $203,785 Operations $138,290 $143,521 $148,151 $152,801 $157,456 $162,253 Supplies $194,200 $200,774 $207,022 $213,375 $219,825 $226,470 Water Purchase $2,401,147 $2,189,291 $2,421,421 $2,620,069 $2,835,011 $3,067,570 Capital Assts $15,420 $15,883 $16,359 $16,850 $17,355 $17,876 Internal Service & Capital $231,696 $239,601 $247,463 $255,240 $262,897 $270,784 Transfers $687,026 $687,026 $687,026 $687,026 $687,026 $687,026 Total $5,374,241 $5,316,902 $5,638,454 $5,938,373 $6,257,058 $6,598,436 Line Item FY 2029 FY 2030 FY 2031 FY 2032 FY 2033
Salary & Wages $892,533 $919,309 $946,888 $975,295 $1,004,554 Employee Benefits $588,333 $635,400 $686,232 $741,130 $800,421 Professional Services $568,318 $585,803 $603,854 $622,491 $641,733 Property Services $210,421 $217,275 $224,352 $231,662 $239,211 Operations $167,196 $172,290 $177,539 $182,949 $188,525 Supplies $233,316 $240,370 $247,637 $255,124 $262,838
Water Purchase $3,319,195 $3,591,455 $3,886,011 $4,204,717 $4,549,554 Capital Assts $18,412 $18,965 $19,534 $20,120 $20,723
Internal Service & Capital $278,908 $287,275 $295,893 $304,770 $313,913 Transfers $687,026 $687,026 $687,026 $687,026 $687,026
Total $6,963,659 $7,355,168 $7,774,966 $8,225,284 $8,708,497 Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 29
Table 4-7: Projected Capital Improvement Plan Costs Through FY 2028

4.2.3. Existing Debt Service
The water utility’s outstanding debt service payments related to its 2012 Refunding Water Installment Sale Revenue Bonds issue are shown in Table 4-8. These bonds refinanced a 2001 Bond Issuance used to finance the construction of a water tank project and the installation of water mains and laterals. The debt is expected to be retired in FY 2032.

Table 4-8: Existing Debt Service
The City does not anticipate issuing new debt to pay for capital improvements during the study period.

Line Item FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 Urban Water Master Plan & Minor
Water Master Plan Update $0 $0 $0 $86,814 $0 $0
Water Meter System Upgrades
(AMI) $0 $1,696,000 $1,113,000 $578,760 $596,123 $0
Well No. 1 Vault Cover and Air
Exchange Improvements $125,000 $0 $0 $0 $0 $0
Norrborm Tank Coating Renewal $265,000 $0 $0 $0 $0 $0
Well No. 3 Water Disinfection
Equipment Replacement $45,000 $0 $0 $0 $0 $0
Loval Valley Road & Thorsnberry
Water Valve Box, Frame, Cover,
Replacement
$32,500 $0 $0 $0 $0 $0
Future Undesignated Projects $0 $0 $556,500 $1,070,706 $1,192,246 $1,842,019 Total $467,500 $1,696,000 $1,669,500 $1,736,280 $1,788,368 $1,842,019 Line Item FY 2029 FY 2030 FY 2031 FY 2032 FY 2033
Future Undesignated Projects $1,897,280 $1,954,198 $2,012,824 $2,073,209 $2,135,405 Total $1,897,280 $1,954,198 $2,012,824 $2,073,209 $2,135,405 Line Item FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 2012 Refunding Water Installment Sale
Principal $85,000 $85,000 $90,000 $90,000 $95,000 $100,000 Interest $36,563 $33,248 $29,835 $26,325 $22,718 $18,915 Total $121,563 $118,248 $119,835 $116,325 $117,718 $118,915 Line Item FY 2029 FY 2030 FY 2031 FY 2032 FY 2033
2012 Refunding Water Installment Sale
Principal $105,000 $105,000 $110,000 $115,000 $0
Interest $14,918 $10,823 $6,630 $2,243 $0
Total $119,918 $115,823 $116,630 $117,243 $0
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City of Sonoma / Water Rate Study – FINAL 30

4.3. Financial Policies

4.3.1. Debt Coverage Requirements
The City must meet or exceed a debt coverage requirement of 125 percent. Debt coverage is calculated by dividing net operating revenues by total debt service in each fiscal year.

4.3.2. Reserve Policies
The City has the following reserve policies:
 Operating reserve: The operating reserve is used primarily to meet ongoing cash flow requirements.

The City’s operating reserve target level equals two months of O&M expenses, which is used to calculate operating reserve target levels throughout the study period.  Capital reserve: The capital reserve is used to cover any unexpected and unplanned infrastructure repairs and replacements not included in the CIP budget. The City’s capital reserve target level equals the annual average CIP expenditures (averaged over the next five years). The capital reserve target levels do not include any debt funded CIP projects (none anticipated).  Rate stabilization reserve: The rate stabilization reserve is used during periods of short-term revenue shortages due to economic recession, drought, or other causes to alleviate the need to quickly implement substantial rate increases. The current Rate Stabilization Reserve target level is 15 percent of annual volumetric charge revenue.

4.4. Proposed Financial Plan and Revenue Adjustments
The proposed revenue adjustments help ensure adequate revenue to fund operating expenses, capital expenditures, and meet reserve targets. The financial plan modeling assumes the first revenue adjustment occurs on December 1, 2023. The proposed revenue adjustments, along with a gradual drawdown of reserves to target levels, will enable the City to meet operating costs and to execute the CIP. Table 4-9 shows the proposed revenue adjustments for the rate-setting period. Adjustments beyond the 5-year rate setting period are shown for informational purposes only.

Table 4-9: Proposed Revenue Adjustments
Table 4-10 shows the cash flow detail through the study period. Line 16 shows total revenue, which is the sum of revenue from current rates (Line 1), additional rate revenue resulting from the proposed revenue Effective Date Revenue Adjustment
Dec. 1, 2023 5.0%
July 1, 2024 5.0%
July 1, 2025 5.0%
July 1, 2026 5.0%
July 1, 2027 5.0%
July 1, 2028 4.0%
July 1, 2029 4.0%
July 1, 2030 4.0%
July 1, 2031 4.0%
July 1, 2032 4.0%
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adjustments (Line 12), non-operating revenue (Line 14), and estimated interest earnings (Line 15). Line 20 shows net operating revenue, which is calculated by subtracting operating expenses (Line 19) from total revenue (Line 16). Line 22 shows total debt service. Line 23 shows capital expenditures to be funded through rates during the study period. Line 24 is the net cash and equals net operating revenue (Line 20) less the sum of debt (Line 22) and capital (Line 23). A positive value indicates an addition to the reserve balance and a negative value indicates a withdrawal from reserves.

Ending balances for the water utility in Line 26 are determined by summing the starting balance in Line 25 and the net cash change in Line 24. The City provided the starting balance for FY 2023. The ending fund balance is projected to be at or above the target reserve level (Line 27) throughout the study period.

Debt service coverage (Line 28) is calculated by dividing net operating revenue (Line 20) by total debt service (Line 22) and is expected to stay above the minimum coverage requirement of 125 percent over the study period.
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Table 4-10: Water Utility Cashflow Detail
No. FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 1 Revenue Under Existing Rates $6,082,946 $6,350,540 $6,380,747 $6,411,091 $6,441,588 $6,472,182 $6,502,921 $6,533,852 $6,564,864 $6,596,066 $6,627,420 Mo. Effctv.

FY First Year Adjustment
2 2024 7 5.0% $185,224 $319,037 $320,555 $322,079 $323,609 $325,146 $326,693 $328,243 $329,803 $331,371 3 2025 12 5.0% $334,989 $336,582 $338,183 $339,790 $341,403 $343,027 $344,655 $346,293 $347,940 4 2026 12 5.0% $353,411 $355,093 $356,779 $358,474 $360,179 $361,888 $363,608 $365,337 5 2027 12 5.0% $372,847 $374,618 $376,397 $378,188 $379,983 $381,789 $383,603 6 2028 12 5.0% $393,349 $395,217 $397,097 $398,982 $400,878 $402,784 7 2029 12 4.0% $331,982 $333,561 $335,145 $336,737 $338,338 8 2030 12 4.0% $346,904 $348,550 $350,207 $351,872
9 2031 12 4.0% $362,492 $364,215 $365,947
10 2032 12 4.0% $378,784 $380,584
11 2033 12 4.0% $395,808
12 Revenue Adjustment Revenue $0 $185,224 $654,027 $1,010,548 $1,388,202 $1,788,145 $2,128,619 $2,485,648 $2,859,938 $3,252,315 $3,663,583 13 Total Sales Revenue $6,082,946 $6,535,764 $7,034,774 $7,421,639 $7,829,790 $8,260,326 $8,631,540 $9,019,500 $9,424,802 $9,848,381 $10,291,003 14 Miscellenous $63,735 $63,891 $64,048 $64,205 $64,363 $64,522 $64,682 $64,843 $65,004 $65,166 $65,329 15 Interest $90,849 $90,013 $86,593 $84,277 $82,239 $80,535 $78,736 $76,384 $73,356 $69,486 $65,210 16 Total Revenue $6,237,530 $6,689,668 $7,185,415 $7,570,122 $7,976,392 $8,405,384 $8,774,959 $9,160,726 $9,563,162 $9,983,032 $10,421,542 Operating Expenses
17 Water Purchase $2,401,147 $2,189,291 $2,421,421 $2,620,069 $2,835,011 $3,067,570 $3,319,195 $3,591,455 $3,886,011 $4,204,717 $4,549,554 18 All Other O&M $2,973,094 $3,127,611 $3,217,034 $3,318,304 $3,422,047 $3,530,866 $3,644,464 $3,763,712 $3,888,956 $4,020,567 $4,158,944 19 Total O&M $5,374,241 $5,316,902 $5,638,454 $5,938,373 $6,257,058 $6,598,436 $6,963,659 $7,355,168 $7,774,966 $8,225,284 $8,708,497 20 Net Operating Revenue $863,289 $1,372,766 $1,546,961 $1,631,749 $1,719,334 $1,806,948 $1,811,300 $1,805,559 $1,788,196 $1,757,748 $1,713,045 Debt
21 Existing Debt $121,563 $118,248 $119,835 $116,325 $117,718 $118,915 $119,918 $115,823 $116,630 $117,243 $0 22 Total Debt Service $121,563 $118,248 $119,835 $116,325 $117,718 $118,915 $119,918 $115,823 $116,630 $117,243 $0 CIP
23 Paygo CIP Spending $467,500 $1,696,000 $1,669,500 $1,736,280 $1,788,368 $1,842,019 $1,897,280 $1,954,198 $2,012,824 $2,073,209 $2,135,405 24 Net Cash Changes $274,226 -$441,482 -$242,374 -$220,856 -$186,752 -$153,986 -$205,898 -$264,462 -$341,259 -$432,703 -$422,361 25 Starting Balance $8,947,767 $9,221,993 $8,780,512 $8,538,137 $8,317,281 $8,130,529 $7,976,543 $7,770,645 $7,506,183 $7,164,924 $6,732,221 26 Ending Balance $9,221,993 $8,780,512 $8,538,137 $8,317,281 $8,130,529 $7,976,543 $7,770,645 $7,506,183 $7,164,924 $6,732,221 $6,309,860 27 Target Reserves $3,554,582 $3,653,204 $3,838,588 $4,001,913 $4,173,218 $4,353,372 $4,469,924 $4,593,370 $4,724,132 $4,862,721 $5,009,650 28 Debt Service Coverage 710% 1161% 1291% 1403% 1461% 1520% 1510% 1559% 1533% 1499% #N/A Agenda Item #7.1:

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The next four figures display the proposed ten-year financial plan in graphical form. Figure 4-1 illustrates the operating financial plan, which compares existing and proposed revenues with projected expenses. The expenses include O&M, water supply costs, debt service, cash-funded capital projects, and reserve funding.

Expenses are represented by the stacked bars. Total projected revenues at existing and proposed rates are shown by the red and blue lines, respectively. Figure 4-1 shows that projected revenue from existing rates would fail to generate sufficient revenue to fund projected expenses over the study period and clearly demonstrates the need for revenue adjustments.

Figure 4-1: Proposed Operating Financial Plan
Figure 4-2 summarizes projected CIP expenditures (inflated) by funding source. Total CIP expenditures in millions of dollars in each fiscal year are displayed at the top of the stacked bars. No new debt service is proposed during the study period. All capital is anticipated to be funded with cash generated from rates and/or from reserves.

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Figure 4-2: Projected CIP and Funding Sources
Figure 4-3 shows projected debt service coverage in orange versus the minimum required in grey. Figure 4-3 demonstrates that with the proposed annual revenue adjustments, the debt coverage requirement is exceeded throughout the study period. Note that the projected and minimums terminate in FY 2032, the year the existing debt service is anticipated to be retired.

Figure 4-3: Projected Debt Coverage
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Figure 4-4 displays the water utility’s projected yearly ending balance (blue bars). The total reserve target is the sum of each individual reserve target and is represented by the black line. Individual reserve targets are also shown for the operating reserve (green line), capital reserve (yellow line), and rate stabilization reserve (orange line). Figure 4-4 demonstrates that under the proposed financial plan, the total reserve balance is drawn down over the course of the study period but is projected to remain above target minimums in FY 2033.

Figure 4-4: Total Reserve Ending Balance
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City of Sonoma / Water Rate Study – FINAL 36

5. Cost-of-Service Analysis
The cost-of-service analysis allocates the overall rate revenue requirement to customer classes based on their proportion of use of and burden on the City’s water system. This provides the basis for the development of proposed water rates.

The first step in the cost-of-service analysis is to determine the revenue required from rates. The total revenue requirement is determined in the financial plan and the proposed revenue adjustments in Section 4. The framework and methodology utilized to develop the cost-of-service analysis and to apportion the revenue requirement to each customer class and tier is informed by the processes outlined in the AWWA Manual M1.

After determining a utility’s revenue requirement, the next step in a cost-of-service analysis is to functionalize its O&M costs to the following functional categories:
 Supply - cost of purchasing water from SCWA and supplying groundwater  Pumping and Conveyance – costs associated with pumping and conveying water through the system  Treatment - cost of treating water to drinking water quality  Transmission and Distribution (T&D) - cost associated with pipes, pumps, mains, etc.  Storage - cost associated with storing treated water
 Billing and Collection - costs associated with meter reading and billing  Customer Service – costs associated with customer service  General & Administration - general and administrative costs incurred by the City  Meters - costs associated with meter maintenance and replacement  Conservation – costs incurred for conservation programs, messaging, and rebates  Private Fire Protection – costs associated with private fire protection The functionalization of costs allows for a better allocation of the functionalized costs to cost-causation components. The cost-causation components used in this study are:
 Customer Service: Pertains to costs directly associated with serving customers, irrespective of the amount of water used, and generally include meter reading, bill generation, accounting, customer service, and collection expenses.
 Meter Capacity: Maintenance and capital costs related to water meters and associated services. Costs incurred are generally proportional to the size of the water meter.  Supply Cost: costs related to the purchase of water from SCWA and production of groundwater from City wells.
 Conservation: Costs associated with the City's water conservation efforts, which include general conservation efforts and the extra costs associated with necessary flushing of water mains without discharging water.
 Base: Costs that vary with the total quantity of water demanded within the water system under average conditions. Costs may include O&M expenses for: supply, treatment, pumping, transmission and distribution facilities, and capital costs related to plant investment that are associated with serving customers at a constant, or average, annual rate of use. Base costs are therefore spread over all units of water equally.

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 Max Day: Different facilities, such as distribution and storage facilities, and the O&M costs associated with those facilities, are designed to meet the peak demands placed on the system by customers.

Peaking costs include the O&M and capital costs associated with meeting peak customer demand in excess of the average annual rate of use or base use requirements. Peaking costs are separated into max day and max hour. Max day pertains to the maximum amount of water used in a single day in a year.
 Max Hour: Peaking costs pertaining to the maximum usage experienced by the system in an hourlong period.  Fire: Costs associated with providing fire protection services.  Elevation: Costs associated with pumping water to customers in higher elevation zones.

5.1. Cost-of-Service Calculations

5.1.1. Revenue Requirement Determination
Table 5-1 shows the net revenue requirement from rates for FY 2024, the test year (Column C, Line 12). The totals shown in Column C are the total O&M and capital revenue requirements that are to be allocated to the cost-causation components. Raftelis calculated the revenue requirement using FY 2024 expenses, which include O&M expenses, rate funded capital expenses, and existing debt service. The rate revenue requirement is adjusted for revenue offsets from other sources and for other adjustments. The total revenue requirement is the amount that fixed and commodity rates are designed to collect.

The total revenue requirement shown in Line 5 is equal to operating expenses (Table 4-6) and capital-related expenses (Table 4-7 and Table 4-8). Revenues from other sources, totaled in Line 8, comprise miscellaneous revenues and interest income (Table 4-4) and reduce the total revenue required from rates. The adjustment for cash (Line 9) is subtracted to account for the withdrawal from reserves to help cover revenue requirements.

The mid-year increase (Line 10) reflects that the FY 2024 revenue adjustment occurs partway through the fiscal year and is used to annualize the rates for an entire fiscal year.

Table 5-1: FY 2024 Revenue Requirement Determination
Line Revenue Requirements Operating Capital Total
No. (A) (B) (C)
Revenue Requirements
1 Water Purchases $2,189,291 $2,189,291
2 Other Operating $3,127,611 $3,127,611
3 Current Debt Service $118,248 $118,248
4 Rate Funded Capital $1,696,000 $1,696,000
5 Total $5,316,902 $1,814,248 $7,131,149
Revenue From Other Sources
6 Non-Operating Revenues -$63,891 -$63,891
7 Interest -$90,013 -$90,013
8 Total -$153,904 $0 -$153,904
Adjustments
9 Adjustment for Cash Balance -$441,482 -$441,482
10 Adjustment for Annualizing Rate Increase $132,303 $132,303 11 Total -$309,179 $0 -$309,179
12 Total Revenue Required $4,853,819 $1,814,248 $6,668,067 Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 38

5.1.2. Peaking Factors
Peaking factors represent the ratio of water moving through the system during the maximum day and maximum hour of water use relative to the water use during an average day within a year. Peaking factors are used to allocate peaking costs (max day and max hour costs) to customer classes. Table 5-2 shows the systemwide peaking factors used to derive the cost component allocation bases for base (average daily demand delivery), max day, and max hour costs. Raftelis utilized max day and max hour factors provided in the City’s 2018 Final Water Master Plan, Section 6.1 and 6.2, in terms of million gallons per day (MGD). Per the Water Master Plan, the average flow amount is 2.08 MGD, the maximum day flow amount is 4.16 MGD (or 2 times average flow), and the maximum hour flow amount is 6.24 MGD (or 3 times average flow). Base costs represent average daily demand during the year, which is normalized to a factor of 1.00 (Column A, Line 1).

The max month factor (Column A, Line 4) is the maximum month usage divided by the average monthly usage using FY 2021 billing data.

Table 5-2: System-wide Peaking Factors and Allocation to Cost-causation Components The allocation bases (Columns B, C, and D) are calculated using the equations outlined below. Columns are represented in these equations as letters and rows are represented as numbers. For example, Column C, Line 2 is shown as C2.

The max day allocations are calculated as follows:

Base = A1 / A2 x 100% = B2
Max Day= 100% - B2 = C2
The peak hour allocations are calculated as follows:

Base = A1 / A3 x 100% = B3
Max Day = (A2 – A1) / A3 x 100% = C3
Peak Hour = 100% - B3 – C3 = D3
The max day and max hour peaking factors for each customer class are shown in Table 5-3. The max month to average month (MM/AM) factor (Column C) is the maximum month usage divided by the average month.

The MM/AM factor (Column C) is multiplied by the ratio of the system-wide max day factor to the systemwide max month factor (2.00/1.52) from Table 5-2 to determine the max day capacity factor (Column D).

The max hour factor (Column E) is the max day factor (Column D) times the ratio of max hour to max day from Table 5-2 (Column A, Line 3 divided by Line 2).

Line Factor System-Wide Base Max Day Max Hour Total
No. (A) (B) (C) (D) (E)
1 Base 1.00 100% 0% 0% 100%
2 Max Day 2.00 50% 50% 0% 100%
3 Max Hour 3.00 33% 33% 33% 100%
4 Max Month 1.52
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City of Sonoma / Water Rate Study – FINAL 39
Table 5-3: Max Day and Max Hour Capacity Factors by Class

5.1.3. Functionalization of O&M Expenses
With assistance and input from City staff, Raftelis functionalized the water utility’s projected O&M budget for the test year on a line-item basis. Each line item was assigned to one of the functional categories listed at the beginning of Section 5. Table 5-4 shows a summary of the functionalization of the City’s O&M expenses.

Functionalizing O&M expenses allows Raftelis to follow the principles of rate-setting theory in which the end goal is to allocate the City’s O&M expenses to cost-causation components and ultimately to user classes.

Table 5-4: FY 2024 O&M Expenses by Functional Category

5.1.4. Allocation of O&M Expenses to Cost Causation Components After functionalizing expenses, the next step is to allocate the functionalized expenses to cost-causation components. To do so, we use the system-wide peaking factors, which are shown in Table 5-2. Table 5-5 shows the allocation basis for the water utility’s O&M costs. The top row shows the cost-causation components and Column J shows O&M expenses by functional category (from Table 5-4). The allocation basis for each functional category is shown in Column A. Base, max day, and max hour allocations come from Table 5-2. All other functional categories are allocated to cost causation components by Raftelis based on industry norms and input from City staff. The percentages shown in Lines 1-8 in Table 5-5 are multiplied by the total O&M (Column J) for each functional category to determine the dollar amount to be allocated to each cost causation component in Columns B-I, Lines 9-16.

Customer Class Max. Month Avg. Mo. MM/AM Max Day Max Hour (kgal) (kgal)
(A) (B) (C) (D) (E)
Single Family 51,132 33,346 1.53 2.02 3.04
Tier 1 6,925 6,742 1.03 1.36 2.03
Tier 2 14,491 11,553 1.25 1.66 2.48
Tier 3 29,716 15,051 1.97 2.61 3.91
Multi-Family 10,857 8,321 1.30 1.72 2.58
Commercial 7,372 5,662 1.30 1.72 2.58
Municipal 5,340 3,343 1.60 2.11 3.16
Irrigation 9,341 4,392 2.13 2.81 4.21
Hydrant (Construction) 3,662 628 5.84 7.70 11.55
Functional Category O&M Expense, $ O&M Expenses, %
Supply $2,189,291 41.2%
Pumping and Conveyance $89,880 1.7%
Treatment $25,750 0.5%
Transmission and Distribution $301,923 5.7%
Storage $8,240 0.2%
General & Administration $2,434,017 45.8%
Meters $103,000 1.9%
Conservation $164,800 3.1%
Total Test Year O&M $5,316,902 100.0%
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City of Sonoma / Water Rate Study – FINAL 40
Table 5-5: Allocation of Functionalized O&M Expenses to Cost-Causation Components

5.1.5. Functionalization of Assets
Capital-related costs are allocated based on the assets of the system in recognition of the fact that the assets need to be replaced over time and that capital expenses will, over time, generally match the overall asset base.

This distribution of costs allows the allocation of capital expenses to the cost-causation components previously defined in this section. Raftelis was provided an asset list for the City’s water utility for FY 2022.

Raftelis assigned each listed asset to a functional category and calculated the value of each asset using the replacement cost less depreciation (RCLD) valuation method. Table 5-6 shows a summary of water utility assets by functional category. The capital-related expenses shown in Line 12, Column B of Table 5-1 are allocated to the functional categories using the percent of total assets in Table 5-6.

Table 5-6: Current Asset Value by Functional Category

5.1.6. Allocation of Capital Expenses to Cost-Causation Components Table 5-7 shows the allocation of capital-related expenses to the cost causation components. Lines 1-6 show the allocation bases to each cost-causation component in Columns B-I for the six functional categories for which functionalized assets have been assigned. Column J shows the total capital-related costs allocated to the functional categories, matching the values in Table 5-6.

Line Functional Allocation Customer Meter Conserva- Max Max O&M No. Category Basis Service Capacity Supply tion Base Day Hour Elevation Expense (A) (B) (C) (D) (E) (F) (G) (H) (I) (J)
1 Supply Supply 100.00% $2,189,291
2 Pumping and Conveyance Electricity Costs 77.84% 22.16% $89,880 3 Treatment Base 100.00% $25,750
4 Transmission and Distribution Max Hour 33.33% 33.33% 33.33% $301,923 5 Storage Max Day 50.00% 50.00% $8,240
6 General & Administration Staff Allocation 20.00% 40.00% 40.00% $2,434,017 7 Meters Meter 100.00% $103,000
8 Conservation Conservation 100.00% $164,800
9 Supply $0 $0 $2,189,291 $0 $0 $0 $0 $0 $2,189,291
10 Pumping and Conveyance $0 $0 $69,962 $0 $0 $0 $0 $19,919 $89,880 11 Treatment $0 $0 $0 $0 $25,750 $0 $0 $0 $25,750
12 Transmission and Distribution $0 $0 $0 $0 $100,641 $100,641 $100,641 $0 $301,923 13 Storage $0 $0 $0 $0 $4,120 $4,120 $0 $0 $8,240
14 General & Administration $486,803 $973,607 $0 $0 $973,607 $0 $0 $0 $2,434,017 15 Meters $0 $103,000 $0 $0 $0 $0 $0 $0 $103,000
16 Conservation $0 $0 $0 $164,800 $0 $0 $0 $0 $164,800
17 Total $486,803 $1,076,607 $2,259,253 $164,800 $1,104,118 $104,761 $100,641 $19,919 $5,316,902 O&M Allocation by Cost-Causation Component, %
O&M Allocation by Cost-Causation Component, $
Functional Category Asset Value (RCLD) % of Total Assets Capital-Related Supply $1,853,891 7.8% $142,344
Transmission and Distribution $13,250,287 56.1% $1,017,370 Storage $5,973,137 25.3% $458,623
Meters $117,211 0.5% $9,000
Fire Hydrants $991,590 4.2% $76,135
General & Administration $1,442,759 6.1% $110,776
Total $23,628,875 100% $1,814,248
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City of Sonoma / Water Rate Study – FINAL 41
Lines 7-12 in Table 5-7 show the allocation of capital-related expenses from current debt service and rate funded CIP to the cost-causation components. This is determined for each cost-causation component by multiplying the dollar amount in Column J, Lines 7-12 by the corresponding total allocation percentage in Lines 1-6. Line 13 is the sum of Lines 7-12.

Table 5-7: Allocation of Capital Expenses to Cost-Causation Components

5.1.7. Equivalent Meters
Equivalent meters (EMs) are used to allocate meter-related costs. Larger meters can impose both greater average and peak demands on the system and are more expensive to install, maintain, and replace than smaller meters. This study uses a hydraulic capacity (capacity) ratio to calculate equivalent meters. The capacity ratio is based on meter hydraulic capacity and is calculated to represent the potential demand on the water system compared to the base meter size. A ratio of hydraulic capacity is calculated by dividing the capacity of a meter at a given size by the base meter capacity using the maximum safe operating flow rates in gallons per minute (gpm). Consistent with previous studies, the base meter used in the study is the 1" meter.

Smaller meters are assigned a ratio of 1.

Table 5-8 shows the meter capacity and capacity ratio for each meter size. The capacity in gpm is based on the safe operating flow rates provided in the AWWA Manual M1. The capacity ratios (Column D) are calculated by dividing the capacity in gpm (Column C) for each meter size (Column A) by the capacity in gpm for the 1" meter (Column C, Line 3). Column E shows the estimated equivalent meters based on the capacity ratio.

Meter counts (Column B) at each size are multiplied by the capacity ratio (Column D) to arrive at the total number of equivalent meters (Column E).

Line Functional Allocation Customer Meter Conserva- Max Max Public Capital No. Category Basis Service Capacity Supply tion Base Day Hour Fire Expense (A) (B) (C) (D) (E) (F) (G) (H) (I) (J)
1 Supply Supply 100.00% $142,344
2 Transmission & Distribution Max Hour 33.33% 33.33% 33.33% $1,017,370 3 Storage Max Day 50.00% 50.00% $458,623
4 General & Administration Staff Allocation 20.00% 40.00% 40.00% $110,776 5 Meters Meter 100.00% $9,000
6 Fire Fire Hydrants 100.00% $76,135
7 Supply $0 $0 $142,344 $0 $0 $0 $0 $0 $142,344
8 Transmission & Distribution $0 $0 $0 $0 $339,123 $339,123 $339,123 $0 $1,017,370 9 Storage $0 $0 $0 $0 $229,312 $229,312 $0 $0 $458,623
10 General & Administration $22,155 $44,311 $0 $0 $44,311 $0 $0 $0 $110,776 11 Meters $0 $9,000 $0 $0 $0 $0 $0 $0 $9,000
12 Fire $0 $0 $0 $0 $0 $0 $0 $76,135 $76,135
13 Total $22,155 $53,310 $142,344 $0 $612,745 $568,435 $339,123 $76,135 $1,814,248 Capital-Related Allocation by Cost-Causation Component, % Capital-Related Allocation by Cost-Causation Component, $ Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 42
Table 5-8: Equivalent Meters

5.1.8. Allocation of Public and Private Fire Protection Costs Water systems provide two types of fire protection: public fire protection for firefighting (i.e., fire hydrants) and private fire protection (i.e., fire lines for private structures with sprinkler systems for fire suppression and private fire hydrants). Raftelis performed a fire demand analysis to determine the share of fire protection costs allocated to public versus private fire protection. The City provided Raftelis with a count of fire hydrants. The number of private fire connections is shown in Table 3-3.

Table 5-9 shows the calculation of equivalent fire demand associated with public hydrants and private fire lines. Each connection size has a fire flow demand factor similar to the hydraulic capacity factor of a water meter. The diameter of the connection (in inches) is raised to the 2.63 power to determine the fire demand factor (Column A).3 Hydrants are presumed to have one 4-inch and two 2-inch openings. The equivalent demand ratio (Column B) takes the relative flow capacity factor at each fire line size divided by the 2-inch flow capacity (Line 1, Column A) to establish each connection on an equivalent basis. The equivalent demand ratio is multiplied by the number of hydrants (Column C) or connections (Column D) at each size and summed to calculate the equivalent number of hydrants (Column C, Line 8) and connections (Column D, Line 8). Line 9 shows the proportional share of equivalent fire connections between public (Column C) and private (Column D).
3 Hazen-Williams equation and AWWA Manual M1
Line Meter Test Year AWWA AWWA Equivalent
No. Size Meters Capacity (gpm) Ratio Meters
(A) (B) (C) (D) (E)
1 5/8" 253 20 1.0 253
2 3/4" 2,566 30 1.0 2,566
3 1" 1,262 50 1.0 1,262
4 1 1/2" 145 100 2.0 289
5 2" 107 160 3.2 341
6 3" 22 320 6.4 141
7 4" 9 500 10.0 90
8 6" 1 1,000 20.0 20
9 8" 0 0 0.0 0
10 4,365 4,963
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City of Sonoma / Water Rate Study – FINAL 43
Table 5-9: Equivalent Fire Connections
Table 5-10 shows the max day and max hour extra capacity requirements based on fire flow information in the 2018 Final Water Master Plan, Section 7.1. The information in Table 5-9 and Table 5-10 is used to determine the amount of max day and max hour demand due to fire flow. The flow rates (Column A) and durations (Column B) are converted to kgal per day to determine max day and max hour requirements4.

Table 5-10: Fire Service Share of Peaking Requirements

5.1.9. Unit Costs of Service
The end goal of a cost-of-service analysis is to distribute the revenue requirement to each customer class.

Raftelis calculated unit costs for each cost component by assessing the total water demand, meter count, or equivalent service units. Table 5-11 shows the units of service for each customer class. The Max Day Capacity Factor (Column E) and the Max Hour Capacity Factor (Column H) are the demand factors shown in Table 5-3. Max Day Total Capacity (Column F) is the Annual Use (Column D), divided by 365, and multiplied by the Max Day Capacity Factor (Column E). Max Day Extra Capacity (Column G) is the difference between the Max Day Total Capacity (Column F) and the Annual Use (Column D), divided by 365. Max Hour Total Capacity (Column I) is the Annual Use (Column D), divided by 365, and multiplied by the Max Hour Capacity Factor (Column H). Max Hour Extra Capacity (Column J) is the difference between the Max Hour Total Capacity (Column I) and the Max Day Total Capacity (Column F). 4 For example, the residential max day fire flow = A1 * 60 min/hr * B1 * 1kgal/1000gal and the max hour fire flow = A1 * 60 min/hr * 24hr/day * 1kgal/1000gal.

Line
No.

Fire Line
Size
Relative Flow
Capacity Factor
Equivalent
Demand Ratio
Public Fire
Hydrants
Private Fire
Connections
(A) (B) (C) (D)
1 2" 6.2 1.00 9
2 4" 38.3 6.19 76
3 Hydrant 60.6 9.79 514 0
4 6" 111.3 17.98 62
5 8" 237.2 38.32 20
6 10" 426.6 68.91 3
7 Total 514 171
8 Equivalent No. of Connections 5,030 2,579
9 Proportional Share 66% 34%
No Simultaneous Fires Max Fire Max Day Max Hour
Flow Duration Fire Flow Fire Flow
(A) (B) (C) (D)
(gpm) (hours) (kgal/day) (kgal/day)
1 Residential 1,500 2 180 2,160
2 All Other Land Use Categories 2,000 2 240 2,880
3 Total 420 5,040
Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 44
Public fire Max Day Total Capacity is equal to Max Day Fire Flow (Table 5-10, Column C, Line 3) multiplied by public fire’s proportional share of fire connections (Table 5-9, Column C, Line 9). Public fire Max Day Extra Capacity is the same as its total capacity. Public fire Max Hour Total Capacity is equal to Max Hour Fire Flow (Table 5-10, Column D, Line 3) multiplied by public fire’s proportional share of fire connections (Table 5-9, Column C, Line 9). Public fire Max Hour Extra Capacity is its Max Hour Total Capacity less its Max Day Total Capacity. Max day and max hour factors for private fire are calculated similarly using its proportional share of connections (Table 5-9, Column D, Line 9).

Table 5-11: Units of Service
Table 5-12 shows the operating and capital-related revenue requirements allocated to cost components.

Revenue offsets and adjustments from Table 5-1 are subtracted to arrive at the net revenue requirement (prior to adjustments) in Line 5. Line 1 matches Line 17 from Table 5-5. Line 2 matches Line 13 from Table 5-7. As shown in Line 3 of Table 5-12, all revenue offsets (from Column C, Line 8 in Table 5-1) are applied to the Supply cost-causation component. In Line 4, the total Adjustments (from Column C, Line 11 in Table 5-1) are allocated in proportion to the total operating costs in Line 1 of Table 5-12. The total cost of service in Column A, Line 5 is the same as the revenue requirement shown in Column C, Line 12 of Table 5-1.

Table 5-12: Total Adjusted Cost-of-Service Calculation
Public
Line Equivalent Annual Capacity Total Extra Capacity Total Extra Fire No Customer Class Acts Bills Meters Use Factor Capacity Capacity Factor Capacity Capacity Protection (A) (B) (C) (D) (E) (F) (G) (H) (I) (J) (K)
No. No. No. kgal kgal/day kgal/day kgal/day kgal/day Hydrants 1 Single Family 314,475
2 Tier 1 83,309 1.36 309 81 2.03 464 155
3 Tier 2 117,226 1.66 532 211 2.48 798 266
4 Tier 3 113,940 2.61 814 501 3.91 1,220 407
5 Multi-Family 87,866 1.72 415 174 2.58 622 207
6 Commercial 69,848 1.72 329 138 2.58 493 164
7 Municipal 34,871 2.11 201 106 3.16 302 101
8 Irrigation 44,304 2.81 341 219 4.21 511 170
9 Construction 954 7.70 20 18 11.55 30 10
10 Subtotal 4,365 52,374 4,963 552,318 1,447 1,480
11 Public Fire 0 278 278 3,332 3,054 514
12 Private Fire 171 2,050 142 142 1,708 1,566
13 Total Water 4,535 54,424 4,963 552,318 1,867 6,100 514 Max Day Requirements Max Hour Requirements
Line Customer Meter Conserva- Max Max Public Private Elevation No Line Item Total Service Capacity Supply tion Base Day Hour Fire Fire Elevation (A) (B) (C) (D) (E) (F) (G) (H) (I) (J) (K)
1 Total Operating $5,316,902 $486,803 $1,076,607 $2,259,253 $164,800 $1,104,118 $104,761 $100,641 $0 $0 $19,919 2 Total Capital $1,814,248 $22,155 $53,310 $142,344 $0 $612,745 $568,435 $339,123 $76,135 $0 $0 3 Revenue Offsets -$153,904 $0 $0 -$153,904 $0 $0 $0 $0 $0 $0 $0 4 Adjustments -$309,179 -$28,308 -$62,605 -$131,376 -$9,583 -$64,205 -$6,092 -$5,852 $0 $0 -$1,158 5 Total Prior To Adjustment $6,668,067 $480,651 $1,067,312 $2,116,317 $155,217 $1,652,659 $667,104 $433,912 $76,135 $0 $18,760 Reallocations
6 Public Fire Costs $0 $0 $392,564 $0 $0 $0 -$99,188 -$217,240 -$76,135 $0 $0 7 Private Fire Costs $0 $0 $0 $0 $0 $0 -$50,854 -$111,379 $0 $162,233 $0 8 Total Reallocations $0 $0 $392,564 $0 $0 $0 -$150,042 -$328,620 -$76,135 $162,233 $0 9 Total Adjusted Costs-of-Service $6,668,067 $480,651 $1,459,876 $2,116,317 $155,217 $1,652,659 $517,062 $105,292 $0 $162,233 $18,760 Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 45
The net revenue requirements are further adjusted for public and private fire peaking impacts. Public fire’s proportion of total max day costs (Column G, Line 5) are determined based on the ratio of public fire Max Day Extra Capacity (Table 5-11, Column G, Line 11) to Total System Extra Capacity (Table 5-11, Column G, Line 13). Public fire’s proportion of max hours costs (Column H, Line 6) are determined based on the ratio of public fire Max Day Extra Capacity (Table 5-11, Column J, Line 11) to Total System Extra Capacity (Table 5-11, Column J, Line 13). Line 6 shows that public fire max day and max hour costs, as well as direct public fire costs, are allocated to the meter component since public fire protection is a fixed cost of the system.

Private fire’s share of max day and max hour demand are calculated similarly to public fire. Line 7 of Table 5-12 shows the allocation of private fire peaking costs to the private fire component.

The total adjusted cost of service for the test year is shown in Line 9, which is the sum of Lines 5 and 8. This represents the amount that must be recovered by the City’s fixed charges and volumetric rates in the test year.

The adjusted cost-of-service allocations to each cost-causation component are used to calculate the City’s FY 2024 proposed water rates.

Table 5-13 divides the adjusted cost-of-service (Table 5-12, Line 9) by the respective units of service for each cost component, to determine the unit cost for each component.

Table 5-13: Unit Costs of Service
Customer Meter Conserva- Max Max Private
Line Item Service Capacity Supply tion Base Day Hour Fire Elevation Bills EMs/yr kgal kgal kgal kgal/day kgal/day Eq. Cnnct./yr Zone 2 Usage Adjusted Cost of Service $480,651 $1,459,876 $2,116,317 $155,217 $1,652,659 $517,062 $105,292 $162,233 $18,760 Units 54,424 4,963 552,318 552,318 552,318 1,447 1,480 2,579 5,829 Unit Cost, $/unit $8.83 $294.16 $3.83 $0.28 $2.99 $357.24 $71.13 $62.90 $3.22 Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 46

6. Rate Design and Derivation
Rate design is the process by which the cost causation components derived in Line 9 of Table 5-12 are converted into rates and charges that recover those costs. These rates are designed to recover the total cost of service (Table 5-12, Column A, Line 9).

6.1. Proposed Fixed Charges
From the calculations in Table 5-13, the proposed fixed charges are determined for each meter size. Table 6-1 shows the derivation of the monthly service charge. The Customer Service Cost component (Column E) is equal to the unit rate from Table 5-13. As the cost of issuing a bill does not vary by meter size, it remains uniform for all meter sizes. The Meter Capacity Cost component (Column D) is the Meter Capacity unit cost from Table 5-13 divided by 12 months for the 5/8”, 3/4", and 1” meter. For meters larger than 1", this unit rate is multiplied by the Meter Ratio (Column C) to derive the Meter Capacity Cost (Column D) associated with those larger meter sizes. The proposed monthly service charge (Column F) is the sum of Columns D and E and is rounded up to the nearest penny for revenue sufficiency. The Current Charge (Column G) is shown for comparison.

Table 6-1: Monthly Service Charge Derivation ($/mo)
Table 6-2 shows the derivation of the private fire protection service charge. The charge shown in Column E is the unit rate shown for Private Fire in Table 5-13 divided by 12 months multiplied by the Fire Demand Factor (Column C). The total Monthly Fire Protection Charge (Column D) is the sum of Columns D and E, rounded up to the nearest cent. The current monthly charge is shown in Column G for comparison.

Meter
Size
Total
Meters
Meter
Ratio
Meter
Capacity
Customer
Service
Proposed
Charge
Current
Charge
Cost Cost
(A) (B) (C) (D) (E) (F) (G)
5/8" 253 1.00 $24.51 $8.83 $33.35 $30.46
3/4" 2,566 1.00 $24.51 $8.83 $33.35 $30.46
1" 1,262 1.00 $24.51 $8.83 $33.35 $30.46
1 1/2" 145 2.00 $49.03 $8.83 $57.86 $50.19
2" 107 3.20 $78.44 $8.83 $87.28 $73.86
3" 22 6.40 $156.89 $8.83 $165.72 $136.98
4" 9 10.00 $245.13 $8.83 $253.97 $207.99
6" 1 20.00 $490.27 $8.83 $499.11 $405.24
Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 47
Table 6-2: Private Fire Protection Service Charge Derivation ($/mo) The proposed five-year monthly service and fire line charges are shown in Table 6-3. The rates for FY 2024 are derived from the cost-of-service analysis and the proposed revenue adjustments from Table 4-9 are used to determine the proposed water rates and charges for FY 2025 to FY 2028 by escalating the rates shown in FY 2024, rounded up to the nearest penny.

Table 6-3: Proposed Monthly Service and Fire Line Charges Through FY 2028

6.2. Volumetric Charge Rates
The following subsection describes the derivation of volumetric charge rates for each customer class and tier.

The volumetric charges are designed to recover the revenue requirements for the following cost causation components, Supply, Base, Max Day and Max Hour (collectively referred to as Peaking), and Conservation.

These four cost-causation components generally vary with the amount of water used and are recovered by dollar per kgal rates. The revenue requirement in FY 2024 for each is shown in Line 9 of Table 5-12. Note that the Peaking revenue requirement is the sum of the Max Day and Max Hour revenue requirements. Units of service for each component are shown in Table 5-13. The remainder of this subsection details the derivation of unit costs by customer class and tier and then the summation of the unit costs of the four cost causation components to determine the proposed volumetric charge rates.

Connection
Size
Number of
Connections
Fire Demand
Factor
Billing
Charge
Private Fire
Protection
Proposed
Charge
Current
Rates
(A) (B) (C) (D) (E) (F) (G)
2" 9 1.00 $8.83 $5.24 $14.08 $0.82
4" 76 6.19 $8.83 $32.45 $41.28 $4.98
6" 62 17.98 $8.83 $94.26 $103.09 $14.41
8" 20 38.32 $8.83 $200.86 $209.70 $30.72
10" 3 68.91 $8.83 $361.22 $370.06 $55.21
Meter/ Connection
Size Current Charge FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 cost-of-service 5% Adjustment 5% Adjustment 5% Adjustment 5% Adjustment Monthly Service Charge
5/8" $30.46 $33.35 $35.02 $36.78 $38.62 $40.56
3/4" $30.46 $33.35 $35.02 $36.78 $38.62 $40.56
1" $30.46 $33.35 $35.02 $36.78 $38.62 $40.56
1 1/2" $50.19 $57.86 $60.76 $63.80 $66.99 $70.34
2" $73.86 $87.28 $91.65 $96.24 $101.06 $106.12
3" $136.98 $165.72 $174.01 $182.72 $191.86 $201.46
4" $207.99 $253.97 $266.67 $280.01 $294.02 $308.73
6" $405.24 $499.11 $524.07 $550.28 $577.80 $606.69
Fire Line Charge
2" $0.82 $14.08 $14.79 $15.53 $16.31 $17.13
4" $4.98 $41.28 $43.35 $45.52 $47.80 $50.19
6" $14.41 $103.09 $108.25 $113.67 $119.36 $125.33
8" $30.72 $209.70 $220.19 $231.20 $242.76 $254.90
10" $55.21 $370.06 $388.57 $408.00 $428.40 $449.82
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City of Sonoma / Water Rate Study – FINAL 48

6.2.1. Supply Unit Cost
Supply costs are costs related to the cost of purchasing and producing water. The City has two sources of water, each incurring different supply-related costs, as shown in Table 6-4. Table 6-4 shows the determination of per kgal supply costs for water from the City’s wells and from SCWA. This must be determined to calculate a weighted average supply unit cost for each single-family residential (SFR) tier. Table 6-4 determines the share of water supply obtained from groundwater (“GW” in the table) from City wells in Line 4. This percentage is multiplied by total projected test year SFR usage in Line 5 to determine the amount of groundwater allocated to SFR customers. The Source/Notes column in Lines 8-15 of Table 6-4 provides a description of the determination of SCWA and City groundwater unit supply costs in Lines 16 and 17 respectively.

Table 6-4: Groundwater and SCWA Supply Unit Costs
The supply unit cost varies by tier for SFR customers, who are levied the volumetric charge based on three tiers under the current rate structure. As Tier 1 is designed to apply to essential water usage, it is appropriate that Tier 2 and Tier 3 are allocated a greater proportion of cost recovery of expenses related to the purchase of SCWA water. Therefore, the relatively less expensive City well supply costs are allocated first to SFR Tier 1 water use. All users in the class benefit from this approach of allocating lowest cost water to highest priority use as even high volume SFR water customers must first pass through Tier 1.

Table 6-5 shows the amount of projected test year (FY 2024) SFR water supplies provided by each source of supply. Raftelis analyzed FY 2021, FY 2022, and partial FY 2023 water use data to determine the percentages of SFR projected usage in each tier (Column A). These percentages were multiplied by total projected SFR usage in the test year (Table 6-4, Line 5) to determine test year usage within each tier (Column B). Column C, Line 1 shows that all of the City groundwater supply available to serve SFR customers (Table 6-4, Line 6) is Line Line Item Total Source/Notes
1 SCWA Purchased Water 1,624 AF Table 4-5
2 Well/Groundwater 238 AF Table 4-5
3 Total Purchased/Acquired Water 1,862 AF Line 1 + Line 2 4 GW as percent of total 12.78% Line 2 / Line 3
5 Single Family Usage 314,475 kgals Table 3-4
6 GW To Meet Single Family Demand 40,194 kgals Line 4 x Line 5 7 SCWA To Meet Single Family Demand 274,281 kgals Line 5 - Line 6 8 Total Supply Cost $2,116,317 Table 5-12, Col. D, Line 9 9 Total Consumption 552,318 kgals Table 5-11, Col. D, Line 13 10 Consumption met by GW 70,593 kgals Line 4 x Line 9
11 Consumption met by SCWA Import 481,725 kgals Line 9 - Line 10 12 SCWA Portion of Supply Cost 97% Table 5-5, Col. D, Line 19 / Line 17 13 GW Portion of Supply Cost 3% Table 5-5, Col. D, Line 10 / Line 17 14 SCWA Cost $2,050,782 Line 8 x Line 12
15 GW Cost $65,535 Line 8 x Line 13
16 SCWA Import Cost ($/kgal) $4.26 Line 14 / Line 11
17 Groundwater Cost ($/kgal) $0.93 Line 15 / Line 10
Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 49
fully allocated to Tier 1. Column D, Line 1 shows the remaining SFR Tier 1 supply required from SCWA in the test year to satisfy Tier 1 demand. Lines 2 and 3 demonstrate that all projected Tier 2 and 3 demand is required to be met by SCWA supplies.

Table 6-5: SFR Usage by Tier and Source of Supply
Table 6-6 shows the final determination of supply unit costs for each SFR tier. Column A is determined by dividing Column C in Table 6-5 by Column B in Table 6-5. Column B is determined by dividing Column D by Column B (both of Table 6-5). Unit supply costs shown in Columns C and D were determined in Lines 16- 17 of Table 6-4. A weighted average is used to determine the final SFR Supply unit costs in Column E.

Table 6-6: Supply Unit Cost for SFR Tiered Rates
The supply unit cost shown in Table 5-13 represents the unit cost across all users with a uniform volumetric rate structure: Multi-family residential, Commercial, Municipal, Irrigation, and Construction (Hydrant).

6.2.2. Base Unit Cost
The base cost-causation component pertains to the costs to treat and deliver water under average daily demand conditions. Since the base cost-causation component is designed to recover costs incurred to meet average day demands, the base unit cost is uniform for all units of water, regardless of customer class or tier.

The Base unit cost is shown in Table 5-13.

6.2.3. Peaking Unit Cost
The peaking cost-causation component is designed to recover costs incurred to meet customer peak demands in excess of average daily demand. Total peaking costs are comprised of max day and max hour costs. The peaking costs are distributed to each tier using peaking factors derived for each class and tier.

Table 6-7 shows the derivation of peaking unit costs for each customer class and tier. The max day costs (Column A) are the max day unit costs from Table 5-13 apportioned to each customer class by the classes’/tier’s respective max day extra capacity (Table 5-11, Column G). The max hour costs (Column B) are the max hour unit costs from Table 5-13 apportioned to each customer class by the classes’/tier’s respective max hour extra capacity (Table 5-11, Column J). Total Peaking Costs (Column C) are the sum of Columns A and B. Water use (Column D) comes from Table 5-11, Column D. The unit rates (Column E) for each class Line Tier % in Tier Use in Tier GW Use In Tier SCWA Use in Tier (A) (B) (C) (D)
1 Tier 1 26% 83,309 kgals 40,194 kgals 43,115 kgals
2 Tier 2 37% 117,226 kgals 0 kgals 117,226 kgals
3 Tier 3 36% 113,940 kgals 0 kgals 113,940 kgals
Line Tier % Met by GW % Met by SCWA GW Cost SCWA Cost Average Cost (A) (B) (C) (D) (E)
1 Tier 1 48% 52% $0.93 $4.26 $2.65
2 Tier 2 0% 100% $0.93 $4.26 $4.26
3 Tier 3 0% 100% $0.93 $4.26 $4.26
Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 50
and tier are the Total Peaking Costs (Column C) divided by the Water Use (Column D). The Totals shown in Columns A and B match the totals shown for max day and max hour, respectively, in Table 5-12.

Table 6-7: Derivation of Peaking Unit Costs

6.2.4. Conservation Unit Cost
The conservation cost-causation component pertains to costs associated with the City’s water conservation efforts, which include general conservation efforts and the extra costs associated with necessary flushing of water mains without discharging water. The conservation unit cost shown in Table 5-13 represents the average unit cost across all users and is applied to the Multi-family residential, Commercial, Municipal, Irrigation, and Construction (Hydrant) customer classes.

SFR conservation costs are calculated based on total class usage and the uniform unit rate from Table 5-13.

Since conservation-related costs are made increasingly necessary because of wasteful and/or inefficient water use, all conservation costs allocated to the SFR customer class are designated to be recovered by Tier 3 (which represents all water use above average water use). All SFR water users, even those with use in Tier 3, benefit from Tier 1 and Tier 2 water being exempted from conservation cost recovery.

Table 6-8 shows the determination of the conservation unit costs for each customer class and tier. Column A is the annual test year water usage from Table 5-11, Column D. Column B shows the conservation unit cost from Table 5-13. The conservation cost for each class and tier (Column C) equals Column A times Column B.

Column D shows the total SFR conservation costs (sum of Lines 1 -3, Column C) being applied to Tier 3 water use only. For the other customer classes, the value in Column D equals Column C. The Unit Cost is shown in Column E and is the cost in Column D divided by the Water Use in Column A.

Class
Max Day Allocated
Costs
Max Hour Allocated
Costs
Total Peaking
Costs
Water Use
(kgal) Unit Rate
(A) (B) (C) (D) (E)
SFR Tier 1 $29,012 $11,006 $40,017 83,309 $0.48
SFR Tier 2 $75,231 $18,912 $94,143 117,226 $0.80
SFR Tier 3 $179,109 $28,933 $208,043 113,940 $1.83
Multifamily $62,111 $14,745 $76,856 87,866 $0.87
Commercial $49,135 $11,697 $60,832 69,848 $0.87
Municipal $37,841 $7,165 $45,006 34,871 $1.29
Irrigation $78,364 $12,118 $90,482 44,304 $2.04
Construction (Hydrant) $6,259 $716 $6,975 954 $7.31
Total $517,062 $105,292
Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 51
Table 6-8: Derivation of Conservation Unit Costs

6.2.5. Derivation of Proposed FY 2024 Volumetric Charge Rates To determine proposed FY 2024 volumetric charge rates, the Supply, Base, Peaking, and Conservation unit costs are summed for each customer class and tier. The calculation of FY 2024 volumetric charge rates is shown below in Table 6-9. The total unit cost is rounded up to the nearest penny.

Table 6-9: Derivation of FY 2019 Volumetric Charge Rates ($/kgal) Table 6-10 shows the current FY 2023 and proposed FY 2024 through FY 2028 volumetric charge rates. The FY 2024 rates were determined in Table 6-9. The FY 2024 volumetric charge rates are then increased in each subsequent year by the revenue adjustments shown in Table 4-9 and rounded up to the nearest cent.

Line
No. Class
Water Use
(kgal)
Conservation
Unit Cost
Conservation
Cost Allocation SFR Redistributed Unit Cost
(A) (B) (C) (D) (E)
1 SFR Tier 1 83,309 $0.28 $23,412
2 SFR Tier 2 117,226 $0.28 $32,944
3 SFR Tier 3 113,940 $0.28 $32,020 $88,376 $0.78
4 Multifamily 87,866 $0.28 $24,693 $24,693 $0.28
5 Commercial 69,848 $0.28 $19,629 $19,629 $0.28
6 Municipal 34,871 $0.28 $9,800 $9,800 $0.28
7 Irrigation 44,304 $0.28 $12,451 $12,451 $0.28
8 Construction (Hydrant) 954 $0.28 $268 $268 $0.28
9 Total 552,318 $155,217 $155,217
Class Supply Cost Base Cost Peaking Cost
Conservation
Cost Total Cost
SFR Tier 1 $2.65 $2.99 $0.48 $0.00 $6.13
SFR Tier 2 $4.26 $2.99 $0.80 $0.00 $8.06
SFR Tier 3 $4.26 $2.99 $1.83 $0.78 $9.86
Multi-Family $3.83 $2.99 $0.87 $0.28 $7.98
Commercial $3.83 $2.99 $0.87 $0.28 $7.98
Municipal $3.83 $2.99 $1.29 $0.28 $8.40
Irrigation $3.83 $2.99 $2.04 $0.28 $9.15
Construction (Hydrant) (1) $3.83 $2.99 $7.31 $0.28 $14.42 (1) Private fire water use is also charged at this rate.

Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 52
Table 6-10: Proposed Volumetric Charge Rates through FY 2028 ($/kgal)

6.3. Elevation Charge Rate
The elevation charge rate is designed to recover the revenue requirement associated with the elevation costcausation component. These costs are associated with pumping water to Zone 2, which is at a higher elevation area within the City’s water service area. Only customers in Zone 2 are levied the elevation charge.

Table 6-11 shows the proposed elevation charge for FY 2024 through FY 2028. The proposed FY 2024 charge is equal to the elevation unit cost shown in Table 5-13, rounded up to the nearest penny. This charge is increased in each subsequent year by the revenue adjustments shown in Table 4-9 and are rounded up to the nearest cent.

Table 6-11: Proposed Elevation Charge ($/kgal)
Class Current FY 2024 FY 2025 FY 2026 FY 2027 FY 2028
Charge cost-of-service 5% Adjustment 5% Adjustment 5% Adjustment 5% Adjustment SFR Tier 1 $6.19 $6.13 $6.44 $6.77 $7.11 $7.47
SFR Tier 2 $8.37 $8.06 $8.47 $8.90 $9.35 $9.82
SFR Tier 3 $9.86 $9.86 $10.36 $10.88 $11.43 $12.01
MFR $8.16 $7.98 $8.38 $8.80 $9.24 $9.71
Comm $7.93 $7.98 $8.38 $8.80 $9.24 $9.71
Municipal $8.16 $8.40 $8.82 $9.27 $9.74 $10.23
Irrigation $8.69 $9.15 $9.61 $10.10 $10.61 $11.15
Construction (Hydrant) (1) $10.74 $14.42 $15.15 $15.91 $16.71 $17.55 (1) Private fire water use is also charged at this rate.

Zone Current Charge FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 cost-of-service 5% Adjustment 5% Adjustment 5% Adjustment 5% Adjustment Zone 2 $2.40 $3.22 $3.39 $3.56 $3.74 $3.93
Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 53

7. Customer Bill Impacts and
Neighboring Agency Comparison

7.1. Single-Family Bill Impacts
Figure 7-1 shows calculated monthly water bills (which includes the monthly service charge and volumetric charge) for single-family residential customers in Zones 1 or 3 at various levels of monthly water usage under current FY 2023 rates and proposed FY 2024 rates. The blue bars in Figure 7-1 represent monthly water bills under the current rates. The gold bars show monthly water bills using the proposed FY 2024 rates. The current and proposed monthly bills in Figure 7-1 are calculated assuming a 1-inch meter size. The dollar difference between current and proposed monthly bills at different monthly water use levels is shown in the Impacts ($) row of Figure 7-1. These amounts were selected to give a cross-section of the City’s usage patterns. The first column, at 2 kgal of use, indicates use that is wholly contained within the first tier, the second indicates median residential usage (5 kgal), the third is average usage for all residential customers (7.5 kgal), and the fourth column shows usage at the 75th percentile (75 percent of bills are at or below 9 kgal/mo).

Figure 7-1: Single-Family Residential Monthly Bill Impacts

7.2. Neighboring Agency Comparison
Figure 7-2 shows a comparison of monthly water bills for a single-family customer on a 1-inch meter using

7.5 kgal/month. The comparison shows current FY 2023 rates and adopted or proposed rates for FY 2024 and FY 2025.

Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 54
Figure 7-2: Neighboring Agency Comparison
Town of
Windsor
City of
Rohnert
Park
City of
Santa
Rosa
City of
Petaluma
City of
Cotati
City of
Sonoma
North
Marin
WD -
Novato
Valley of
the Moon
WD
Marin
Water
FY 2023 $44.92 $65.73 $78.89 $77.67 $81.20 $89.67 $87.99 $92.89 $97.23 FY 2024 $47.18 $69.01 $81.29 $84.33 $86.05 $90.89 $92.39 $99.38 $119.14 FY 2025 $49.54 $72.46 $84.51 $86.37 $91.21 $95.48 $96.98 $106.34 $137.04 $0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
Single Family, 7.5 kgal/mo, 1" Meter
Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 55

8. Drought Rates
As part of the study, Raftelis calculated a demand reduction surcharge (i.e., drought rate or drought surcharge) to recover the revenue shortfall that occurs because of demand reduction during water shortage situations.

A drought surcharge may be imposed during times of a declared drought when a certain level of reduction from the base usage has been mandated. A drought surcharge is charged on each unit of water used and is calculated to recover costs resulting from a loss of volumetric revenue due to reduced water use. The amount of the drought surcharge at different levels of usage reduction is based upon the City’s projected revenue shortfall, adjusted for changes in costs.

To determine the demand reduction surcharge, the first step is to project the water demand reduction for each customer class under different levels of shortage. Table 8-1 shows the projected water demand for each customer class and tier at different levels of reduction. Raftelis analyzed individual customer usage data, assuming that customers using more water are expected to reduce more since they have more discretionary water use. The analysis calculates the increase in commodity rates that need to be applied to all usage, including the SFR tiers, at each percentage reduction in usage. A magnified version of this table is presented in Appendix B. Note that the reduction achieved under each drought stage is lower than the maximum targeted at each level but falls at the upper end of each range.

Table 8-1: Projected Water Demand by Percent Usage Reduction The next step is to estimate the water supply cost savings that result when there is a reduction in demand. For this study, Raftelis presumed that the overall reduction percentage for a stage is met by reducing the amount of water purchases. The variable costs associated with each supply are used to determine the cost savings.

Almost all other costs are fixed and will not vary based on water demand; therefore, no other costs are included in the analysis. Table 8-2 shows the estimated cost savings in the water supply costs for each stage due to the reduction in usage. The total supply assumes an 8.9 percent water loss from the water usage shown in Table 8-1.

Usage Data
(kgal) Monthly Tier
Proposed
Rates FY 2024 % Reduction
0 - 10% Reduction % Reduction10 - 20% Reduction % Reduction20 - 30% Reduction % Reduction30 - 40% Reduction % Reduction40 - 50% Reduction Single Family Residential Tier 1 2 $6.13 83,309 -2.0% 81,643 -7.0% 77,477 -10.0% 74,978 -15.0% 70,813 -15.0% 70,813 Tier 2 5 $8.06 117,226 -12.0% 103,159 -25.0% 87,920 -30.0% 82,058 -40.0% 70,336 -45.0% 64,474 Tier 3 7+ $9.86 113,940 -20.0% 91,152 -30.0% 79,758 -50.0% 56,970 -65.0% 39,879 -75.0% 28,485 Subtotal Single Family 314,475 -12% 275,954 -22% 245,155 -32% 214,006 -42% 181,027 -48% 163,772 Multi-Family $7.98 87,866 -5% 83,473 -10.0% 79,079 -30.0% 61,506 -35.0% 57,113 -45.0% 48,326 Commercial $7.98 69,848 -5% 66,356 -10.0% 62,863 -15.0% 59,371 -30.0% 48,894 -45.0% 38,416 Municipal $8.40 34,871 -5% 33,127 -10.0% 31,384 -15.0% 29,640 -30.0% 24,410 -45.0% 19,179 Irrigation $9.15 44,304 -10% 39,874 -20.0% 35,443 -30.0% 31,013 -40.0% 26,582 -50.0% 22,152 Total Non-Single Family 236,889 -6% 222,829 -12% 208,770 -23% 181,530 -34% 156,999 -46% 128,074 Hydrant $14.42 954 0% 954 0% 954 0% 954 0% 954 0% 954
Total Potable Water (kgal) 552,318 499,737 454,879 396,490 338,980 292,800 Total Potable Water (AF) 1,534 1,695 1,396 1,217 1,040 899 % Total Reduction -10% -18% -28% -39% -47% Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 56
Table 8-2: Estimated Cost Savings by Percent Usage Reduction The final step is to calculate the drought surcharge, shown in Table 8-3. First, the projected potable water revenue is calculated by multiplying the demand projections from Table 8-1 for each level of reduction in use and the proposed water rates in FY 2024. The revenue shortfall is determined by comparing this revenue for each reduction level with the FY 2024 revenues. Next, we add the estimated cost savings from Table 8-2 for each reduction level. The net shortfall to be recovered is divided by the projected demand at each reduction level (Table 8-1) to arrive at a uniform dollar increase per unit of water for each reduction level. Table 8-3 shows the proposed surcharge that will be available to impose effective December 1, 2023. For future fiscal years, the “% Revenue Shortfall” percentages shown in Table 8-3 would be applied to the rates in effective at the time the drought rates are implemented.

Table 8-3: Drought Surcharge by Percent Usage Reduction FY 2024
0 - 10%
Reduction
10 - 20%
Reduction
20 - 30%
Reduction
30 - 40%
Reduction
40 - 50%
Reduction

SUPPLY (AF)
Groundwater Wells 238 238 238 238 238 238
Sonoma County Water Agency 1,624 1,446 1,295 1,098 904 749 Total Potable Supply 1,862 1,684 1,533 1,336 1,142 987
VARIABLE COST ($/AF)
Groundwater $294 $294 $294 $294 $294 $294
SCWA $1,348 $1,348 $1,348 $1,348 $1,348 $1,348
TOTAL VARIABLE COSTS $2,259,253 $2,019,137 $1,815,372 $1,550,151 $1,288,915 $1,079,147 TOTAL WATER SUPPLY COSTS $2,259,253 $2,019,137 $1,815,372 $1,550,151 $1,288,915 $1,079,147 Cost Savings $240,116 $443,881 $709,102 $970,338 $1,180,106 FY 2024
0 - 10%
Reduction
10 - 20%
Reduction
20 - 30%
Reduction
30 - 40%
Reduction
40 - 50%
Reduction
Projected Potable Variable Revenue $4,549,587 $4,083,190 $3,704,370 $3,193,830 $2,702,152 $2,304,365 Revenue Shortfall ($466,396) ($845,217) ($1,355,756) ($1,847,434) ($2,245,222) Cost Savings $240,116 $443,881 $709,102 $970,338 $1,180,106 Net Revenue Shortfall to be Recovered ($226,280) ($401,336) ($646,654) ($877,096) ($1,065,116) % Revenue Shortfall 6% 11% 20% 32% 46%
$/kgal Increase - Dec. 1, 2023 $0.46 $0.89 $1.64 $2.59 $3.64 Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 57
APPENDIX A:

City of Sonoma Service Area
Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 58
Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 59
APPENDIX B:

Projected Water Demand by
Percent Usage Reduction
Agenda Item #7.1:

City of Sonoma / Water Rate Study – FINAL 60
Table 8-1: Projected Water Demand by Percent Usage Reduction Usage Data
(kgal) Monthly Tier
Proposed
Rates FY 2024 % Reduction
0 - 10%
Reduction % Reduction
10 - 20%
Reduction % Reduction
20 - 30%
Reduction % Reduction
30 - 40%
Reduction % Reduction
40 - 50%
Reduction
Single Family Residential
Tier 1 2 $6.13 83,309 -2.0% 81,643 -7.0% 77,477 -10.0% 74,978 -15.0% 70,813 -15.0% 70,813 Tier 2 5 $8.06 117,226 -12.0% 103,159 -25.0% 87,920 -30.0% 82,058 -40.0% 70,336 -45.0% 64,474 Tier 3 7+ $9.86 113,940 -20.0% 91,152 -30.0% 79,758 -50.0% 56,970 -65.0% 39,879 -75.0% 28,485 Subtotal Single Family 314,475 -12% 275,954 -22% 245,155 -32% 214,006 -42% 181,027 -48% 163,772 Multi-Family $7.98 87,866 -5% 83,473 -10.0% 79,079 -30.0% 61,506 -35.0% 57,113 -45.0% 48,326 Commercial $7.98 69,848 -5% 66,356 -10.0% 62,863 -15.0% 59,371 -30.0% 48,894 -45.0% 38,416 Municipal $8.40 34,871 -5% 33,127 -10.0% 31,384 -15.0% 29,640 -30.0% 24,410 -45.0% 19,179 Irrigation $9.15 44,304 -10% 39,874 -20.0% 35,443 -30.0% 31,013 -40.0% 26,582 -50.0% 22,152 Total Non-Single Family 236,889 -6% 222,829 -12% 208,770 -23% 181,530 -34% 156,999 -46% 128,074 Hydrant $14.42 954 0% 954 0% 954 0% 954 0% 954 0% 954
Total Potable Water (kgal) 552,318 499,737 454,879 396,490 338,980 292,800 Total Potable Water (AF) 1,695 1,534 1,396 1,217 1,040 899 % Total Reduction -10% -18% -28% -39% -47% Agenda Item #7.1:

1 City of Sonoma
Water Rate Study
Public Hearing - October 4, 2023
Agenda Item #7.1:

Agenda

1. Rate Study Overview

2. Financial Plan Review

3. Proposed Rates
2 Agenda Item #7.1:

3 Rate Study
Overview
Agenda Item #7.1:

• Rates must keep up with the costs to operate the City’s water system • The City’s water utility (enterprise fund) is a self-funding enterprise – it is not like other government services (e.g., Police, Fire, Library) that are funded by tax dollars from the General Fund
• The water enterprise is funded by customer rate revenue:
› Water rate revenue = 98% of water enterprise revenue
› It’s a non-profit business
• By law (Proposition 218), rates must be based on the cost to operate and maintain the water system.
4 Why Would the City do a Water Rate Study?
Agenda Item #7.1:

Key Steps in Conducting a Rate Study
Rate Adoption
– 218
Procedures
Rate Design Rate Adoption Cost-ofService
Financial
Planning =
Revenue
Requirements
5 Compare
revenue with
operating costs,
capital costs,
and reserve
requirements
Identify
differences in
costs to serve
each of the
customer
classes
Consider level
and structure of
rate design for
each class of
service
Documentation,
report, review
by legal counsel
Notice to City
customers
Public Hearing
Agenda Item #7.1:

6 Financial Plan
Review
Agenda Item #7.1:

All Revenues Go to Operations and Improvement of the
Water System
Water Purchases,
36%
Other Operating
Expenses, 25%
Capital Spending,
21%
Salaries & Benefits,
16%
Debt Service, 1%
Percent of Expenses
Agenda Item #7.1:

Proposed Financial Plan
8 Effective Date Adjustment
Dec. 1, 2023 5.0%
July 1, 2024 5.0%
July 1, 2025 5.0%
July 1, 2026 5.0%
July 1, 2027 5.0%
July 1, 2028 4.0%
July 1, 2029 4.0%
July 1, 2030 4.0%
July 1, 2031 4.0%
July 1, 2032 4.0%
$9.22
$8.78 $8.54 $8.32 $8.13 $7.98 $7.77 $7.51 $7.16
$6.73
$6.31
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 $ Millions
Projected Ending Balance
Water Funds Ending Balance Operating Reserve
Total Reserve Target Capital Reserve
Rate Stabilization
Agenda Item #7.1:

9 Proposed Rates
Agenda Item #7.1:

10 Proposed Fixed & Private Fire Charge Schedule
Meter/ Connection
Size Current Charge FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 cost-of-service 5% Adjustment 5% Adjustment 5% Adjustment 5% Adjustment Monthly Service Charge
5/8" $30.46 $33.35 $35.02 $36.78 $38.62 $40.56
3/4" $30.46 $33.35 $35.02 $36.78 $38.62 $40.56
1" $30.46 $33.35 $35.02 $36.78 $38.62 $40.56
1 1/2" $50.19 $57.86 $60.76 $63.80 $66.99 $70.34
2" $73.86 $87.28 $91.65 $96.24 $101.06 $106.12
3" $136.98 $165.72 $174.01 $182.72 $191.86 $201.46
4" $207.99 $253.97 $266.67 $280.01 $294.02 $308.73
6" $405.24 $499.11 $524.07 $550.28 $577.80 $606.69
Fire Line Charge
2" $0.82 $14.08 $14.79 $15.53 $16.31 $17.13
4" $4.98 $41.28 $43.35 $45.52 $47.80 $50.19
6" $14.41 $103.09 $108.25 $113.67 $119.36 $125.33
8" $30.72 $209.70 $220.19 $231.20 $242.76 $254.90
10" $55.21 $370.06 $388.57 $408.00 $428.40 $449.82
Agenda Item #7.1:

11 Proposed Variable & Elevation Rate Schedule
Class Current FY 2024 FY 2025 FY 2026 FY 2027 FY 2028
Charge cost-of-service 5% Adjustment 5% Adjustment 5% Adjustment 5% Adjustment SFR Tier 1 $6.19 $6.13 $6.44 $6.77 $7.11 $7.47
SFR Tier 2 $8.37 $8.06 $8.47 $8.90 $9.35 $9.82
SFR Tier 3 $9.86 $9.86 $10.36 $10.88 $11.43 $12.01
MFR $8.16 $7.98 $8.38 $8.80 $9.24 $9.71
Comm $7.93 $7.98 $8.38 $8.80 $9.24 $9.71
Municipal $8.16 $8.40 $8.82 $9.27 $9.74 $10.23
Irrigation $8.69 $9.15 $9.61 $10.10 $10.61 $11.15
Construction (Hydrant) (1) $10.74 $14.42 $15.15 $15.91 $16.71 $17.55 (1) Private fire water use is also charged at this rate.

Zone Current Charge FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 cost-of-service 5% Adjustment 5% Adjustment 5% Adjustment 5% Adjustment Zone 2 $2.40 $3.22 $3.39 $3.56 $3.74 $3.93
Agenda Item #7.1:

12 Drought Rates – FY2024
Customer Class
Baseline
Rate
Stage 1
Surcharge
Stage 2
Surcharge
Stage 3
Surcharge
Stage 4
Surcharge
Stage 5
Surcharge
6% 11% 20% 32% 46%
Single Family Residential
Tier 1 $6.13 $0.34 $0.67 $1.25 $1.99 $2.84
Tier 2 $8.06 $0.45 $0.88 $1.64 $2.62 $3.73
Tier 3 $9.86 $0.55 $1.07 $2.00 $3.21 $4.56
Multi-Family $7.98 $0.45 $0.87 $1.62 $2.60 $3.69
Commercial $7.98 $0.45 $0.87 $1.62 $2.60 $3.69
Municipal $8.40 $0.47 $0.92 $1.71 $2.73 $3.89
Irrigation $9.15 $0.51 $1.00 $1.86 $2.98 $4.23
Hydrant $14.42 $0.80 $1.57 $2.92 $4.69 $6.67
Agenda Item #7.1:

13 Bill Impacts &
Comparison
Agenda Item #7.1:

Bill Impact
14 2.0 kgal/mo 5.0 kgal/mo 7.5 kgal/mo 9.0 kgal/mo
Current Monthly Bill $42.84 $67.95 $89.67 $104.41
Proposed Monthly Bill $45.61 $69.79 $90.89 $105.63
Impacts ($) $2.77 $1.84 $1.22 $1.22
Impacts (%) 6.5% 2.7% 1.4% 1.2%
$0
$20
$40
$60
$80
$100
$120
Single-Family (1") Monthly Water Bill (Average = 7.5 kgal/mo) Agenda Item #7.1:

Neighboring Agency Comparison
15 Town of
Windsor
City of
Rohnert
Park
City of
Santa
Rosa
City of
Petaluma
City of
Cotati
City of
Sonoma
North
Marin
WD -
Novato
Valley of
the Moon
WD
Marin
Water
FY 2023 $44.92 $65.73 $78.89 $77.67 $81.20 $89.67 $87.99 $92.89 $97.23 FY 2024 $47.18 $69.01 $81.29 $84.33 $86.05 $90.89 $92.39 $99.38 $119.14 FY 2025 $49.54 $72.46 $84.51 $86.37 $91.21 $95.48 $96.98 $106.34 $137.04 $0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
Single Family, 7.5 kgal/mo, 1" Meter
Agenda Item #7.1:

16 Thank you!
Agenda Item #7.1:

City of Sonoma
Agenda Item Summary
Meeting: City Council - 04 Oct 2023
Department
City Council
Staff Contact
Jennifer Gates, AICP, Community Development
Director, Rebekah Barr, MMC, City Clerk
Agenda Item Title
A Resolution Establishing a Disclosure of Ex Parte Communications Policy Summary
"Ex parte" is a Latin term that translates to "for one party." In a general sense, an ex parte communication refers to any significant spoken or written interaction with a decision-maker that pertains to the substance of an adjudicatory or quasi-judicial process. Ex parte communications include oral and written information, but can also include any other sensory communication, such as visual or auditory information obtained during a site visit.

Ex parte communication takes place when a Council member, Commissioner or Committee Member receives information from a member of the public regarding a matter scheduled for consideration by the City Council or Commission outside of a public meeting or a formal hearing process.

In quasi-judicial proceedings where findings must be made based on substantial evidence in the record, applicants and affected participants must be given the opportunity to be heard by an impartial decision-maker. Ex parte communications may threaten due process and fair hearing requirements since the decision-makers, Council Members or Commissioners, may be possess information that has not been made public and to which others have not had an opportunity to respond.

By adopting a Council policy establishing guidelines for disclosing ex parte communications, the City would limit the risk of a legal challenge based on violation of due process. This policy would apply to the City Council and all City Commissions and Committees who make quasijudicial decisions.

Recommended Council Action
Adopt the resolution establishing a disclosure of ex parte communications policy.

Alternative Actions
Council discretion.

Financial Impact
There is no financial impact to this action; however, by establishing this policy it could limit the costs associated with a legal defense is a decision was challenged.

Environmental Review Status
Agenda Item #8.1:

Environmental Impact Report
Negative Declaration
Exempt
Not Applicable
Approved/Certified
No Action Required
Action Requested
Attachments
Ex Parte Communication Resolution and Policy
Alignment with Council Goals:

Compliance with Climate Action 2020 Target Goals:

CC:
n/a
Agenda Item #8.1:

City of Sonoma
RESOLUTION # _______ - 2023

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SONOMA ESTABLISHING A

POLICY ON THE DISCLOSURE OF EX PARTE COMMUNICATIONS
WHEREAS, ex parte communications are communications occurring between governmental decision-maker and third parties, outside of official proceedings; and WHEREAS, ex parte communications include oral and written information, but can also include any other sensory communication, such as visual or auditory information obtained during a site visit; and
WHEREAS, the City Council of the City of Sonoma (“City”) desires a process to allow for ex parte communications and limit risk of a legal challenge based on violation of due process; and WHEREAS, a consistent Citywide ex parte policy would apply to the City Council and all Commissions, Committees, and other bodies making quasi-judicial decisions.

NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Sonoma resolves as follows:

SECTION 1. That the above recitations are true and correct.

SECTION 2. The City Council adopts the Disclosure of Ex Parte Communications Policy attached as Exhibit A.

SECTION 3. This action is exempt from the environmental review under CEQA Guidelines Section 15378(b)(5), which exempts organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment. The action before the City Council is to establish a procedural policy.

SECTION 4. That this Resolution shall take effect immediately upon its adoption.

PASSED, RESOLVED AND ADOPTED at a Regular Meeting of the City o Sonoma City Council on this 4th day of October 2023 by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
_________________________________
Sandra Lowe, Mayor
ATTEST:
_________________________________
Rebekah Barr, MMC, City Clerk
Agenda Item #8.1:

EXHIBIT A
Disclosure of Ex Parte Communications
A. As used in this policy:

1. “Ex parte communication” is any written or oral communication between Councilmembers or Commissioners and any Interested Person, other than an individual on the City’s staff acting in their official capacity, about a matter pending before and within the jurisdiction of the City, and which does not occur in a public hearing, workshop, or other official proceeding, or appear in the official record of the proceeding on the matter, where the matter is quasi-judicial in nature, e.g., discretionary permits, licenses, maps, and similar applications, where findings must be made based on substantial evidence in the record. A communication concerning only the status of a pending matter shall not be regarded as an ex parte communication.

2. “Interested Person” means any of the following:
a) Any applicant, protestant, respondent, petitioner, complainant, appellant, interested party who has made a formal appearance, or the agents or employees of any of them, including persons receiving consideration to represent any of them;
b) Any person with a financial interest, as described in the California Political Reform Act, in a matter at issue before the City Council or Commission, or such person’s agents or employees, including persons receiving consideration to represent such a person;
c) A representative acting on behalf of any formally organized civic, environmental, neighborhood, business, labor, trade, or similar association who intends to influence the decision of a Councilmember or Commissioner on a matter before them, even if that association is not a party to the matter.

3. A matter is “pending” if an application has been filed with City.

B. When a Councilmember or Commissioner has an ex parte communication concerning a pending matter that is the basis of a quasi-judicial proceeding, the Councilmember or Commissioner shall verbally disclose the ex parte communication as follows. When a matter that is the subject of an ex parte communication is called but before it is considered by the body, the Councilmember or Commissioner shall verbally disclose: (1) the nature of the ex parte communication, (2) with whom the ex parte communication was made, and (3) a brief statement as to the substance of the communication.

A Councilmember or Commissioner should only announce the receipt of any emails from Interested Persons if the emails were not addressed to the full Council or Commission and only the site visits where they spoke to Interested Persons regarding the item being considered.

Agenda Item #8.1:

C. After closure of the hearing on a matter and prior to a final decision. Councilmembers and Commissioners shall refrain from any ex parte communications with Interested Persons pertaining to the matter.

D. This policy is meant to augment, not supplant, any other legal obligations Councilmembers and Commissioners have regarding contact with applicants and the public, including but not limited to disclosure of conflicts of interest under the Political Reform Act, Government Code section 81000 et seq., and/or adherence to open meeting laws such as the Brown Act, Government Code section 54950 et seq.

Agenda Item #8.1:

City of Sonoma
Agenda Item Summary
Meeting: City Council - 04 Oct 2023
Department
Planning and Community Services
Staff Contact
Jennifer Gates, AICP, Community Development Director
Agenda Item Title
FY 23-24 Planning Commission Annual Work Plan
Summary
The City of Sonoma has several Commissions that are advisory to the City Council as described in the Sonoma Municipal Code (SMC) Title 2 Administration and Personnel. Chapter 2.44 Planning Commission and adopted policies describe how members are appointed, term of appointment, and the rules and regulations of operations. In order to set priorities for ordinance and policy amendments and any new items, staff recommends that the Planning Commission annually adopt a work plan. This work plan will be used to formulate goals, timelines, and priorities for the fiscal year. In May or June 2024, staff will present a status update on the work plan and the Planning Commission will identify the work plan for the next fiscal year.

Work Plan
The proposed work plan is a framework for achieving continuous improvement to the City’s land use and regulatory policies.

On August 17, 2023 the Planning Commissioners provided their top five priorities based on the existing “fix it” list and City Council priorities for FY 23-24. The Commissioners discussed and prioritized the final list based on voting for each. The following is the list of priorities and their ranking.

1. Application and Filing Process.
a. Permit time limits and extensions
b. Streamlining application process – reduce time to permit or hearing c. Enforcement of project milestones
d. Consistency

2. Affordable Housing/Housing
a. Development constraints on all housing types
b. Incentives for affordable housing
c. Funding policy

3. Parking Standards
a. Dimensions for stalls and routes, and back-up
b. Landscaping requirements
c. Material standards
d. Solar and EV standards

4. Trees
a. Clear standards for removal and maintenance
b. Clarity on protected trees
Agenda Item #8.2:

c. Information guide for homeowners

5. Special Use Standards

6. Fences and Hedges
a. Standards and permit process

7. General Plan/ Development Code references and timeliness and consistency (Administrative needs)

8. Planning Area Standards
a. Evaluation of Planning Areas and standards
b. Form based code/ objective standards

9. Vacant Structures / Demolition by Neglect

10. Historic Preservation and Infill in Overlay Zone
Staff and Planning Commission then organized the priorities into three categories: Current Goals, As Time Permits and Long-term Goals, as see in the attached workplan. On September 21, 2023, Planning Commission recommended that the City Council Approve the FY 2023-24 Work Plan.

Environmental Review
This action is exempt from the California Environmental Quality Act pursuant to CEQA Guidelines Section 15378(b)(5), which exempts organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment.

Recommended Council Action
Approve the proposed FY 2023-24 Planning Commission Work Plan.

Alternative Actions
Provide direction and modify the proposed FY 2023-24 Planning Commission Work Plan.

Financial Impact
The fiscal impact associated with the staff recommendation is mostly accounted for in the FY 2023-24 budget. No additional funding is being requested at this time.

Environmental Review Status
Environmental Impact Report
Negative Declaration
Exempt
Not Applicable
Approved/Certified
No Action Required
Action Requested
Attachments
Planning Commission Workplan FY23-24
Agenda Item #8.2:

PLANNING COMMISSION FY23-24 WORK PLAN
Current Goals

NAME COUNCIL

PRIORITY
AMENDS

GENERAL

PLAN OR
ZONING
CODE?
SUMMARY/COMMENTS TIMELINE FUNDED?
General Plan Update Yes Yes Update the General Plan through community engagement process. Community
Development Element (Land Use); Local
Economy Element; Environmental Resources
Element; Circulation Element; Public Safety
Element; Noise Element; Historic and
Archeological Resources; Environmental Justice
and Equity; Sustainability and Climate Change;
Parks, Recreation and Open Space. Kick-off
October 2023
FY23-25 Yes -
Consultant
Housing Element
Implementation
Yes Yes Housing Element tasks identified to be
completed within this fiscal year include:

Inclusionary housing update; affordable
housing impact fee nexus study; identified
housing constraints code amendments;
implementation of AB 2011, SB 6, SB 330, SB
35 in code and application materials; update
Chapter 19.44 density bonus provisions; rezone
identified sites
FY23-24 No will
need
funding for
items not
feasible for
staff to
complete.

Affordable Housing Yes Identify potential incentives for affordable housing; Update and Implement, the
Affordable Housing Fund policy and
implementation program guidelines
FY23-24 Staff time
Agenda Item #8.2:

NAME COUNCIL

PRIORITY
AMENDS

GENERAL

PLAN OR
ZONING
CODE?
SUMMARY/COMMENTS TIMELINE FUNDED?
Title 18 Signs and Display
Advertising - Currently in
progress
Yes Comprehensive update to the sign ordinance.

Tentative Study Session November 2023
FY23-24 50%
Funded -
Consultant
Multiple Sections – Permit
Streamlining
Yes Permit Streamlining for specific projects to
reduce time to permit or hearing with
development of clear policies, such as Window
and Roof Replacement Policies, to guide
administrative decisions and update
application requirements.

FY23-24 Staff time
Chapter 19.41 and Chapter 16.14
Two Unit Development and
Urban Lot Split (SB9) -
Compliance with State Laws
Yes Update the existing SB9 code sections to be
consistent with guidance from HCD.

FY23-24 Staff time
Multiple Sections – Appeal
Periods
Yes Need consistency between appeal times for
permits to reduce confusion for the applicant,
public, and City Clerk.

FY23-24 Staff time
Tree Removal Ordinance and
Policy
Yes Need clear standards for removal and
maintenance; list of significant tree types;
appropriate street trees and replacement
options; clarity on protected trees; and
information guide for homeowners.

FY23-24 Staff time
Entitlements Yes Review and update, as allowable, permit time limits and extensions; enforcement of project
milestones or timeliness on implementation;
ensure consistency of construction with
approvals.

FY23-24 Staff time
Agenda Item #8.2:

As Time Permits

NAME COUNCIL

PRIORITY
AMENDS

GENERAL

PLAN OR
ZONING
CODE?
SUMMARY/COMMENTS TIMELINE FUNDED?
Chapter 5.3 Telecommunication
Wireless Facilities – Compliance
with Federal Laws
Yes Update the existing wireless facilities
section to be consistent with current FCC
regulations.

TBD
Parking Standards Yes Continue to improve parking standards including dimensions for stalls and routes,
and back-up; landscaping requirements;
material standards, and solar and EV
standards.

TBD
Fences and Hedges Yes Update standards and clarify when a permit is required.

TBD
Vacant Structures Yes Research standards and requirements associated with vacant structures.

TBD
Demolition by Neglect Yes Create an ordinance to allow for the enforcement of structures being neglected.

TBD
Agenda Item #8.2:

Long-term Goals

NAME COUNCIL

PRIORITY
AMENDS

GENERAL

PLAN OR
ZONING
CODE?
SUMMARY/COMMENTS TIMELINE FUNDED?
Special Use standards Yes Revisit standards for special uses and applicability today.

TBD
Planning Area Standards Yes Evaluation of planning areas and standards to todays development patterns and future
land use and housing needs; evaluate
potential for form based code/objective
standards.

TBD
Historic preservation and infill
in overlay zone
Yes Revisit historic preservation standards and
infill standards in the overlay zone.

TBD
Agenda Item #8.2: