St. Helena City Council
May 9, 2023

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 69 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 69 Table 4-30 and Table 4-31 show the calculation of equivalent fire demand associated with private fire lines and fire hydrants, respectively. 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 divided by 6 (to normalize to a 6-inch hydrant connection) and then raised to the power of 2.63 to determine the fire flow demand factor (Column C).4
The fire flow demand factor (Column C) is multiplied by the number of connections by size (Column B) to calculate equivalent fire demand (Column D). Total equivalent fire demand is shown for private fire lines and public fire hydrants in Line 10 and Line 12, respectively.

Table 4-30: Private Fire Line Equivalent Fire Demand

A B C D
Line
Fireline
Size/Meter Size
Number of Fire
Connections
Potential Demand per
Connection
Equivalent Potential
Demands
7 4" 57 44.02 2,509
8 6" 29 133.15 3,861
9 8" 15 292.04 4,381
10 Totals 101 10,751
Table 4-31: Public Fire Hydrant Equivalent Fire Demand

A B C D
Line Hydrant
Number of Public
Hydrants
Potential Demand per
Connection
Equivalent Potential
Demands
1 4" 20 44 880
2 6" 143 133 19,041
3 8" 136 292 39,717
4 10" 2 537 1,074
5 12" 37 883 32,686
6 14" 9 1,346 12,111
7 16" 3 1,938 5,813
11 24" 3 5,861 17,583
12 Total 353 128,905
Table 4-32 shows the percentage of equivalent fire demand units associated with fire hydrants and private fire lines (from Table 4-30). The proportional share of equivalent fire demand (Column B, Lines 2-3) provides the basis for which Fire Protection costs are allocated in subsequent steps of the COS analysis.

Table 4-32: Fire Protection Allocation Basis
A B
Line Description
1 Total Potential Fire Demand 139,656
2 Percent Allocated to Public Fire Protection 92%
3 Percent Allocated to Private Fire Protection 8%
4 Per the Hazen-Williams equation and AWWA Manual M1
Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 70 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 70

4.3.9. Peaking Units of Service
Peaking units of service are developed to calculate unit peaking costs (Max Day and Max Hour) for the water system and provide an objective basis with which to identify and reallocate peaking costs in subsequent steps of the COS analysis. Fire hydrants and private fire lines contribute to system capacity-related costs (i.e. peaking costs), and therefore are reallocated a portion of Max Day and Max Hour costs.

Table 4-33 shows calculations used to attribute peaking costs to customer demands based on actual water use patterns. Raftelis estimates Max Day (Column E) and Max Hour (Column H) factors based on actual FY 2022 water use and systemwide peaking factors (from Table 4-22). Projected FY 2024 water use in Column C (from Table 4-6) is divided by 365 days to determine average daily water use (Column D). Average daily use in Column D is then multiplied by the Max Day factor (Column E) to determine Max Day demand (Column F). Max Day requirements (Column G) are determined by subtracting average daily water use (Column D) from Max Day demand (Column F). Max Hour requirements (Column J) are similarly calculated. Max Hour demand (Column I) equals average daily water use (Column D) multiplied by the Max Hour factor (Column H). Max Hour requirements (Column J) equal Max Hour demand (Column I) less Max Day demand (Column F).

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 71 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 71 Table 4-33: Peaking Units of Service

A B C D E F G H I J
Line
Units of Service
Bi-Monthly Tier (HCF)
Usage (HCF)
Average Daily Use (HCF)
Max Day Peaking
Max Day Demand (HCF/day)
Max Day Add'l Capacity
Max Hour Peaking
Max Hour Demand (HCF/day)
Max Hour Add'l Capacity
1 All Classes
2 Tier 1 11 223,678 613 1.35 826 213 2.15 1,320 495 3 Tier 2 15 87,235 239 1.35 322 83 2.15 515 193 4 Tier 3 15+ 248,283 680 1.35 917 236 2.15 1,466 549 5 Total 559,196 1,532 2,065 532 3,301 1,236

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 72 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 72 Table 4-34 shows the methodology5 used to calculate peaking units of service associated with fire protection (Columns B and C, Lines 7-8) based on assumptions regarding the duration and water flow rate in gallons per minute (gpm) associated with an urban fire in St Helena. The flow rate and duration is informed by the City’s 2020 Integrated Utility Master Plan with assistance from City Public Works staff:

Max Day Requirements (HCF/day) = Duration of Fire (hrs) × Water Use Rate (gpm) × 60 mins/hr ÷ 748.05 gallons/HCF Max Hour Requirements (HCF/day) = [Water Use Rate (gpm) × 60 mins/hr × 24 hrs/day ÷ 748.05 gallons/HCF] – Max Day Requirements (HCF/day)
The percentage of Max Day and Max Hour requirements attributed to Fire Protection are shown in Line 14.

Table 4-34: Peaking Units for Fire Protection
A B C
Line Fire Assumptions
1 Fire Estimate Max Day Max Hour
2 Hours for Fire 4 0
3 Gals/minute 3500 3500
4 5 Cost to Public Fire 92.3% 92.3%
6 Capacity Demanded for Fire (HCF/day) 1,123 5,615
7 Public Fire 1,036 5,182
8 Private Fire 86 432
9 10 Total Extra Capacity - Fire and Potable (HCF/day) 1,655 6,851 11 12 Percent of Peaking Costs due to Public Fire 62.6% 75.6% 13 Percent of Peaking Costs due to Private Fire 5.2% 6.3% 14 Total Peaking to Fire Protection 67.8% 82.0%

4.3.10. Adjusted Water Cost of Service
Table 4-35 shows the adjusted allocation of the water rate revenue requirement to the various cost causation components. The adjusted COS allocations (Column H) incorporates adjustments to the preliminary COS allocations developed in the preceding sub-sections and provides the underlying basis for FY 2024 rate calculations. The results shown in Table 4-35 are calculated as follows based on intermediate results developed in the preceding subsections:

6. Preliminary Cost of Service Allocation (Column B): The preliminary COS allocations were developed in previous sub-sections (see Table 4-29, Column F, Lines 1-10). The General cost causation component is excluded because all General costs were previously reallocated to other cost causation components.

7. Reallocation of Fire Hydrant Costs (Column C): Fire protection costs associated with fire flow for fire hydrants are reallocated to the Meters cost causation component to recover these extra-capacity costs 5 Per the AWWA Manual M1.

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 73 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 73 from all metered connections. Preliminary Max Day (Column B, Line 3) and Max Hour costs (Column B, Line 4) associated with fire hydrants are reallocated from Max Day (Column C, Line 3) and Max Hour (Column C, Line 4) to Meters (Column C, Line 6) based on the percentage of peaking units associated with fire flow for fire hydrants (Table 4-30, Column B and C, Line 12). Note that the reallocation results in a shifting of costs between cost causation components but does not change the total rate revenue requirement.

8. Reallocation of Private Fire Costs (Column D): Preliminary peaking costs (Column B, Lines 3-4) associated with private fire protection are reallocated from Max Day (Column D, Line 3) and Max Hour (Column D, Line 4) to Fire Protection (Column D, Line 5) based on the percentage of peaking units associated with private fire lines (Table 4-30, Column B and C, Line 13). Note that the reallocation results in a shifting of costs between cost causation components but does not change the total rate revenue requirement.

9. Reallocation of Peaking Costs to Meters (Column E): The recommended rate structure from the RSAC defines a tiered rate structure based on supply availability from each source. The structure would impose the same three tier structure for all user classes. Traditionally, water use rates are differentiated by customer class based on respective peaking characteristics. In order to harmonize the RSAC recommendation with cost of service principles, the COS identifies peaking at the system level (a single user class) and then reallocates and recovers peaking costs on the meter component.

Utilities invest in, and continuously maintain, facilities to provide capacity to meet all levels of water consumption, including peak demand. These costs must be recovered regardless of the amount of water used during a given period, so peaking costs are generally considered as fixed water system costs.

Further, metered connections are sized for both average and peak demands as larger meters have higher average demands on average. For both these reasons it is a common practice to recover peaking costs through fixed charges.

In reallocating the peaking costs to the meter, the proposed rate structure recovers 40 percent of the total revenue requirement from fixed charges (this includes Water Service Charges and Private Fire Line Service Charges) and 60 percent from variable charges (from Water Volume Rates).

10. Adjusted Cost of Service Allocation (Column F): The final COS allocation (Column F) equals the sum of Columns B to E. This represents the final allocation of the total water revenue requirement (from Table 4-21, Column D, Line 20) to the various cost causation components.

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 74 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 74 Table 4-35: Adjusted Cost of Service Allocation (Test Year FY 2024)

A B C D E F
Line
Cost
Causation
Component
Preliminary
COS
Allocation
Reallocation
of Hydrant
Reallocation
of Private Fire
Reallocation
of Peaking to
Meters
Adjusted
COS
Allocation
1 Supply $2,329,543 $0 $0 $0 $2,329,543
2 Base $3,093,487 $0 $0 $0 $3,093,487
3 Max Day $2,536,660 -$1,156,460 -$96,451 -$924,299 $359,450 4 Max Hour $547,117 -$301,342 -$25,133 -$158,862 $61,780 5 Fire $665 $0 $121,584 $0 $122,249
6 Meters $33,281 $1,457,802 $0 $1,083,161 $2,574,244
7 Customer $542,231 $0 $0 $0 $542,231
8 Conservation $172,513 $0 $0 $0 $172,513
9 Total $9,255,497 $0 $0 $0 $9,255,497

4.3.11. Cost of Service Reallocation
Table 4-36 shows the reallocation of the adjusted cost of service by cost causation component. Column J shows the adjusted cost of service from Table 4-35, Column F. Those values are multiplied by the percentages in Columns B-H to determine the reallocated costs by cost component in Line 9. Max Day and Max Hour costs are each allocated 100 percent to Meter based on the rationale described in the previous sub-section.

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 75 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 75 Table 4-36: Reallocation of Cost of Service by Cost Causation Component

A B C D E F G H I J
Line
Cost of Service Reallocation Supply Base
Max Day
Max Hour Fire Meters Customer Conservation Total
1 Supply 100% 0% $2,329,543
2 Base 100% 0% $3,093,487 3 Max Day 0% 100% 0% $359,450 4 Max Hour 0% 100% 0% $61,780 5 Fire 100% 0% $122,249 6 Meters 100% 0% $2,574,244 7 Customer 100% 0% $542,231 8 Conservation 100% $172,513
9 Total $2,329,543 $3,093,487 $0 $0 $122,249 $2,995,473 $542,231 $172,513 $9,255,497

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 76 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 76

4.3.12. Unit Cost Calculation
Table 4-38 shows the calculation of unit costs for each cost causation component. The units of service depend on how the revenue will be recovered (see Table 4-39). The total reallocated costs in Table 4-36, Line 9 are divided by the units of service in Line 1 to calculate the unit costs in Line 4. Usage for Supply, Base, Max Day, Max Hour, and Conservation can be found in Table 4-33. Supply and Base use the total annual usage, Max Day uses Max Day additional Capacity, Max Hour uses Max Hour additional Capacity, and Conservation uses Tier 2 and Tier 3 annual usage. Fire demand is found by taking the equivalent potential demand in Table 4-30, Column D, Line 10 and multiplying it by 12 months to get annual private fire demand. The number of annual equivalent meters (Column G, Line 1) is found by multiplying the total equivalent meter in Table 4-37, Column D, Line 10 and multiplying it by six billing periods. Number of Bills (Column H, Line 1) is found by multiplying the total number of meters in Table 4-37, Column C, Line 10 and multiplying it by six billing periods.

Table 4-37: Units of Service – Equivalent Meters

A B C D
Line
Meter
Size
Capacity
Ratio
Number of
Meters
Equivalent
Meters
1 5/8" 1.00 2,020 2,020
2 3/4" 1.00 35 35
3 SFR 1" 1.00 263 263
4 1" 2.50 124 310
5 1 1/2" 5.00 71 353
6 2" 8.00 63 506
7 3" 17.50 8 141
8 4" 31.50 11 347
9 6" 70.00 13 913
10 Total 2,608 4,888
Table 4-38: Unit Cost of Service by Cost Causation Component

A B C D E F G H I
Line Description Supply Base
Max
Day
Max
Hour Fire Meters
Customer Conservation
1 Unit of Service 559,196 559,196 532 1,236 129,012 58,656 32,512 335,517 2 HCF HCF HCF/day HCF/day
Fire
demand Eq. Meters
No. of
Bills HCF
3 4 Unit Costs $4.17 $5.53 $0.00 $0.00 $0.95 $51.07 $16.68 $0.51 5 $/HCF $/HCF
$/HCF/
day
$/HCF/
day
$/Fire
Customer $/Eq
Meters
$/
Mo./Bill $/HCF
Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 77 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 77

4.3.13. Water Cost Allocation to Rate Components
The final cost of service allocation determines how much revenue must be generated from the City’s water rates and charges. Each cost causation component is recovered by either a fixed charge or water use rate (see Table 4-39). The basis for specific exclusions is described in further detail in Section 4.4.

Table 4-39: Recovery of Cost Causation Components by Charge Type A B
Line Cost Causation Component Associated Charge
1 Supply Water Volume Rates
2 Base Water Volume Rates
3 Max Day Water Service Charges
4 Max Hour Water Service Charges
5 Fire Fire Line Service Charges
6 Meters Water Service Charges
7 Customer Water Service Charges
8 Conservation Water Volume Rates
Table 4-40 shows projected rate revenues by component and tier for FY 2024. The costs for each component and tier were calculated by multiplying the unit cost for each cost component with the units of service for each tier or component. The costs of service in Columns B-I are summed to get the total cost of service in Column J.

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 78 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 78 Table 4-40: Cost to Serve

A B C D E F G H I J
Line Class Supply Base Max Day Max Hour Fire Meters Customer Conservation Total 1 Fixed Charges $122,249 $2,995,473 $542,231 $3,659,954 2 Tier 1 Use $931,817 $1,237,395 $0 $0 $0 $2,169,212 3 Tier 2 Use $363,409 $482,584 $0 $0 $44,853 $890,846 4 Tier 3 Use $1,034,317 $1,373,508 $0 $0 $127,659 $2,535,485 5 Total $2,329,543 $3,093,487 $0 $0 $122,249 $2,995,473 $542,231 $172,513 $9,255,497

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 79 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 79

4.4. Proposed Water Rates

4.4.1. Proposed Rate Structure Modification
Raftelis worked closely with City staff, the RSAC, and the City Council to evaluate potential changes to the existing water rate structure. All proposed water rates presented in subsequent sections incorporate the following RSAC recommended revisions to the existing water rate structure. » Update Variable Rate Tiers and Tier Allotments: The proposed rate structure recommendation is for a single three-tier water use rate structure, applicable to all customer classes. The proposed three-tier structure is defined by water source of supply from low cost to high cost water. The allotment in each tier represents the average available volume of water, per connection (or residential dwelling unit where master-metered), in normal supply conditions. The sources in order of tiers are:
o Tier 1: Bell Canyon Surface Water
o Tier 2: Stonebridge Wells Groundwater
o Tier 3: Purchased Water from the City of Napa
The current rate structure is a uniform water use rate structure, applicable to all customer classes, which varies by season. Current and proposed bi-monthly tier allotments are shown below in Table 4-41. The current bi-monthly structure reflects the City’s existing seasonal, uniform rate structure, which has been in effect since 2017 (2016 Rate Study).

Table 4-41: Proposed Changes to Water Rate Structure
A B C
Line Customer Class Current Structure Proposed Structure 1 Commodity Rates ($/HCF)
2 Tier 1 Off-Peak (Nov-Apr) 0-11 HCF
3 Tier 2 Peak (May-Oct) 12-15 HCF
4 Tier 3 16+ HCF

4.4.2. Water Service Charges (Test Year FY 2023-24)
Table 4-42 and Table 4-43 show the detailed calculation of Water Service Charges for the test year based on Customer and Meters unit charges. Customer costs do not vary by meter size. Therefore, the Customer unit rate is applied uniformly to all Water Service Charges (Column F). Because Meters costs vary by meter size based on hydraulic capacity, AWWA capacity ratios in Column C (from Table 4-37, Column B) are used to differentiate Meters unit charges by meter size. The Meters charges (Column E) are calculated by multiplying the Meters unit charge (from Table 4-38) by the AWWA capacity ratio (Column C). COS bi-monthly Water Service Charges (Column G) equal the sum of Columns E-F and are compared to current FY 2023 charges in Columns H-J. Calculations are made as monthly, but scheduled rates and charges to customers are bimonthly and will see bi-monthly charges on their bill and the City’s rate schedule.

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 80 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 80 Table 4-42: Water Service Charge Calculation (Test Year FY 2024)

A B C D E F G H I J
Line
Meter Size
Number of Accounts AWWA Ratio Eq Meter Meters Customer
Proposed Rates (Monthly)
Current Rates (Monthly)
Difference ($)
Difference (%)
1 5/8" 2,020 1.00 2,020 $51.07 $16.68 $67.75 $69.89 -$2.14 -3.1% 2 3/4" 35 1.00 35 $51.07 $16.68 $67.75 $69.89 -$2.14 -3.1% 3 SFR 1" 263 1.00 263 $51.07 $16.68 $67.75 $69.89 -$2.14 -3.1% 4 1" 124 2.50 310 $127.67 $16.68 $144.35 $128.22 $16.13 12.6% 5 1 1/2" 71 5.00 353 $255.34 $16.68 $272.02 $225.64 $46.38 20.6% 6 2" 63 8.00 506 $408.55 $16.68 $425.23 $324.00 $101.23 31.2% 7 3" 8 17.50 141 $893.70 $16.68 $910.38 $654.72 $255.66 39.0% 8 4" 11 31.50 347 $1,608.66 $16.68 $1,625.34 $1,011.98 $613.36 60.6% 9 6" 13 70.00 913 $3,574.80 $16.68 $3,591.47 $1,981.63 $1,609.84 81.2% 10 Total 2,608 4,888 $2,995,473 $522,017 $3,517,491 $3,079,254 Table 4-43: Bi-Monthly Water Service Charges (Test Year FY 2024)

A B C D E F
Meter Size
Number of
Accounts
Proposed Rates
(Bi-Monthly)
Current Rates
(Bi-Monthly) Difference ($) Difference (%)
5/8" 2,020 $135.50 $139.78 -$4.28 -3.1% 3/4" 35 $135.50 $139.78 -$4.29 -3.1% SFR 1" 263 $135.50 $139.78 -$4.29 -3.1% 1" 124 $288.70 $256.44 $32.26 12.6% 1 1/2" 71 $544.05 $451.28 $92.77 20.6% 2" 63 $850.46 $648.00 $202.46 31.2% 3" 8 $1,820.76 $1,309.44 $511.32 39.0% 4" 11 $3,250.68 $2,023.96 $1,226.72 60.6%

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 81 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 81

4.4.3. Fire Line Service Charges (Test Year FY 2024)
Fire Service Charges are designed to recover costs associated with the Customer and Fire Protection cost causation components. Table 4-44 and Table 4-45 show the calculation of unit charges for the Customer and Fire Protection. Customer unit charges were previously calculated in Table 4-42 but are shown again below.

Fire Protection unit charges are calculated per fire demand equivalent (from Table 4-30). Fire demand equivalents are used to allocate Fire Protection costs by connection size because larger connections are more expensive to install, maintain, and replace than smaller fire lines, and have greater potential capacity on the water system. Calculations are made as monthly, but scheduled rates and charges to customers are bi-monthly and will see bi-monthly charges on their bill and the City’s rate schedule.

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 82 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 82 Table 4-44: Fire Line Service Charge Unit Charge Calculation (Test Year FY 2024)

A B C D E F G H I J
Line
Fireline Size
Connection Count
Equivalent Potential Demands Eq Meter Fire Customer
Proposed Rates (Monthly)
Current Rates (Monthly)
Difference ($)
Difference (%)
1 4" 57 44.02 2,509 $41.71 $16.68 $58.39 $13.33 $45.06 338.0% 2 6" 29 133.15 3,861 $126.17 $16.68 $142.85 $38.73 $104.12 268.8% 3 8" 15 292.04 4,381 $276.73 $16.68 $293.41 $82.53 $210.88 255.5% 4 Total 101 10,751 $122,249 $20,214 $142,463 $37,451 Table 4-45: Fire Line Service Charge Unit Charge Calculation (Test Year FY 2024)

A B C D E F
Fireline Size
Connection Count
Proposed Rates (Bi-Monthly)
Current Rates (Bi-Monthly)
Difference ($)
Difference (%)
4" 57 $116.78 $26.66 $90.12 338.0% 6" 29 $285.71 $77.46 $208.25 268.8% 8" 15 $586.82 $165.06 $421.76 255.5%

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 83 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 83

4.4.4. Water Volume Rates (Test Year FY 2023-24)
Water Volume Rates are designed to recover the portion of the rate revenue requirement allocated to the following cost causation components: Water Supply, Base Delivery, and Conservation. However, the costs associated with each cost causation component listed above are not uniformly applied to each customer class.

Customer classes are only subject to each unit cost if the service they receive contributes to the Water Enterprise incurring costs associated with that specific cost causation component.

Water Supply Unit Rate
Water supply unit rates are applied to all tiers. Table 4-46 shows the preliminary calculation of Water Supply unit rates by tier. The revenue requirement associated with the Water Supply cost causation component (from Table 4-35, Column F, Line 1) is allocated into each tier based on the costs incurred for each source of supply that makes up each tier. Tier 1 is sourced from Bell Canyon Surface Water, Tier 2 is sourced from Stonebridge Wells Groundwater, and Tier 3 is sourced from City of Napa water purchased through a longterm contract. The supply costs are shown in Column C, Lines 1-3. The average normal year supply volumes, in HCF, are shown in Column D. The supply costs for each tier are then divided by the volumes in each tier to obtain the supply unit cost for each tier in Column E.

Table 4-46: Water Supply Unit Rate

A B C D E
Line Supply Tier Supply Costs ($) Usage (HCF) Supply Unit Cost 1 Surface Water Tier 1 $102,136 223,678 $0.46
2 Groundwater Tier 2 $523,771 87,235 $6.00
3 Napa Tier 3 $1,703,636 248,283 $6.86
4 Total $2,329,543 559,196 $4.17
Conservation Unit Rate
Conservation unit rates are applied to Tier 2 and Tier 3. Conservation efforts are generally aimed at promoting water use efficiency, curtailing discretionary outdoor water use, and otherwise reducing overall system demands. Tier 1 water predominantly represents indoor use for both residential and non-residential connections. Tier 2 and Tier 3 water use represents outdoor irrigation for residential connections as well as higher volume non-residential users. Every unit of water saved through conservation efforts reduces pressure on the City’s lowest cost source of supply (Surface Water) and allows the City to better manage the groundwater basin. Based on these considerations and in discussion with the RSAC, conservation costs are omitted from Tier 1. Table 4-47 details the allocation of conservation costs to each tier.

Table 4-47: Conservation Unit Rate

A B C D E
Line Supply Tier Supply Costs ($) Usage (HCF) Supply Unit Cost 1 Surface Water Tier 1 $0 0 $0.00
2 Groundwater Tier 2 $44,853 87,235 $0.51
3 Napa Tier 3 $127,659 248,283 $0.51
4 Total $172,513 335,517 $0.51
Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 84 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 84

4.4.4.1. Water Volume Rate Calculation (Test Year FY 2020-21) Table 4-48 shows the calculation of Water Volume Rates for the test year. The proposed rate is calculated by summing the following unit rates (Columns B-E):
» Water Supply Unit Rates (from Table 4-46)
» Base Delivery Unit Rates (from Table 4-38)
» Conservation Unit Rates (from Table 4-47)
Table 4-48: Water Volume Rates Calculation (Test Year FY 2023-24)

A B C D E
Line Volumetric Charges Supply Base Conservation
Proposed
Charge
($/HCF)
1 Bi-Monthly Tiers All Classes
2 Tier 1 $0.46 $5.53 $0.00 $5.99
3 Tier 2 $6.00 $5.53 $0.51 $12.05
4 Tier 3 $6.86 $5.53 $0.51 $12.91
The Proposed Five-Year Water Rate Schedule in Table 4-49 shows rates for FY 2024 through FY 2028.

Proposed FY 2025 water rates were calculated by increasing COS Water Service Charges (from Table 4-42), Fire Line Service Charges (from Table 4-44), and Water Volume Rates (from Table 4-48) by the proposed FY 2025 revenue adjustment (from Table 4-19). All proposed rates in subsequent years are then increased each year based on the schedule of proposed revenue adjustments (from Table 4-19). All proposed rates are rounded up to the nearest cent to ensure adequate revenue recovery. Current FY 2023 water rates (from Table 4-1) are also shown. Current and proposed fixed charges are bi-monthly. Proposed rates reflect non-shortage / new baseline supply and demand conditions (i.e., no declared water shortage phase).

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 85 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 85 Table 4-49: Proposed Five-Year Water Rate Schedule

A B C D E F G
Line Description
Current
Charges
Proposed
FY 2024
Proposed
FY 2025
Proposed
FY 2026
Proposed
FY 2027
Proposed
FY 2028
1 Bi-Monthly Fixed
Charges
2 Meter Size
3 5/8" $139.78 $135.50 $146.34 $158.05 $170.70 $184.36
4 3/4" $139.78 $135.50 $146.34 $158.05 $170.70 $184.36
5 SFR 1" $139.78 $135.50 $146.34 $158.05 $170.70 $184.36 6 1" $256.44 $288.70 $311.80 $336.75 $363.69 $392.79
7 1 1/2" $451.28 $544.05 $587.58 $634.59 $685.36 $740.19 8 2" $648.00 $850.46 $918.50 $991.98 $1,071.34 $1,157.05 9 3" $1,309.44 $1,820.76 $1,966.43 $2,123.75 $2,293.65 $2,477.15 10 4" $2,023.96 $3,250.68 $3,510.74 $3,791.60 $4,094.93 $4,422.53 11 6" $3,963.26 $7,182.95 $7,757.59 $8,378.20 $9,048.46 $9,772.34 12 13 Fireline Size
14 4" $26.66 $116.78 $126.13 $136.23 $147.13 $158.91
15 6" $77.46 $285.71 $308.57 $333.26 $359.93 $388.73
16 8" $165.06 $586.82 $633.77 $684.48 $739.24 $798.38
17 18 Volumetric Charges
19 All Classes
20 Tier 1 $6.50 $5.99 $6.47 $6.99 $7.55 $8.16
21 Tier 2 $7.23 $12.06 $13.03 $14.08 $15.21 $16.43
22 Tier 3 $12.91 $13.95 $15.07 $16.28 $17.59

4.5. Proposed Water Shortage Surcharges

4.5.1. Calculation of Proposed Water Shortage Surcharges This subsection shows detailed calculations of proposed Water Shortage Surcharges through FY 2028. All proposed surcharges are first calculated for FY 2024 (i.e., the “test year”) to maintain consistency with the water COS analysis.

Water shortage rates are designed to recover net revenue shortfalls during periods of reduced water sales due to mandatory water conservation. The first step in the development of Water Shortage Surcharges is to estimate reductions in water use at each water shortage stage. Table 4-50 shows projected reductions in FY 2024 water use by customer class and tier. Reductions were estimated in consultation with City staff relying on a mix of prior study assumptions, actual reductions during recent shortage conditions, and professional judgment. All reductions shown are relative to “base” (non-shortage) water use projections (from Table 4-6).

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 86 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 86 Table 4-50: Projected Water Use Reduction by Water Shortage Stage (FY 2023-24)

A B C D E
Line Water Reduction Baseline Phase I Phase II Phase III 1 Targeted System Demand
Reduction Goal N/A 10% 30% 40%
2 3 Customer Class
4 Residential N/A 10% 30% 45%
5 Commercial N/A 10% 20% 30%
6 Industrial N/A 10% 20% 30%
7 Landscape N/A 10% 40% 63%
8 9 Customer Class
10 Residential 297,704 267,934 208,393 163,737
11 Commercial 132,276 119,049 105,821 92,594
12 Industrial 116,963 105,267 93,571 81,874
13 Landscape 12,252 11,026 7,351 4,594
14 Total (HCF) 559,196 503,276 415,136 342,800
Table 4-51 shows the detailed calculation of Water Shortage Surcharges as a percent of base Water Volume Rates. The net revenue loss to be recovered by Water Shortage Surcharges is based on total rate revenue loss.

As water sales decrease with each subsequent phase, revenues from Water Volume Rates also decline. Raftelis projected annualized Water Volume Rate revenues in FY 2024 under each stage based on proposed FY 2024 Water Volume Rates (from Table 4-48) and projected water demand by customer class and shortage phase (from Table 4-50). The total net revenue loss represents the additional revenue required from Water Shortage Surcharges at each stage. Dividing the net revenue loss by annualized Water Volume Rate revenue under “base rates” results in the proposed FY 2024 Water Shortage Surcharges (as a percent of base rates).

Table 4-51: Calculation of Water Shortage Surcharges (Test Year FY 2023-24)

A B C D E
Line Drought Costs Baseline Phase I Phase II Phase III
1 Reduced Commodity Revenue $0 $721,922 $1,859,814 $2,793,675 2 3 Drought Revenues (from Base Rates) $5,597,214 $4,875,293 $3,737,401 $2,803,540 4 % Additional Revenue Required 0% 15% 50% 100%
Table 4-52 shows the calculation of Water Shortage Surcharges per HCF at each stage for the test year (FY 2024).

Surcharges per HCF are equal to the COS Water Volume Rates (from Table 4-48) increased by the corresponding surcharge percentages at each stage (from Table 4-51). This approach ensures that surcharges by tier and shortage phase are proportional to the cost of service analysis and function as an extension to the COS rates. In this way the results of the cost of service are maintained through shortage conditions and over the five-year rate-setting period.

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 87 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 87 Table 4-52: Calculated Water Shortage Phase Rates per HCF (Test Year FY 2024)

A B C D E
Line Proposed Total Rate Baseline Phase I Phase II Phase III 1 All Classes
2 Tier 1 $5.99 $6.88 $8.98 $11.96
3 Tier 2 $12.06 $13.85 $18.07 $24.08
4 Tier 3 $12.91 $14.83 $19.34 $25.78

A B C D E
Line
Proposed Shortage
Surcharge Baseline Phase I Phase II Phase III
1 All Classes
2 Tier 1 $0.89 $2.99 $5.97 $0.89
3 Tier 2 $1.79 $6.01 $12.02 $1.79
4 Tier 3 $1.92 $6.43 $12.87 $1.92
Table 4-53 shows the proposed five-year schedule of Water Shortage Surcharges for FY 2024 through FY 2028.

All proposed surcharges in subsequent years are increased based on the schedule of proposed revenue adjustments (from Table 4-19). All proposed surcharges are rounded up to the nearest cent to ensure adequate revenue recovery.

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 88 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 88 Table 4-53: Proposed Five-Year Schedule of Water Shortage Surcharges

A B C D
Line
Fiscal Year and
Tier Phase I Phase II Phase III
1 FY 2024
2 Tier 1 $0.89 $2.99 $5.97
3 Tier 2 $1.79 $6.01 $12.02
4 Tier 3 $1.92 $6.43 $12.87
5 6 FY 2025
7 Tier 1 $0.97 $3.23 $6.45
8 Tier 2 $1.94 $6.50 $12.99
9 Tier 3 $2.08 $6.95 $13.90
10 11 FY 2026
12 Tier 1 $1.05 $3.49 $6.97
13 Tier 2 $2.10 $7.02 $14.03
14 Tier 3 $2.25 $7.51 $15.02
15 16 FY 2027
17 Tier 1 $1.14 $3.77 $7.53
18 Tier 2 $2.27 $7.59 $15.16
19 Tier 3 $2.43 $8.12 $16.23
20 21 FY 2028
22 Tier 1 $1.24 $4.08 $8.14
Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 89 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 89 23 Tier 2 $2.46 $8.20 $16.38
24 Tier 3 $2.63 $8.77 $17.53
Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 90 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 90

5. Wastewater Rate Study

5.1. Key Inputs and Assumptions
Raftelis developed a wastewater rate model in Microsoft Excel to project financial calculations over the next ten fiscal years with projections shown in this section through the five-year rate-setting period of FY 2027-28 (i.e., the “study period”). The City’s fiscal year spans from July 1 through June 30. Projections in future years were generally made based on actual or estimated FY 2021-22 and/or budgeted data for FY 2022-23 data using key assumptions outlined below. Assumptions were discussed with and reviewed by City Staff to ensure that the City wastewater system’s unique characteristics are accurately accounted for. Note that most table values shown throughout this report are rounded to the last digit shown and may therefore not sum precisely to the totals shown.

5.1.1. Current Wastewater Rates
Table 5-1 shows the wastewater rates currently in effect in FY 2020-21, which were developed during the prior rate study in 2016. Rates and charges vary by customer class. The City’s wastewater rate structure consists of Fixed Service Charges and Variable Flow Charges for all customer classes. Residential customers are charged a base rate (Fixed Service Charge) and a volumetric rate (Variable Flow Charge) based on AWC. Commercial customers are charged a Fixed Service Charge based on the size of the meter serving the connection and Variable Flow Charges based on billed water use. Multi-Family Residential (MFR) customers which include Multi-Dwelling apartments, condos, and mobile home parks, are charged base rates as commercial customers (by meter size) and volumetric flow rates as residential customers (AWC).

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 91 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 91 Table 5-1: Current Wastewater Rate Schedule
A B
Line Description
Bi-Monthly
Rates
1 Residential
2 Base Charge $127.35
3 Use Charge $5.58
4 5 Non-Residential
6 Base Charge
7 5/8" $176.68
8 1" $441.72
9 1.5" $883.42
10 2" $1,413.48
11 3" $2,826.98
12 4" $4,417.14
13 6" $8,834.28
14 15 Use Charge
16 Car Wash $3.86
17 Religious Places/Community Centers $4.29
18 Commercial $5.07
19 Groceries and Mortuaries $13.62
20 Laundry $4.42
21 Mixed Retail $8.52
22 Lodging with Food $10.22
23 Lodging without Food $5.54
24 Restaurant $13.50
25 Napa Valley College $4.22
26 Service Station $5.83
27 Winery Pre-Treated $5.39
28 Winery Non-Treated $23.75
29 Schools $2.10

5.1.2. Wastewater Enterprise Financial Assumptions
Inflationary assumptions shown in Table 5-2 are used to escalate projected non-rate revenues and operations and maintenance (O&M) expenses beyond FY 2022-23. For O&M expenses, the general inflation rate is consistent with long-term changes in the Consumer Price Index (CPI), with an expectation that inflation remains elevated through FY 2026. Similarly, capital inflation is based on the long-term average of the Engineering News-Record’s (ENR) Construction Cost Index (CCI). The capital inflation factor is used to adjust uninflated capital project cost estimates provided to Raftelis by City staff. Salary and benefit inflationary increases were provided by City staff, as wastewater utility personnel cost increases are typically agency-specific.

All other O&M expense inflationary assumptions were developed by Raftelis based on professional judgment, experience with similar agencies, and after discussions with City staff and the RSAC.

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 92 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 92 Table 5-2: Wastewater Inflationary Assumptions

A B C D E F
Line Inflation Factors FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Revenue Inflation
2 Miscellaneous Revenues 0.0% 0.0% 0.0% 0.0% 0.0%
3 Reserve Interest Rate 1.0% 1.0% 1.0% 1.0% 1.0%
4 5 Expense Inflation
6 General 5.0% 4.2% 3.5% 2.8% 2.8%
7 Salary 4.0% 4.0% 4.0% 4.0% 4.0%
8 Benefits 6.0% 6.0% 6.0% 6.0% 6.0%
9 Supplies 5.0% 4.2% 3.5% 2.8% 2.8%
10 Utilities 5.0% 5.0% 5.0% 5.0% 5.0%
11 Capital 5.0% 4.4% 3.8% 3.2% 3.2%
Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 93 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 93

5.1.3. Projected Wastewater Billing Units of Service
Wastewater connection growth projections are necessary to estimate wastewater rate revenues over the study period. Raftelis relied on information within the City’s General Plan and projected housing units over the long-term. An assumption of 10 SFR units and 8 MFR dwelling units per year is translated into percentages relative to the existing connection base. The base units are the number of billing units, by customer class, in FY 2022. Raftelis then applied annual account growth rates to all billing units to develop projections over the study, shown in Table 5-3. Additional wastewater generation factors were applied to billed wastewater and are shown in Table 5-4.

Table 5-5 shows the current FY 2021-22 wastewater billing units of service and projected wastewater billing units of service for the rate study period. All billing units shown below are based on the current wastewater rate structure.

Table 5-3: Projected Wastewater Connection Growth

A B C D E F G
Line Description FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Single Family 0.48% 0.48% 0.48% 0.48% 0.48% 0.48%
2 Multi Family 0.85% 0.85% 0.85% 0.85% 0.85% 0.85%
3 Commercial 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4 Institutional 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Table 5-4: Projected Wastewater Demand Factors

A B C D E F G
Line Description FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Single Family 0.48% 0.48% 0.00% 0.00% 0.00% 0.00%
2 Multi Family 0.85% 0.85% 0.00% 0.00% 0.00% 0.00%
3 Commercial 7.50% 7.50% 0.00% 0.00% 0.00% 0.00%
4 Institutional 7.50% 7.50% 0.00% 0.00% 0.00% 0.00%
Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 94 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 94 Table 5-5: Projected Wastewater Billing Units Under Existing Rate Structure

A B C D E F G H
Line Description FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Residential - Dwelling Units
2 Single Family 1,526 1,533 1,541 1,548 1,555 1,563 1,570 3 Multi Family 673 679 685 690 696 702 708 4 Mobile Home 212 214 216 217 219 221 223 5 6 Residential - Accounts
7 Single Family 1,506 1,513 1,520 1,528 1,535 1,542 1,550 8 Multi Family 100 101 102 103 103 104 105 9 Mobile Home 2 2 2 2 2 2 2 10 11 Non-Residential Meter Size
12 5/8" 117 117 117 117 117 117 117 13 1" 43 43 43 43 43 43 43 14 1.5" 20 20 20 20 20 20 20 15 2" 20 20 20 20 20 20 20 16 3" 2 2 2 2 2 2 2 17 4" 4 4 4 4 4 4 4 18 6" 1 1 1 1 1 1 1 19 Total Non-Residential Meters 207 207 207 207 207 207 207 20 21 Customer Usage 22 Residential (Annual Winter Average) 23 Single Family 77,832 78,203 78,576 78,950 79,326 79,704 80,084 24 Multi Unit 29,124 29,373 29,623 29,876 30,131 30,388 30,648 25 Mobile Home 13,164 13,276 13,390 13,504 13,619 13,735 13,853 26 27 Non-Residential 61,136 65,605 70,408 70,408 70,408 70,408 70,408 28 Car Wash 504 542 582 582 582 582 582 29 Religious Places/Community Centers 1,535 1,650 1,774 1,774 1,774 1,774 1,774 30 Commercial 16,333 17,558 18,875 18,875 18,875 18,875 18,875 31 Groceries and Mortuaries 990 1,064 1,144 1,144 1,144 1,144 1,144 32 Laundry 4,066 4,371 4,699 4,699 4,699 4,699 4,699 33 Mixed Retail 2,075 2,231 2,398 2,398 2,398 2,398 2,398 34 Lodging with Food 10,437 11,220 12,061 12,061 12,061 12,061 12,061 35 Lodging without Food 7,668 8,243 8,861 8,861 8,861 8,861 8,861 36 Restaurant 7,518 8,082 8,688 8,688 8,688 8,688 8,688 37 Napa Valley College 510 548 589 589 589 589 589 38 Service Station 511 549 591 591 591 591 591 39 Winery Pre-Treated 1,555 1,555 1,555 1,555 1,555 1,555 1,555 40 Winery Non-Treated 929 999 1,074 1,074 1,074 1,074 1,074 41 Schools 6,505 6,993 7,517 7,517 7,517 7,517 7,517 42 43 Total - Usage (HCF) 242,392 252,061 262,406 263,147 263,894 264,645 265,402

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 95 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 95

5.2. Wastewater Financial Plan
This section details the development of the proposed Wastewater financial plan over the study period. The following subsections include estimates and projections of annual revenues, O&M expenses, debt service payments, capital expenditures, and reserve funding through FY 2032. For formatting purposes, most tables in this section are shown through FY 2028, the end of the five-year rate setting period. The overall purpose of the financial plan is to determine annual wastewater rate revenues required to achieve sufficient cash flow, maintain adequate reserves, and meet debt coverage requirements in every year of the plan.

5.2.1. Wastewater Enterprise Revenue under Current Rates The Wastewater utility’s revenue sources consist of wastewater rates, interest earnings on cash reserves, and other non-rate revenues. The rate revenue projections shown in this section assume that current FY 2021-22 wastewater rates are effective throughout the study period, and therefore represent estimated revenues in the absence of any wastewater rate increases. This status quo scenario provides a baseline from which Raftelis evaluates the need for revenue adjustments (i.e., gross rate revenue increases).

Calculated Wastewater Rate Revenues
Raftelis projects annual wastewater rate revenues over the study period based on current FY 2022 wastewater rates (from Table 5-1) and projected number of billing units (from Table 5-5). Table 5-6 shows projected wastewater rate revenues under current rates over the study period, calculated as follows:

Fixed Charge Revenue = [ Respective FY 2022 bi-monthly charge] × [Number of dwelling units or metered connections] ×
[6 Bills per year]
Variable Rate Revenue = [ Respective FY 2022 unit rate] × [Number of billing units] Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 96 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 96 Table 5-6: Projected Rate Revenues under Current Wastewater Rates

A B C D E F G
Line Description FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Bi-Monthly Service Charge
2 Single Family $1,156,219 $1,161,729 $1,167,266 $1,172,829 $1,178,419 $1,184,035 3 Multi-Unit $399,866 $403,279 $406,721 $410,193 $413,694 $417,225 4 Mobile Home $62,011 $62,541 $63,074 $63,613 $64,156 $64,703 5 Non-Residential $706,562 $706,562 $706,562 $706,562 $706,562 $706,562 6 7 Flow Rates ($/HCF) 8 Single Family $436,372 $438,452 $440,542 $442,641 $444,751 $446,871 9 Multi-Unit $163,899 $165,298 $166,709 $168,132 $169,567 $171,014 10 Mobile Home $74,082 $74,714 $75,352 $75,995 $76,644 $77,298 11 Car Wash $2,091 $2,248 $2,248 $2,248 $2,248 $2,248 12 Religious Places/Community Centers $7,079 $7,610 $7,610 $7,610 $7,610 $7,610 13 Commercial $89,019 $95,695 $95,695 $95,695 $95,695 $95,695 14 Groceries and Mortuaries $14,495 $15,582 $15,582 $15,582 $15,582 $15,582 15 Laundry $19,320 $20,769 $20,769 $20,769 $20,769 $20,769 16 Mixed Retail $19,005 $20,430 $20,430 $20,430 $20,430 $20,430 17 Lodging with Food $114,666 $123,266 $123,266 $123,266 $123,266 $123,266 18 Lodging without Food $45,667 $49,092 $49,092 $49,092 $49,092 $49,092 19 Restaurant $109,105 $117,288 $117,288 $117,288 $117,288 $117,288 20 Napa Valley College $2,314 $2,487 $2,487 $2,487 $2,487 $2,487 21 Service Station $3,203 $3,443 $3,443 $3,443 $3,443 $3,443 22 Winery Pre-Treated $8,383 $8,383 $8,383 $8,383 $8,383 $8,383 23 Winery Non-Treated $23,719 $25,497 $25,497 $25,497 $25,497 $25,497 24 Schools $14,685 $15,786 $15,786 $15,786 $15,786 $15,786 25 26 Total - Calculated Rate Revenues $3,471,761 $3,520,152 $3,533,803 $3,547,542 $3,561,369 $3,575,285

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 97 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 97

5.2.1.1. Other Wastewater Enterprise Revenues
Table 5-7 shows all other Wastewater revenues. All FY 2023 other revenues are based on the City’s FY 2023 budget and are escalated annually by the miscellaneous inflation rate (from Table 5-2). Interest revenue is estimated in the financial plan model beginning in FY 2024 based on projected fund balances and the assumed interest rate (from Table 5-2).

Table 5-7: Other Wastewater Revenues

A B C D E F G
Line Description FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Other Operating Revenue $2,900 $2,900 $2,900 $2,900 $2,900 $2,900 2 Investment Income $20,000 $38,798 $46,107 $34,477 $35,916 $37,354 3 Total Non-Rate Revenue $22,900 $41,698 $49,007 $37,377 $38,816 $40,254

Summary of Projected Wastewater Enterprise Revenues
Table 5-8 shows a summary of all projected Wastewater Enterprise revenues under current rates over the study period. This includes all projected revenues shown in Table 5-6 and Table 5-7. This revenue summary represents expected revenues in the absence of any rate increase over the study period.

Table 5-8: Summary of Projected Wastewater Revenues Under Current Rates

A B C D E F G
Line Description FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Operating Revenues
2 Sewer Service Charges $3,471,761 $3,520,152 $3,533,803 $3,547,542 $3,561,369 $3,575,285 3 Other Operating Revenue $2,900 $2,900 $2,900 $2,900 $2,900 $2,900 4 5 Non-Operating Revenues
6 Investment Income $20,000 $38,798 $46,107 $34,477 $35,916 $37,354 7 8 Total - Revenues $3,494,661 $3,561,851 $3,582,810 $3,584,919 $3,600,184 $3,615,539 Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 98 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 98

5.2.2. Wastewater Operations & Maintenance Expenses
Table 5-9 shows a summary of all Wastewater O&M expenses over the rate-setting period. O&M expenditures include the cost of operating and maintaining wastewater collection, treatment, and disposal facilities. O&M expenses also include the costs of providing technical services such as laboratory services and other administrative costs of the wastewater system. These costs are a normal obligation of the system and are met from operating revenues as they are incurred. FY 2023 reflects budgeted O&M expenses, as well as temporary/one-time expenses provided by City staff in current dollars. Future years are adjusted for inflation by Raftelis (based on inflationary assumptions shown in Table 5-2).

Table 5-9: Projected Wastewater O&M Expenses

A B C D E F G
Line Description FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Operating Expenses
2 Non Departmental $238,642 $252,168 $266,473 $281,605 $297,609 $314,538 3 Council $21,927 $23,171 $24,486 $25,878 $27,350 $28,906 4 Administration $202,115 $211,490 $221,238 $231,383 $241,939 $252,999 5 Finance $456,929 $479,078 $501,009 $522,774 $544,288 $566,767 6 Attorney $26,500 $27,825 $28,994 $30,008 $30,849 $31,712 7 Public Works $2,182,403 $2,602,358 $2,721,791 $2,839,702 $2,955,546 $3,076,537 8 Temp/Part Time $730,000 $600,000 $0 $0 $0 $0
9 Total Expenses $3,858,516 $4,196,090 $3,763,992 $3,931,349 $4,097,580 $4,271,460

5.2.3. Wastewater Debt
Table 5-10 shows the Wastewater Enterprise’s projected debt service obligations over the study period.

Existing debt service consists of the City’s 2005B Installment Agreement and the 2012B Installment Agreement for Wastewater.
2005B Installment Agreement - In July 2005, the City entered into a $2.2 million installment purchase agreement with the California Statewide Communities Development Authority for the purpose of obtaining funds to make wastewater systems improvements. The agreement bears interest at rates of 2.50% to 4.375% per annum and is payable October 1 and April 1 commencing October 1, 2005, and continuing until April 1, 2031. 2012B Installment Agreement - In June 2012, The City entered into a $7.16 million installment purchase agreement with the California Statewide Communities Development Authority for the purpose of obtaining funds to make water and wastewater improvements. The 2012B installment agreement bears interest rates of

2.0% to 5.0% per annum and is payable October 1 and April 1 commencing October 1, 2013, and continuing until October 31, 2032. The City, under the arrangement, allocated $1.56 million to its wastewater enterprise.

Proposed Wastewater debt service includes Raftelis’ estimated annual repayment of the City’s USDA Loan (not formally structured at the time of this study) and an assumed $3M revenue bond borrowing in FY 2024.

Note that proposed debt service represents preliminary projections for planning purposes based on the proposed financial plan and best information available at the time of this study. The timing, magnitude, or financing assumptions are for planning purposes only and should not be construed as municipal advice.

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 99 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 99 Table 5-10: Wastewater Debt Service

A B C D E F G
Line Description FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Existing Debt Service
2 2005B Installment Agreement $138,014 $138,821 $139,414 $139,750 $139,828 $139,687 3 2012B Installment Agreement - Wastewater $114,033 $113,989 $113,881 $114,598 $113,783 $113,891 4 5 Proposed Debt Service 6 Proposed Bond $0 $175,243 $175,243 $175,243 $175,243 $175,243 7 Proposed USDA Loan $342,235 $342,235 $342,235 $342,235 $342,235 $342,235 8 9 Total Debt Service $594,282 $770,288 $770,773 $771,826 $771,089 $771,056

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 100 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 100

5.2.4. Wastewater Enterprise Capital Improvement Plan Table 5-11 shows the City’s planned capital improvement plan (CIP) for the Wastewater enterprise. All values account for assumed CCI. While the gross (total) CIP is shown it should be noted that the WWTP Phase 1 Upgrades project is mostly funded with USDA loan proceeds and four other projects (lines 4-7) are funded with GO Bond proceeds allocated to the Wastewater utility. All other projects are assumed to be funded with rate revenues through either cash or future revenue bond proceeds. Table 5-11: Wastewater Capital Improvement Plan

A B C D E F G
Line Description FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 S-52 WWTP Phase I Upgrades $5,699,800 $1,407,210 $0 $0 $0 $0 2 S23-01 Recycled Water - Deliver Recycled Water to Crane Park's Irrigation (Design only) $0 $52,500 $0 $0 $0 $0 3 WWTP Pond Cleaning, Decommissioning, and Repurpose $0 $0 $0 $0 $587,133 $605,922 4 S18-70 Sewer Replacement Program $0 $260,400 $271,858 $282,188 $291,218 $300,537 5 S18-71 Crinella Lift Station Improvements $0 $0 $624,834 $648,578 $0 $0 6 WWGM-6 Del Campo Curt $0 $0 $666,490 $0 $0 $0 7 WWRR-1CCTV Inspection Program, Phase 1 $0 $233,100 $0 $0 $0 $0 8 WWRR-2 Flow Monitoring Program $0 $0 $65,772 $0 $0 $0 9 WWRR-3 High Priority Pipeline Replacement $0 $703,080 $734,016 $761,908 $786,289 $811,450 10 WWRR-4 Model Update and System Analysis $0 $0 $0 $56,893 $0 $0 11 WWRR-5 CCTV Inspection Phase 2 $0 $0 $0 $0 $0 $0 12 WWRR-6 Address R/R needs from Phase 1 CCTV Program Years 6-10 & 11-20 $0 $0 $0 $0 $0 $0 13 Asset Management Program Development $0 $0 $0 $56,893 $0 $0 14 Asset Management Software Assessment & Optimization planning $0 $0 $0 $17,068 $0 $0 15 CMMS Purchase & Setup $0 $0 $0 $0 $58,713 $0 16 ArcGIS Purchase & Setup $0 $36,750 $16,443 $0 $0 $0 17 S21-01 WWTP Recycled Pipeline and Pump Station (Design only) $0 $262,500 $0 $0 $0 $0 18 Total $5,699,800 $2,955,540 $2,379,412 $1,823,527 $1,723,354 $1,717,909

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 101 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 101 Table 5-12 shows the assumed funding sources for Wastewater CIP projects over the study period. Proposed debt proceeds are assumed to fund most of the Wastewater CIP projects through FY 2025-26. All remaining CIP not funded by debt is assumed to be funded by Wastewater cash reserves generated from rates (i.e., pay-asyou-go). Figure 5-1 shows a summary of total Wastewater Enterprise CIP expenditures by funding source over the study period.

Table 5-12: Wastewater Capital Improvement Plan Proposed Funding

A B C D E F G
Line Description FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Go Bond $0 $493,500 $1,563,181 $930,766 $291,218 $300,537 2 Bond Funded $0 $2,462,040 $537,960 $0 $0 $0
3 Rate Funded $5,699,800 $0 $278,271 $892,762 $1,432,136 $1,417,372 4 Total CIP $5,699,800 $2,955,540 $2,379,412 $1,823,527 $1,723,354 $1,717,909 Figure 5-1: Wastewater Capital Improvement Plan
Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 102 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 102 Wastewater Enterprise Financial Policies

5.2.4.1. Required Debt Coverage
The Wastewater utility is required to meet debt service coverage requirements on its outstanding wastewater revenue bonds. The required debt coverage ratio is 1.20, meaning that the Wastewater utility’s net operating revenues (i.e., total operating revenues less operating expenses) must amount to at least 1.20 times the amount of annual debt service. Failure to meet debt service coverage results in a technical default, which without foreseeable remedial action such as implementing rate increases, could result in a downgrade of credit rating, higher costs in future debt issuance, or even denial of credit.

5.2.4.2. Reserve Targets
Adequate cash reserves are required to meet operating, capital, and debt service requirements. Operating reserves provide funds to meet ongoing cash flow requirements related to operating expenses. The current reserve target is equal to 8 months of annual operating expenses (which includes both O&M and debt service), and the minimum reserve target is equal to 6 months of annual O&M expenses. Table 5-13 shows projected reserve targets over the study period based on the policies outlined above. No changes are proposed to the City’s existing wastewater reserve policies.

Table 5-13: Projected Wastewater Reserve Targets

A B C D E F G
Line Description FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Reserve - 8 Months $2,968,532 $3,310,918 $3,023,177 $3,135,450 $3,245,779 $3,361,677 2 Reserve – 6 Months $2,226,399 $2,483,189 $2,267,383 $2,351,587 $2,434,334 $2,521,258

5.2.5. Status Quo Wastewater Financial Plan
To evaluate the need for revenue adjustments (i.e., increases to gross rate revenues), Raftelis first develops a status quo financial plan. The status quo financial plan assumes that current FY 2023 rates remain unchanged over the study period. Table 5-14 combines projected Fund 571 revenues (from Table 5-8), O&M expenses (from Table 5-9), and debt service (from Table 5-10) to generate operating cash flow projections under the status quo. In the absence of any revenue adjustments, the Wastewater Operating Fund (Fund 571) will fail to generate sufficient revenue to recover O&M expenses and debt service, and net cash generation becomes increasingly negative in subsequent years.

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 103 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 103 Table 5-14: Wastewater Operating Cash Flow (Fund 571) – Status Quo Financial Plan

A B C D E F G H
Line Description FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Revenues
2 Revenue from Existing Rates $3,471,761 $3,520,152 $3,533,803 $3,547,542 $3,561,369 $3,575,285 3 4 Revenue Adjustments Adjustment 5 FY 2023 0.0% $0 $0 $0 $0 $0 $0 6 FY 2024 0.0% $0 $0 $0 $0 $0 7 FY 2025 0.0% $0 $0 $0 $0 8 FY 2026 0.0% $0 $0 $0
9 FY 2027 0.0% $0 $0
10 FY 2028 0.0% $0
11 Revenue Adjustments $0 $0 $0 $0 $0 $0
12 Total Revenues from Rates $3,471,761 $3,520,152 $3,533,803 $3,547,542 $3,561,369 $3,575,285 13 Other Operating Revenue $2,900 $2,900 $2,900 $2,900 $2,900 $2,900 14 Investment Income $20,000 $29,998 $28,247 $17,932 $6,683 $6,840 15 Total - Revenues $3,494,661 $3,553,050 $3,564,950 $3,568,374 $3,570,952 $3,585,024 16 17 Operating Expenses 18 Operating Expenses $3,128,516 $3,596,090 $3,763,992 $3,931,349 $4,097,580 $4,271,460 19 Temp/Part Time (WWTP temp operators) $730,000 $600,000 $0 $0 $0 $0 20 Total Operating Expenses $3,858,516 $4,196,090 $3,763,992 $3,931,349 $4,097,580 $4,271,460 21 22 Net Revenue ($363,855) ($643,039) ($199,042) ($362,975) ($526,628) ($686,435) 23 24 Existing Debt Service $252,047 $252,810 $253,295 $254,348 $253,611 $253,578 25 Proposed Debt Service $342,235 $517,478 $517,478 $517,478 $517,478 $517,478 26 Annual Debt Service $594,282 $770,288 $770,773 $771,826 $771,089 $771,056 27 28 Net Cash ($958,137) ($1,413,327) ($969,815) ($1,134,801) ($1,297,716) ($1,457,491) 29 30 Debt Service Coverage 31 Calculated Coverage (0.61) (0.83) (0.26) (0.47) (0.68) (0.89) 32 Target Coverage 1.20 1.20 1.20 1.20 1.20 1.20

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 104 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 104 Table 5-15 shows projected reserve balances and debt coverage under the status quo financial plan for the entire wastewater utility, including both the Wastewater Fund (Fund 571), Wastewater Capital Fund (Fund 773), and the Wastewater Impact Fund (774). Sources of funds include revenues (from Table 5-8) as well as debt proceeds.

Use of funds include O&M expenses (from Table 5-9), debt service (from Table 5-10), and CIP expenditures (from Table 5-11). All ending balance and debt coverage figures are projected values. Target reserve balances shown are from Table 5-13.

Under the status-quo financial plan, reserves are projected to fall below the minimum target every year of the study period. Debt coverage is projected to fall well below the required ratio in all years. The status quo financial plan is insufficient to meet the Wastewater utility’s financial needs over the study period. This demonstrates a clear need for revenue adjustments over the study period to increase rate revenues and ensure financial sustainability.

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 105 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 105 Table 5-15: Status Quo Water Financial Plan Pro Forma (Funds 561, 763, 764)

A B C D E F
Line Description FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Beginning Balances $250,969 ($146,736) ($1,379,199) ($3,391,140) ($6,105,370) 2 3 Sources of Funds 4 Revenue from Existing Rates $3,520,152 $3,533,803 $3,547,542 $3,561,369 $3,575,285 5 Total Revenue Adjustments $0 $0 $0 $0 $0 6 Other Operating Revenue $2,900 $2,900 $2,900 $2,900 $2,900 7 Investment Income $29,998 $28,247 $17,932 $6,683 $6,840 8 WW Capital Revenues $0 $0 $0 $0 $0 9 WW Impact Fee Revenues $16,918 $16,918 $16,918 $16,918 $16,918 10 Bond Proceeds CIP Funding $2,462,040 $537,960 $0 $0 $0 11 SRF Proceeds $0 $0 $0 $0 $0 12 USDA Proceeds $0 $0 $0 $0 $0 13 Go Bond Proceeds $493,500 $1,563,181 $930,766 $291,218 $300,537 14 Interfund Proceeds $0 $0 $0 $0 $0 15 General Fund Loan (+Funds/-Payment) $1,000,000 $0 $0 $0 $0 16 Total Source of Funds $7,525,508 $5,683,010 $4,516,058 $3,879,088 $3,902,479 17 18 Use of Funds 19 Operating Expenses $3,596,090 $3,763,992 $3,931,349 $4,097,580 $4,271,460 20 Temp/Part Time (WWTP temp operators) $600,000 $0 $0 $0 $0 21 WW Impact Fund Expenses $1,296 $1,296 $1,296 $1,296 $1,296 22 WW Capital Fund Expenses $0 $0 $0 $0 $0 23 Unrestricted Capital Project Costs $2,462,040 $816,231 $892,762 $1,432,136 $1,417,372 24 Existing DS $252,810 $253,295 $254,348 $253,611 $253,578 25 Proposed DS $517,478 $517,478 $517,478 $517,478 $517,478 26 SRF CIP $0 $0 $0 $0 $0 27 GO Bond $493,500 $1,563,181 $930,766 $291,218 $300,537 28 Total Use of Funds $7,923,213 $6,915,473 $6,527,998 $6,593,318 $6,761,721 29 30 Ending Balance ($146,736) ($1,379,199) ($3,391,140) ($6,105,370) ($8,964,611)

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 106 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 106

5.2.6. Proposed Wastewater Financial Plan
The Wastewater utility must increase its revenues from wastewater rates over the study period to adequately fund its operating and capital expenditures, meet required debt coverage, and maintain sufficient reserve funding. Raftelis worked closely with City staff and the RSAC over nearly a dozen public meetings to identify financial plan options for consideration. The selected financial plan and annual revenue adjustments are shown in Table 5-16. Revenue adjustments represent annual percent increases in total rate revenue relative to rate revenue generated by the prior year’s wastewater rates.

Table 5-16: Proposed Wastewater Revenue Adjustments

A B C D E F
Line Description FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Effective Month July 1, 2023 July 1, 2024 July 1, 2025 July 1, 2026 July 1, 2027 2 Revenue Adjustments 50% 4% 4% 4% 4%
Table 5-17 combines projected Fund 571 revenues (from Table 5-8), O&M expenses (from Table 5-9), and debt service (from Table 5-10) to generate operating cash flow projections under the proposed financial plan.

By implementing the proposed revenue adjustments, we project that the Wastewater Operating Fund (Fund 571) will maintain sufficient operating cash flow and debt coverage through the study period. Appendix B shows the proposed 10-year pro forma for the entire Wastewater utility, including the Wastewater Operating Fund (Fund 571), Wastewater Capital Fund (Fund 773), and Wastewater Impact Fund (Fund 774). Under the proposed financial plan, debt coverage is projected to achieve target policies and minimum requirements in all years of the rate-setting period.

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 107 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 107 Table 5-17: Wastewater Operating Cash Flow (Fund 571) – Proposed Financial Plan

A B C D E F G H
Line Description FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Revenues
2 Revenue from Existing Rates $3,471,761 $3,520,152 $3,533,803 $3,547,542 $3,561,369 $3,575,285 3 4 Revenue Adjustments Adjustment 5 FY 2023 0.0% $0 $0 $0 $0 $0 $0 6 FY 2024 50.0% $1,760,076 $1,766,902 $1,773,771 $1,780,684 $1,787,642 7 FY 2025 4.0% $212,028 $212,853 $213,682 $214,517
8 FY 2026 4.0% $221,367 $222,229 $223,098
9 FY 2027 4.0% $231,119 $232,022
10 FY 2028 4.0% $241,303
11 Revenue Adjustments $0 $1,760,076 $1,978,930 $2,207,990 $2,447,714 $2,698,581 12 Total Revenues from Rates $3,471,761 $5,280,228 $5,512,733 $5,755,532 $6,009,083 $6,273,866 13 Other Operating Revenue $2,900 $2,900 $2,900 $2,900 $2,900 $2,900 14 Investment Income $20,000 $38,798 $46,107 $34,477 $35,916 $37,354 15 Total - Revenues $3,494,661 $5,321,927 $5,561,740 $5,792,909 $6,047,899 $6,314,120 16 17 Operating Expenses 18 Operating Expenses $3,128,516 $3,596,090 $3,763,992 $3,931,349 $4,097,580 $4,271,460 19 Temp/Part Time (WWTP temp operators) $730,000 $600,000 $0 $0 $0 $0 20 Total Operating Expenses $3,858,516 $4,196,090 $3,763,992 $3,931,349 $4,097,580 $4,271,460 21 22 Net Revenue ($363,855) $1,125,837 $1,797,747 $1,861,560 $1,950,319 $2,042,661 23 24 Existing Debt Service $252,047 $252,810 $253,295 $254,348 $253,611 $253,578 25 Proposed Debt Service $342,235 $517,478 $517,478 $517,478 $517,478 $517,478 26 Annual Debt Service $594,282 $770,288 $770,773 $771,826 $771,089 $771,056 27 28 Net Cash ($958,137) $355,550 $1,026,975 $1,089,734 $1,179,231 $1,271,605 29 30 Debt Service Coverage 31 Calculated Coverage (0.61) 1.46 2.33 2.41 2.53 2.65 32 Target Coverage 1.20 1.20 1.20 1.20 1.20 1.20

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 108 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 108 Figure 5-2 shows projected debt coverage (blue line) relative to the debt coverage requirement (gray line) over the study period. Debt coverage remains above the requirement throughout the study period.

Figure 5-2: Proposed Wastewater Financial Plan - Debt Coverage Figure 5-3 shows the Wastewater projected ending balance under the proposed financial plan. The light blue bars indicate the ending balance. The target and minimum reserve levels are shown by the blue and yellow lines, respectively. The Wastewater utility is projected to build its reserves through the planning period. By the end of the planning period, the Wastewater enterprise’s reserves are projected to remain between the reserve minimum and the reserve target, with the proposed rate increases.

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 109 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 109 Figure 5-3: Proposed Wastewater Financial Plan – Projected Ending Balances Figure 5-4 shows the proposed versus status quo operating financial plan. Revenues under the proposed financial plan and status quo financial plan are represented by the black and blue lines, respectively. Revenue requirements including O&M expenses, debt service, and reserve funding are represented by the various stacked bars. Revenue adjustments are required to generate sufficient revenue to recover O&M expenses and debt service payments over the study period.

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 110 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 110 Figure 5-4: Proposed vs. Status Quo Wastewater Financial Plan Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 111 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 111

5.3. Wastewater Cost of Service Analysis
This section details the cost of service (COS) analysis performed for the Wastewater Enterprise for the ratesetting year FY 2024. The COS analysis allocates the overall rate revenue requirement to customer classes based on their proportion of burden on the wastewater system. This provides the basis for the development of proposed wastewater rates through FY 2028.

5.3.1. Methodology
The first step in a COS analysis is to determine the revenue required from wastewater rates. The total revenue requirement results from the wastewater financial plan in Section 1.6. The methodology to develop the COS analysis and to apportion the revenue requirement to user classes is informed by the WEF’s Manual of Practice (MOP) No. 27 Financing and Charges for Wastewater Systems. COS analyses are tailored to meet the specific needs of each wastewater system. However, there are four distinct steps in every COS analysis to recover costs from customers in an accurate, equitable, and defensible manner:

1. Cost functionalization: O&M expenses and capital assets are categorized by their function in the wastewater system. Functions include collection, treatment, and customer service, among others.

2. Cost causation component allocation: Functionalized costs are then allocated to cost causation components based on their burden on the wastewater system. The cost causation components include flow (wastewater generated), biochemical oxygen demand (BOD), and suspended solids (SS), customer billing costs, and general (indirect) costs. The revenue requirement is allocated accordingly to the cost causation components and results in the total share of the revenue requirement attributable to each cost component.

3. Mass balance analysis: The flow and strength (BOD and SS) of wastewater treatment plant (WWTP) influent is attributed to each customer class based on water use data and wastewater generation and strength assumptions that vary by user classification. This analysis estimates the burden each customer class places on the wastewater system.

4. Revenue requirement distribution: The mass balance analysis is utilized to distribute the revenue requirement for each cost causation component unit cost to customer classes based on each customer class’s individual burden on the wastewater system.

5.3.2. Wastewater Rate Revenue Requirement
Table 5-18 shows the determination of the wastewater rate revenue requirement for FY 2024 (also referred to as the test year). The revenue requirement is split into operating and capital categories (Columns B-C), which are later allocated based on either O&M expenses or capital assets. The revenue requirements (Lines 2-3) include FY 2024 O&M expenses and debt service. The revenue offsets (Lines 8-9) include all Fund 571 nonrate revenues. These revenues are applied as offsets (reductions) to the final rate revenue requirement. The adjustment for cash balance (Line 12) is equal to FY 2024 negative net operating cash flow under the proposed financial plan and represents the additional rate revenue required to replenish cash reserves in FY 2024. All values are from the proposed wastewater financial plan operating cash flow (Table 5-17). The final rate revenue requirement (Line 15) is calculated as follows:

Total revenue required from rates (Line 15) = Revenue requirements (Line 4) - Revenue offsets (Line 9) – Adjustments (Line 13)
Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 112 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 112 Table 5-18: FY 2024 Wastewater Rate Revenue Requirement

A B C D
Line Revenue Requirement Operating Capital Total
1 Revenue Requirement
2 Operating Expenses $4,196,090 $0 $4,196,090
3 Debt Service $0 $770,288 $770,288
4 Total $4,196,090 $770,288 $4,966,377
5 6 Revenue Offsets
7 Other Operating Revenue $2,900 $0 $2,900
8 Investment Income $38,798 $0 $38,798
9 Total Revenue Offsets $41,698 $0 $41,698
10 11 Adjustments
12 Adjustment for Cash Balance ($355,550) $0 ($355,550) 13 Total - Adjustments ($355,550) $0 ($355,550)
14 15 Total Revenue Requirement $4,509,941 $770,288 $5,280,228

5.3.3. Functionalization and Allocation of Expenses
After determining the revenue requirement, the next step of the wastewater COS analysis is to allocate O&M expenses and capital assets to the following functional categories:
» Treatment: costs associated with the wastewater treatment facilities to treat wastewater to discharge and disposal standards
» Collection: costs related to the system of collection and conveyance of wastewater discharges from customers to the wastewater treatment plant
» Customer: costs of billing, revenue collections, and other customer services functions » General: costs for general administration and operational expenses or any other costs that do not clearly relate to another direct functional category (i.e., indirect costs) The functionalization of costs allows for the allocation of costs to cost causation components. Some cost causation components correspond directly to a functional category listed above. The cost causation components include:
» Flow: costs that vary based on the quantity of wastewater generated » Biochemical Oxygen Demand: costs that vary based on the BOD strength parameter of wastewater; BOD is a measure of wastewater strength based on the amount of organic matter contained in wastewater prior to treatment and generally defined in terms of milligrams per liter (mg/L) or parts per million (ppm). » Suspended Solids: costs that vary based on the SS strength parameter of wastewater; Suspended Solids are a measure of wastewater strength based on the amount of solid particles in suspension in wastewater prior to treatment also generally expressed in milligrams per liter (mg/L) or parts per million (ppm). » Customer: directly associated with the Customer functional category » General: directly associated with the General functional category Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 113 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 113 Table 5-19 shows the basis for allocating each functional category to the various cost causation components.

This provides the basis for allocating O&M and capital expenses in the following subsections. The Collection functional category is allocated entirely to the Flow cost causation component because collection-related costs depend on the quantity of wastewater rather than the quality (strength) of wastewater. Treatment costs are then allocated to Flow, BOD, and SS based on Raftelis’ estimate of the wastewater treatment plant’s cost drivers to treat wastewater to standards. The Customer and General functional categories are allocated entirely to the corresponding cost causation component. Raftelis’ estimates are based on the framework and guidance within WEF MOP 27, Chapter 6 as well as our professional judgment with similar treatment facilities.

Table 5-19: Allocation of Functional Categories to Wastewater Cost Causation Components

A B C D E F G
Line Functional Categories Flow BOD TSS Billing General Total 1 Collection 100% 0% 0% 0% 0% 100%
2 Treatment 50% 25% 25% 0% 0% 100%
3 Customer Billing 0% 0% 0% 100% 0% 100%
4 General 0% 0% 0% 0% 100% 100%

5.3.4. Wastewater Enterprise O&M Expense Allocation
The next step of the COS analysis is to develop an allocation basis for the operating revenue requirement based on the functionalization of the Wastewater enterprise’s O&M expenses. Raftelis worked with City staff to allocate Wastewater O&M expenses by line item to the most closely associated functional category. Table 5-20 summarizes FY 2024 Wastewater O&M expenses by functional category. This intermediate step is necessary to allocate wastewater O&M expenses to individual cost causation components.

Table 5-20: Summary of Wastewater O&M Expenses by Functional Category A B C
Line Function
FY 2023-24
O&M Expenses Percent of Total
1 Collection $624,989 14.9%
2 Treatment $1,851,580 44.1%
3 Customer Billing $280,874 6.7%
4 General $1,438,647 34.3%
5 Total $4,196,090 100.0%
Table 5-21 shows the allocation of FY 2024 O&M expenses by functional category to each cost causation component. The percent allocation of each functional category (Columns B-F) to the various cost causation components was determined in Table 5-19. Total O&M expenses associated with each functional category (Column G) were determined in Table 5-20. The total dollar amount allocated to each cost causation component (Line 5) is determined by multiplying the total expense associated with each functional category by the corresponding percentage allocation and summing across all functional categories. The total operating revenue requirement equals the operating revenue requirement from Table 5-18.

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 114 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 114 Table 5-21: Allocation of Wastewater O&M Expenses to Cost Causation Components

A B C D E F G
Line Function Flow BOD TSS Billing General Total
1 Collection $624,989 $0 $0 $0 $0 $624,989
2 Treatment $925,790 $462,895 $462,895 $0 $0 $1,851,580 3 Customer
Billing $0 $0 $0 $280,874 $0 $280,874
4 General $0 $0 $0 $0 $1,438,647 $1,438,647
5 Total $1,550,779 $462,895 $462,895 $280,874 $1,438,647 $4,196,090

5.3.5. Wastewater Enterprise Capital Allocation
Capital assets are utilized in COS analyses to allocate the capital revenue requirement to the various cost causation components. The distribution of short-term CIP project costs can be heavily weighted to specific cost causation components based on the type of projects. Use of short-term plans to allocate capital costs may cause rates to fluctuate and result in customer confusion. The overall wastewater asset base, however, is considerably stable in the long-term, and therefore is more representative of long-term capital investment in the wastewater system. Thus, functionalized capital assets are used to allocate capital costs.

City staff provided Raftelis with a detailed asset listing that included the original cost of each individual wastewater asset. Raftelis calculated the replacement cost less depreciation (RCLD) of each asset based on net book value using the ENR CCI for San Francisco to account for capital cost inflation. As part of the capital asset analysis, Raftelis assigned each individual asset to a functional category with the assistance of City staff.

Total wastewater asset value (RCLD) by functional category is shown in Table 5-22. Percentages are rounded to the nearest one-tenth of one percent.

Table 5-22: Summary of Wastewater Capital Assets by Functional Category A B C
Line Function Asset Value (RCLD) Percent of Total
1 Collection $1,388,917 45.9%
2 Treatment $1,338,148 44.2%
3 Customer Billing $0 0.0%
4 General $299,998 9.9%
5 Total $3,027,064 100.0%
Table 5-23 shows the allocation of capital assets by functional category to each cost causation component. The percentage allocation of each functional category (Columns B-F) to the various cost causation components was determined in Table 5-19. Total capital assets associated with each functional category (Column G) were determined in Table 5-22. The total dollar amount allocated to each cost causation component (Line 5) is determined by multiplying the total asset value associated with each functional category by the corresponding percentage allocation and summing across all functional categories. This is consistent with the methodology used to determine the allocation of O&M expenses to cost causation components in Table 5-21.

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 115 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 115 Table 5-23: Allocation of Functionalized Wastewater Capital Assets to Cost Causation Components

A B C D E F G
Line Function Flow BOD SS Billing General Total
1 Collection $1,388,917 $0 $0 $0 $0 $1,388,917
2 Treatment $669,074 $334,537 $334,537 $0 $0 $1,338,148 3 Customer Billing $0 $0 $0 $0 $0 $0
4 General $0 $0 $0 $0 $299,998 $299,998
5 Total $2,057,991 $334,537 $334,537 $0 $299,998 $3,027,064

5.3.6. Wastewater Cost of Service Allocation
Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 116 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 116 Table 5-24 shows the allocation of the total FY 2024 wastewater rate revenue requirement to the various cost causation components. The COS allocations (Column E) provide the basis for FY 2024 rate calculations shown in Section 5.4. The results shown in Table 5-24 are calculated as follows based on intermediate results developed in the preceding subsections:

1. Operating Revenue Requirement (Column B): The total operating revenue requirement consists of the Wastewater Enterprise’s O&M expenses less revenue offsets. The allocation of the total operating revenue requirement to each cost causation component was previously determined in Table 5-21, Columns B-F, Line 5.

2. Capital Revenue Requirement (Column C): The total capital revenue requirement consists of debt service and cash reserves. The allocation of the total capital revenue requirement to each cost causation component was previously determined in Table 5-23, Columns B-F, Line 5).

3. Reallocation of General Costs (Column D): The total General cost allocation equals the operating revenue requirement (Column B, Line 6) and capital revenue requirement (Column C, Line 6) allocated to the General cost causation component. The total General revenue requirement is fully reallocated to all other cost causation components on a pro rata basis (Column D, Lines 1-4). Note that the reallocation results in a shifting of costs between cost causation components but does not change the total rate revenue requirement.

4. Final Cost of Service Allocation (Column E): The final COS allocation to each cost causation component (Column E, Lines 1-5) equals the sum of Columns B-D. Note that the total COS allocation (Column E, Line 7) equals the total FY 2023-24 wastewater rate revenue requirement (from Table 5-18, Column D, Line 15).

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 117 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 117 Table 5-24: Wastewater Cost of Service Allocation (Test Year FY 2023-24)

A B C D E
Line
Cost Causation
Component
Operating Revenue
Requirement
Capital Revenue
Requirement
Reallocation of
General Costs
COS
Allocation
1 Flow $1,666,771 $523,691 $971,727 $3,162,189
2 BOD $497,518 $85,129 $258,472 $841,118
3 TSS $497,518 $85,129 $258,472 $841,118
4 Billing $301,882 $0 $133,920 $435,802
5 General $1,546,252 $76,340 -$1,622,592 $0
6 Total $4,509,941 $770,288 $0 $5,280,228

5.3.7. Mass Balance Analysis
The next step of the wastewater COS analysis is to attribute flow and strength loadings of the City’s wastewater treatment plant to various user classifications. This is necessary to allocate the Flow, BOD, and TSS cost causation components to each customer class for recovery by the proposed wastewater rates.

Table 5-25 shows Raftelis’ mass balance analysis of the WWTP based on plant influent data for FY 2022.

The result is attribution of flow and strength loadings to each customer class. Key inputs and assumptions include:
» Total FY 2022 wastewater flows entering the wastewater treatment plant (from City staff) » Measurements of FY 2022 strength concentration for BOD and SS (from City staff) » Detailed FY 2022 strength measurements for all non-residential customers (from City staff and industry standard loadings from the State Water Resources Control Board (SWRCB)) » FY 2022 water use associated with non-residential wastewater customers (from City staff) » Estimated system Influent and Infiltration (I&I) from non-connection discharges (e.g., manhole covers, pipe cracks, wet weather flow/stormwater, etc.)
» Residual plant influent is then attributable to Residential class wastewater generation. That is, the difference between net plant influent and estimated wastewater generation from all non-residential sources is Residential wastewater flow. After applying all residual wastewater generation to Residential customers, Raftelis estimates that the residential wastewater discharge factor for the City’s wastewater service area is approximately 45-50 gallons per capita per day, which is well within the bounds of industry norms based on the City’s climate, household density, and seasonality of residency.

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 118 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 118 Table 5-25: FY 2021-22 Mass Balance Analysis

A B C D E F G
Line Description
Flow (HCF/yr)
BOD (mg/L) TSS (mg/L) Flow (MG)
BOD (lbs/yr) TSS (lbs/yr)
1 Total Flow 227,005 375 320 169.8 531,394 453,456 2 Less: I&I 45,401 200 200 33.96 56,682 56,682 3 Net Flow 181,604 175 120 135.84 474,712 396,774 4 5 Commercial 6 Car Wash 582 20 150 0.44 73 545 7 Religious Places/Community Centers 1,774 130 110 1.33 1,440 1,218 8 Commercial 18,875 150 200 14.12 17,674 23,565 9 Groceries and Mortuaries 1,144 800 800 0.86 5,713 5,713 10 Laundry 4,699 150 110 3.51 4,400 3,226 11 Mixed Retail 2,398 240 600 1.79 3,592 8,981 12 Lodging with Food 12,061 500 600 9.02 37,645 45,174 13 Lodging without Food 8,861 310 120 6.63 17,148 6,638 14 Restaurant 8,688 1,000 600 6.50 54,234 32,540 15 Napa Valley College 589 130 100 0.44 478 368 16 Service Station 591 180 280 0.44 664 1,032 17 Winery Pre-Treated 1,555 200 200 1.16 1,942 1,942 18 Winery Non-Treated 1,074 2,800 400 0.80 18,765 2,681 19 Schools 7,517 130 100 5.62 6,100 4,693 20 Total Non-Residential 70,408 386 315 52.67 169,867 138,317 21 22 Net Residential Flow 111,196 439 372 83.17 304,845 258,457

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 119 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 119

5.3.8. Wastewater Unit Costs
The next step of the wastewater COS analysis is to develop unit costs for each cost causation component. This is necessary to allocate the revenue requirement to each customer class in subsequent steps of the COS analysis.

Table 5-26 shows the calculation of unit costs (Line 4) by dividing the COS allocation for each cost causation component in Line 1 (from Table 5-24) by the corresponding units of service in Line 2. Flow, BOD, and SS units of service are based on net plant influent estimates from the mass balance analysis (see Table 5-25).

Customer billing units of service equal the number of bi-monthly wastewater bills in FY 2024.

Table 5-26: Wastewater Unit Costs (Test Year FY 2024)

A B C D E
Line Description Flow BOD TSS Billing
1 Cost of Service $3,162,189 $841,118 $841,118 $435,802 2 Total Units of Service 191,997 586,750 491,763 10,957 3 Units (HCF) (lbs) (lbs) (bills)
4 Total Unit Cost of Service $16.47 $1.43 $1.71 $39.77

5.3.9. Wastewater Cost Allocation to Customer Classes
Table 5-27 shows the allocation of the rate revenue requirement by cost causation component to each customer class based on unit costs and units of service. The units of service shown for each customer class for the Flow, BOD, and SS cost causation components were previously determined as part of the mass balance analysis (see Table 5-25). Cost allocations to each customer class simply equal the unit cost (Table 5-26) multiplied by the corresponding units of service (Table 5-25).

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 120 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 120 Table 5-27: Wastewater Cost Allocation to Customer Classes (Test Year FY 2023-24)

A B C D E F
Line Customer Class Flow BOD TSS Billing Total COS
1 SFR $1,294,140 $397,577 $402,186 $362,836 $2,456,739 2 MFR $487,895 $125,065 $126,515 $24,274 $763,749 3 Mobile Homes $220,528 $74,969 $75,838 $485 $371,821 4 5 Commercial 6 Car Wash $9,593 $104 $933 $239 $10,868 7 Religious Places/Community Centers $29,216 $2,064 $2,083 $3,341 $36,704 8 Commercial $310,868 $25,335 $40,305 $33,172 $409,681 9 Groceries and Mortuaries $18,843 $8,190 $9,772 $716 $37,521 10 Laundry $77,389 $6,307 $5,519 $239 $89,453 11 Mixed Retail $39,494 $5,150 $15,362 $716 $60,721 12 Lodging with Food $198,649 $53,965 $77,267 $477 $330,358 13 Lodging without Food $145,946 $24,582 $11,354 $1,193 $183,075 14 Restaurant $143,091 $77,745 $55,657 $4,057 $280,550 15 Napa Valley College $9,707 $686 $629 $239 $11,260 16 Service Station $9,726 $951 $1,765 $716 $13,158 17 Winery Pre-Treated $25,614 $2,783 $3,321 $239 $31,957 18 Winery Non-Treated $17,682 $26,899 $4,585 $477 $49,644 19 Non-Residential Subtotal $1,035,816 $234,762 $228,552 $45,820 $1,544,951 20 21 Schools $123,810 $8,745 $8,026 $2,386 $142,968 22 23 Total $3,162,189 $841,118 $841,118 $435,802 $5,280,228

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 121 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 121

5.3.10. Wastewater Revenue Recovery within Customer Classes After determining the cost to serve in the preceding section, costs are then allocated among the primary user classes for purposes of determining costs to be recovered via fixed service charges and variable flow charges. Fixed charges for SFR customers are referred to as base charges and are the same for each connection. Fixed charges for all other customers vary by the size of the water meter serving the wastewater connection.

SFR Fixed / Variable Recovery Table 5-28 shows the proposed recovery of SFR costs between fixed and variable charges. All flow and billing costs are proposed to be recovered via the base charges and all strength-related costs (Residential BOD and Residential TSS) recovered via the flow charges. This apportionment maintains the existing fixed and variable rate structure and maintains a high degree of fixed revenue recovery. Table 5-28: Cost of Service Recovery – SFR Fixed & Variable Cost Components Total COS % Fixed Base Charge (Fixed) AWC Charge (Variable) Residential Flow $1,294,140 100% $1,294,140 $0
Residential BOD $397,577 0% $0 $397,577 Residential TSS $402,186 0% $0 $402,186 Residential Billing $362,836 100% $362,836 $0 Total $2,456,739 $1,656,976 $799,763
Table 5-29 shows the proposed recover of MFR costs between fixed and variable charges. All flow and billing costs are proposed to be recovered via the service charges and all strength-related costs recovered via the flow charges. This apportionment maintains the existing fixed and variable rate structure and maintains a high degree of fixed revenue recovery. Note that for MFR (including multi-family, multi-unit, and mobile home subclasses) it is City policy to recovery the fixed charges from meter-based service charges (like Commercial users) and variable charges from AWC charges (like SFR customers). This policy is shown in the subsequent tables where MFR fixed charges are added to the derivation of meter-based charges and MFR variable charges are added to the derivation of AWC charges.

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 122 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 122 Table 5-29: Cost of Service Recovery – MFR6 Fixed & Variable Cost Components Total COS % Fixed Service Charge (Fixed) AWC Charge (Variable) Residential Flow $708,423 100% $708,423 $0
Residential BOD $200,034 0% $0 $200,034 Residential TSS $202,353 0% $0 $202,353 Residential Billing $24,759 100% $24,759 $0 Total $1,135,570 $733,182 $402,388
Table 5-30 shows the proposed recovery of Non-Residential (non-SFR & MFR) costs between fixed and variable charges. 70 percent of flow costs and all billing costs are proposed to be recovered via the meter-based service charges. All strength-related costs are recovered via the flow charges based on water use for non-residential users. This apportionment maintains the existing rate structure and a similar degree of fixed revenues, while minimizing the impacts between the existing rate components. Table 5-30: Cost of Service Recovery – Non-Residential Fixed & Variable Cost Components Total COS % Fixed Service Charge (Fixed) Use Charge (Variable) Residential Flow $1,159,627 70% $811,739 $347,888 Residential BOD $243,507 0% $0 $243,507 Residential TSS $236,578 0% $0 $236,578 Residential Billing $48,207 100% $48,207 $0 Total $1,687,919 $859,945 $827,974
Table 5-31 shows the summation of all costs to be recovered based on AWC. SFR and MFR costs are summed together to determine the total costs.

This total becomes the numerator in deriving the AWC charges in the next sub-section. 6 MFR includes all connections designated as multi-family, multi-unit, and mobile homes.

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 123 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 123 Table 5-31: Average Winter Consumption Costs – Residential Cost Components AWC Costs SFR AWC Costs MFR Total AWC Costs Residential Flow $0 $0 $0 Residential BOD $397,577 $200,034 $597,611 Residential TSS $402,186 $202,353 $604,540 Residential Billing $0 $0 $0 Total $799,763 $402,388 $1,202,151
Table 5-32 shows the calculation of the Non-Residential service charges, which include all non-residential user classes as well as MFR fixed components. The fixed portion under the Flow row of Table 5-29 and Table 5-30 are summed together and become the total Service Component (Meter) in Table 5-32. Similarly, the fixed portion under the Billing row in Table 5-29 and Table 5-30 are summed together and become the total Service Component (Customer) in Table 5-32. Each component is divided by its respective denominator (equivalent meters and customer accounts) to yield the bi-monthly charge for each. Table 5-32: Non-Residential Service Charge Calculations7 Service Component (Meter)
Service Component (Customer)
Total Service Charge Cost $1,520,162 $72,966 Non-Residential Equivalent Meters 1,199 311 Bi-Monthly Charge per Equivalent Meter $211.37 $39.13 Monthly Charge per Equivalent Meter $105.69 $19.57 Table 5-33 shows the calculation of the unit rates of flow for Non-Residential user classes. Each respective unit of service (Flow, BOD, TSS) is summed across all user groups and divided into the total revenue required from each (from the Use Charge column of Table 5-30). This yields the unit cost of each component which is utilized in the following sub-section to derive user rates. 7 Per the City’s policy, MFR connections pay fixed charges like Non-Residential connections, by water meter size

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 124 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 124 Table 5-33: Non-Residential Flow Unit Rate Calculations Non-Residential User Classes Flow (HCF) BOD (lbs) TSS (lbs) Billing (Accounts) Car Wash 582 73 545
Religious Places/Community Centers 1,774 1,440 1,218 Commercial 18,875 17,674 23,565 Groceries and Mortuaries 1,144 5,713 5,713 Laundry 4,699 4,400 3,226 Mixed Retail 2,398 3,592 8,981 Lodging with Food 12,061 37,645 45,174 Lodging without Food 8,861 17,148 6,638 Restaurant 8,688 54,234 32,540 Napa Valley College 589 478 368 Service Station 591 664 1,032 Winery Pre-Treated 1,555 1,942 1,942 Winery Non-Treated 1,074 18,765 2,681 Schools (Per Student) 7,517 6,100 4,693 Total 70,408 169,867 138,317 - Total Revenue Required from Flow $347,888 $243,507 $236,578 $0 Unit Costs $4.94 $1.43 $1.71 #N/A Table 5-34 summarizes the final cost of service and respective cost recovery component for the three primary user classes: SFR, MFR, and NonResidential.

Table 5-34: Wastewater Cost of Service, by User Class
User Class COS Fixed Charges COS Variable Charges Total Cost of Service SFR $1,656,976 $799,763 $2,456,739 MFR $733,182 $402,388 $1,135,570 Non-Residential $859,945 $827,974 $1,687,919 Total $3,250,104 $2,030,125 $5,280,228

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 125 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 125

5.4. Proposed Wastewater Rates
This section shows detailed calculations of proposed wastewater rates through FY 2028. All proposed rates are first calculated directly from the results of the COS analysis (Section 5.3) for FY 2024.

5.4.1. Proposed Wastewater Rates (Test Year FY 2023-24) Table 5-35, Table 5-36, and Table 5-37 show the calculation of COS wastewater rates for the test year. The revenue requirement associated with each charge is from customer class cost allocations in the preceding subsections.

Table 5-35 shows the calculation of Residential wastewater rates. For Residential customers, the revenue requirement (Column B) is divided by the units of service (Column C) to calculate the cost of service rate in Column D. Columns E-F show the comparison to current rates. Recall that the fixed (base) charge includes only SFR connections whereas the variable (AWC) charge includes both SFR and MFR costs and units of service.

Table 5-36 shows the calculation of Non-Residential fixed charges. For the non-residential fixed charges, the meter component is calculated by multiplying the meter unit charge by the respective capacity; and the customer charge is uniform. The sum of the two yields the proposed bi-monthly charges in Column E (COS Rate).

Table 5-37 shows the calculation of Non-Residential variable charges. For the non-residential variable rate, the unit costs for Flow, BOD, and TSS (Table 5-33) are multiplied by the units for each class (Columns B-D), and then summed, to yield the total cost in Column E. The COS rate (Column F) is calculated by dividing the total COS (Column E) by the units of water usage for each customer class (Column B). Columns G-I shows the comparison to current rates.

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 126 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 126 Table 5-35: Proposed Residential Wastewater Rate Calculation (Test Year FY 2024)8

A B C D E F G
Line Description
Revenue Requirement
Units of Service COS Rate
Current Rate
Difference ($)
Difference (%)
1 Residential Fixed + Variable
2 Residential Fixed (per bill) $1,656,976 1,541 $179.26 $127.35 $51.91 41% 3 Residential Variable (per HCF of AWC) $1,202,151 121,589 $9.89 $5.58 $4.31 77% Table 5-36: Proposed Non-Residential Fixed Wastewater Rate Calculation (Test Year FY 2024)9

A B C D E F G H
Line Description
AWWA Ratio
Meter Charge
Customer Charge COS Rate
Current Rate
Difference ($)
Difference (%)
1 5/8" 1.00 $422.75 $39.13 $250.51 $176.68 $73.83 42% 2 1" 2.50 $1,056.86 $39.13 $567.57 $441.72 $125.85 28% 3 1.5" 5.00 $2,113.73 $39.13 $1,096.00 $883.42 $212.58 24% 4 2" 8.00 $3,381.96 $39.13 $1,730.12 $1,413.48 $316.64 22% 5 3" 17.50 $7,398.04 $39.13 $3,738.16 $2,826.98 $911.18 32% 6 4" 31.50 $13,316.47 $39.13 $6,697.37 $4,417.14 $2,280.23 52% 7 6" 70.00 $29,592.16 $39.13 $14,835.22 $8,834.28 $6,000.94 68% 8 Includes MFR in the basis for calculating rates per HCF of AWC 9 Includes MFR in the basis for calculating fixed charges

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 127 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 127 Table 5-37: Proposed Non-Residential Variable Wastewater Rate Calculation (Test Year FY 2024)

A B C D E F G H I
Line Description Annual Use (HCF) BOD (lbs) TSS (lbs) Total COS COS Rate ($/HCF)
Current Rate ($/HCF) $ Change % Change
1 Car Wash 582 73 545 $3,914.85 $6.73 $3.86 $2.87 74% 2 Religious Places/Community Centers 1,774 1,440 1,218 $12,911.71 $7.28 $4.29 $2.99 70% 3 Commercial 18,875 17,674 23,565 $158,901.14 $8.42 $5.07 $3.35 66% 4 Groceries and Mortuaries 1,144 5,713 5,713 $23,615.24 $20.65 $13.62 $7.03 52% 5 Laundry 4,699 4,400 3,226 $35,042.26 $7.46 $4.42 $3.04 69% 6 Mixed Retail 2,398 3,592 8,981 $32,359.62 $13.50 $8.52 $4.98 58% 7 Lodging with Food 12,061 37,645 45,174 $190,827.01 $15.83 $10.22 $5.61 55% 8 Lodging without Food 8,861 17,148 6,638 $79,719.12 $9.00 $5.54 $3.46 62% 9 Restaurant 8,688 54,234 32,540 $176,329.37 $20.30 $13.50 $6.80 50% 10 Napa Valley College 589 478 368 $4,226.96 $7.18 $4.22 $2.96 70% 11 Service Station 591 664 1,032 $5,634.37 $9.55 $5.83 $3.72 64% 12 Winery Pre-Treated 1,555 1,942 1,942 $13,788.57 $8.87 $5.39 $3.48 65% 13 Winery Non-Treated 1,074 18,765 2,681 $36,789.04 $34.27 $23.75 $10.52 44% 14 Schools 7,517 6,100 4,693 $53,914.44 $7.17 $2.10 $5.07 242%

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 128 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 128

6. Customer Bill Impacts

6.1. Bi-Monthly Water Bill Impacts
Figure 6-1 shows sample bi-monthly water bills for SFR customers with a 3/4-inch water meter at varying levels of water use under both the current rates and rate structure and the proposed FY 2024 rates and rate structure. The five water use levels shown are based on account-level single family residential water billing data for FY 2022 and ranges from very low use to peak summer use of a typical SFR customer in St. Helena. The annual average use in the service area is 16 HCF bi-monthly.

Figure 6-1: Single Family Residential Bi-Monthly Water Bill Impacts (FY 2024)

6.2. Bi-Monthly Wastewater Bill Impacts
Figure 6-2 shows sample bi-monthly wastewater bills for SFR customers at varying levels of AWC under both current rates and proposed FY 2024 rates. Bi-monthly water use levels are based on account-level SFR billing data for FY 2022. The average AWC within the service area is 8 HCF.

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 129 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 129 Figure 6-2: Single Family Residential Bi-Monthly Wastewater Bill Impacts (FY 2024) Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 130 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 130

APPENDIX A:

Water Proposed Financial
Plan 10-Year Pro Forma
Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 131 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 131

A B C D E F G H I J
Line Description FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 1 Beginning Balances $2,102,348 $3,635,571 $5,574,766 $6,733,340 $8,525,619 $10,286,438 $11,478,501 $12,783,108 $13,942,281 2 3 Source of Funds
4 Revenue from Existing Rates $7,230,857 $7,255,117 $7,279,521 $7,304,070 $7,328,764 $7,353,604 $7,378,592 $7,403,728 $7,429,013 5 Total Revenue Adjustments $2,024,640 $2,774,357 $3,588,746 $4,473,241 $5,433,735 $5,836,325 $6,253,199 $6,684,849 $7,131,780 6 Other Operating Revenue $34,150 $34,150 $34,150 $34,150 $34,150 $34,150 $34,150 $34,150 $34,150 7 Investment Income $25,358 $42,293 $57,362 $71,696 $92,637 $92,299 $104,363 $110,548 $113,951 8 Water Capital Revenues $0 $0 $0 $0 $0 $0 $0 $0 $0 9 Water Impact Fee Revenues $35,279 $35,619 $35,962 $36,309 $36,659 $37,013 $37,370 $37,731 $38,095 10 Bond Proceeds CIP Funding $3,019,490 $7,160,513 $11,502,580 $9,885,943 $1,931,474 $13,253,285 $5,417,278 $5,329,437 $0 11 SRF Proceeds $0 $0 $0 $0 $0 $0 $0 $0 $0 12 Go Bond Proceeds $302,400 $315,706 $327,702 $338,189 $349,011 $0 $0 $0 $0 13 Interfund CIP Funding $0 $0 $0 $0 $0 $0 $0 $0 $0 14 General Fund Loan (+Funds/-Payment) $0 $0 $0 $0 $0 $0 $0 $0 $0 15 Total Source of Funds $12,672,174 $17,617,755 $22,826,023 $22,143,598 $15,206,429 $26,606,675 $19,224,952 $19,600,443 $14,746,989 16 17 Use of Funds 18 Operating Expenses $6,251,002 $6,636,549 $6,926,137 $7,220,845 $7,529,145 $7,851,703 $8,189,223 $8,542,442 $8,912,137 19 One Time Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 20 Water Impact Fund Expenses $1,296 $1,296 $1,296 $1,296 $1,296 $1,296 $1,296 $1,296 $1,296 21 Rate Funded $0 $0 $0 $0 $726,366 $0 $0 $261,193 $271,270 22 Bond Funded $3,019,490 $7,160,513 $11,502,580 $9,885,943 $1,931,474 $13,253,285 $5,417,278 $5,329,437 $0 23 Interfund Loan Funded $0 $0 $0 $0 $0 $0 $0 $0 $0 24 Existing Debt Service $951,414 $951,147 $952,857 $948,168 $951,441 $949,510 $953,730 $948,082 $949,363 25 Proposed Debt Service $613,350 $613,350 $1,956,877 $1,956,877 $1,956,877 $3,358,819 $3,358,819 $3,358,819 $3,358,81926 Water Capital Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 27 SRF CIP $0 $0 $0 $0 $0 $0 $0 $0 $0 28 GO Bond $302,400 $315,706 $327,702 $338,189 $349,011 $0 $0 $0 $0 29 Total Use of Funds $11,138,951 $15,678,560 $21,667,449 $20,351,318 $13,445,610 $25,414,612 $17,920,346 $18,441,270 $13,492,885 30 31 Ending Balance $3,635,571 $5,574,766 $6,733,340 $8,525,619 $10,286,438 $11,478,501 $12,783,108 $13,942,281 $15,196,384

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 132 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 132

APPENDIX A:

Wastewater Proposed
Financial Plan 10-Year
Pro Forma
Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 133 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 133

A B C D E F G H I J
Line Description FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 1 Beginning Balances $250,969 $1,622,140 $2,386,467 $2,599,061 $2,361,778 $2,231,633 $1,820,786 $2,279,079 $2,187,303 2 3 Sources of Funds
4 Revenue from Existing Rates $3,520,152 $3,533,803 $3,547,542 $3,561,369 $3,575,285 $3,589,290 $3,603,386 $3,617,573 $3,631,851 5 Total Revenue Adjustments $1,760,076 $1,978,930 $2,207,990 $2,447,714 $2,698,581 $2,898,106 $3,104,874 $3,319,138 $3,541,161 6 Other Operating Revenue $2,900 $2,900 $2,900 $2,900 $2,900 $2,900 $2,900 $2,900 $2,900 7 Investment Income $38,798 $46,107 $34,477 $35,916 $37,354 $38,540 $31,020 $41,018 $32,990 8 WW Capital Revenues $0 $0 $0 $0 $0 $0 $0 $0 $0 9 WW Impact Fee Revenues $16,918 $16,918 $16,918 $16,918 $16,918 $16,918 $16,918 $16,918 $16,918 10 Bond Proceeds CIP Funding $2,462,040 $537,960 $0 $0 $0 $0 $0 $0 $0 11 SRF Proceeds $0 $0 $0 $0 $0 $0 $0 $0 $0 12 USDA Proceeds $0 $0 $0 $0 $0 $0 $0 $0 $0 13 Go Bond Proceeds $493,500 $1,563,181 $930,766 $291,218 $300,537 $0 $0 $0 $0 14 Interfund Proceeds $0 $0 $0 $0 $0 $0 $0 $0 $0 15 General Fund Loan (+Funds/-Payment) $1,000,000 $0 $0 $0 $0 ($873,610) $0 ($1,000,000) $0 16 Total Source of Funds $9,294,385 $7,679,799 $6,740,593 $6,356,035 $6,631,576 $5,672,144 $6,759,098 $5,997,547 $7,225,820 17 18 Use of Funds
19 Operating Expenses $3,596,090 $3,763,992 $3,931,349 $4,097,580 $4,271,460 $4,453,368 $4,643,704 $4,842,887 $5,051,360 20 Temp/Part Time (WWTP temp operators) $600,000 $0 $0 $0 $0 $0 $0 $0 $0 21 WW Impact Fund Expenses $1,296 $1,296 $1,296 $1,296 $1,296 $1,296 $1,296 $1,296 $1,296 22 WW Capital Fund Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 23 Unrestricted Capital Project Costs $2,462,040 $816,231 $892,762 $1,432,136 $1,417,372 $857,739 $885,187 $475,970 $491,201 24 Existing DS $252,810 $253,295 $254,348 $253,611 $253,578 $253,110 $253,141 $251,692 $114,044 25 Proposed DS $517,478 $517,478 $517,478 $517,478 $517,478 $517,478 $517,478 $517,478 $517,478 26 SRF CIP $0 $0 $0 $0 $0 $0 $0 $0 $0 27 GO Bond $493,500 $1,563,181 $930,766 $291,218 $300,537 $0 $0 $0 $0 28 Total Use of Funds $7,923,213 $6,915,473 $6,527,998 $6,593,318 $6,761,721 $6,082,991 $6,300,805 $6,089,322 $6,175,378 29 30 Ending Balance $1,622,140 $2,386,467 $2,599,061 $2,361,778 $2,231,633 $1,820,786 $2,279,079 $2,187,303 $3,237,745

Agenda Item #11.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 134 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 134 Agenda Item #11.2.

Proposed Water and Sewer
Rate Adjustments and Rate
Structure Changes
MAY 2023
Dear Neighbor,
After extensive public input, the City of St. Helena is proposing water and wastewater rate structure changes and increases. These increases will pay for the required investments in critical equipment and infrastructure. You are receiving this notice in compliance with Proposition 218, which requires the City to inform property owners and water and wastewater customers that proposed rate increases are being considered. Proposed rate adjustments are based on a Cost of Service Study conducted by City staff and financial experts, with input and recommendations from the City’s Water and Wastewater Rate Study Advisory Committee (RSAC). The rate recommendations were presented to St. Helena’s City Council on March 14, 2023. The Cost of Service Study and information regarding this public process is available at https://bit.ly/3HKQnB4.

My thanks to all who participated in the process to date. From members of City Council and the RSAC to individuals who provided input at open house events and public meetings – all feedback was extremely valuable and helped us make an inclusive plan that will help ensure utility rates align with St. Helena’s values and provide the necessary funding for stable and well-functioning water and wastewater systems.

Sincerely,
Anil Comelo
City Manager

NOTICE OF PUBLIC HEARING
June 27, 2023 / 6 p.m.

St. Helena City Council Chambers
Vintage Hall Board Room – Second Floor
465 Main Street, St. Helena, CA
Scan the QR code or visit to learn more
https://sthelena.civicweb.net
Agenda Item #11.2.

St. Helena Needs Responsible Investment
Other Important Factors
Beyond funding critical infrastructure, the rate adjustments the City is considering will counter inflation and other rising costs across the board, from the cost of purchasing and producing water to funding operations, maintenance, and environmental and regulatory compliance. Per state law, revenues generated from water and wastewater rate increases must only be used to fund the actual costs of water and wastewater services - including the cost of debt to finance capital improvement projects.

PROJECT CATEGORY PROJECTS BENEFIT
Water System • Bell Canyon Intake Tower
• Napa Intertie Pipeline
• Water Treatment Plant Transmission
Main
• Water Main Annual Replacement
Program
Critical pieces of infrastructure that
ensure a reliable level-of-service
for current and future St. Helena
customers
Wastewater System • Treatment Plant Modernization
• Sewer Pipeline Replacement
• Lift station modernization
Ensure continued reliable levelof-service while complying with environmental permitting
requirements
Smarter Data • Smart Water Meters Customer access to real-time water use monitoring
Review the entire 10-year Capital Improvement Program on the City’s Website More than $55 Million Identified to Fund Critical Infrastructure The City of St. Helena goes to great lengths to provide residents, businesses, and visitors with safe, high quality water service that is essential to your everyday life. Everyone and everything rely on water and wastewater systems that work 24/7. These systems provide sanitation, fire protection, and water, making modern life possible. Properly maintaining and upgrading these systems ensures we protect and efficiently use our natural resources.

In addition, there are impacts of climate change and cyclical drought. Extreme temperatures, unpredictable rainfall, and wildfires make our community vulnerable to water supply issues. Because much of our drinking water comes from irregular regional rainfall, we must count every drop and make every drop count.

Much of California’s water infrastructure is more than 100 years old and in need of replacements and upgrades. Like many other utilities, St. Helena's water infrastructure has served beyond its useful life. Modernizing our aging infrastructure now can help avoid costly repairs, service interruptions, and wasted water in the future. These critical projects are primarily funded by rates and will help the City bring each system up to modern standards to continue delivering quality, reliable service for years to come.

Agenda Item #11.2.

Citizen Involvement, Collaboration, and Transparency
As part of the public process, the City convened a Water and Wastewater Rate Study Advisory Committee to help guide the rates study. The committee, composed of seven members representing different stakeholder groups in the community, came together for 11 public meetings over the past year. They studied the issues closely to ensure the recommendations they made to City Council aligned closely with the community’s values. The committee reviewed several rate alternatives brought forward by the financial consultant and settled on an improved water rates structure designed to achieve three goals:

Promote conservation and
water efficiency, so that
customers who use the most
water have an economic
incentive to conserve.

Deliver equity, so all customers
pay their fair share.

Ensure the utilities’ financial
stability, so infrastructure can
be enhanced and serve the
community for years to come.

Participants gather at the March 6, 2023, Open House
hosted by the Citizen-led Rate Study Advisory Committee.

Agenda Item #11.2.

Some of the key benefits of tiered water rates include:

Encouraging water conservation: By increasing the price per unit of water consumed for higher tiers, tiered water rates provide an economic incentive for consumers to reduce their water usage, especially for non-essential purposes such as outdoor irrigation or discretionary use by businesses. This can help promote more sustainable and responsible use of water resources, which is especially important in regions facing water scarcity and drought.

Promoting fairness and equity: Tiered water rates can help ensure that households and businesses that use more water pay their fair share of the cost of providing water services, while also protecting vulnerable populations from high prices for essential water needs. By charging higher prices for luxury uses of water, such as watering lawns or filling swimming pools, tiered water rates can also discourage wasteful consumption and reduce the burden on the water system.

Tiered water rates are a powerful tool for promoting responsible water use, reducing water waste and promoting conservation, and supporting the investments needed to maintain a reliable and sustainable water system. This approach will also ensure that the City’s costs are recovered from those customers driving the City to incur such costs.

What are the Proposed Water Rate Structure Changes?
City Council is considering adopting tiered water rates, which are a pricing system used by municipal water utilities to charge for the volume of water used by households, businesses, and other water consumers. The system involves dividing the total amount of water used by a consumer into different pricing tiers, each with a different price per unit of water consumed.

The first tier has a lower price per unit of water and accounts for essential daily needs such as cooking, bathing, and basic sanitation. As consumption levels increase beyond this initial tier, the price per unit of water consumed increases, with subsequent tiers reflecting the increased cost of supplying, treating, and distributing larger volumes of water.

Will the Way I’m Charged for Wastewater Service Change? No. If approved by City Council, wastewater rates themselves will increase, but the way the City charges for the service will not.

FAQs
Agenda Item #11.2.

How Will the Proposed Water Rate Changes Affect my Bill? Beginning in September 2023, the typical single-family household with a 5/8” meter using 16 Hundred Cubic Feet (11,968 gallons) per bi-monthly billing cycle will see an average decrease of 17 cents on their bi-monthly bill for the next 10 months, with an 8% increase each July 1 after that for the next five years:

Single Family Impacts (5/8” meter, 16HCF bi-monthly usage) Scenarios are based on the most common 5/8” meter size and includes the volumetric charge. August 2022 entry uses current off-peak (winter) rates. The new rate structure under consideration does away with seasonal rates.

One hundred cubic feet (HCF) = 748 gallons.
$250
$275
$300
$325
$350
$375
$400
9/2023 7/2024 7/2025 7/2026 7/2027
$261.86 $261.86 $261.69
$282.63
$305.24
$329.65
$261.69
9/2023 Rate
7/2024 Rate
7/2025 Rate
7/2026 Rate
7/2027 Rate
-$0.17
$282.63
$20.94
$305.24
$22.61
$329.65
$24.42
$356.03
$26.37
Current Bimonthly Water Bill
Difference From Prior Year (-)
Difference From Prior Year (+)
8/2022
Agenda Item #11.2.

Starting September 1, 2023
The City’s proposed water rates include a bi-monthly fixed charge, which fluctuates based on the size of the meter serving the property and recovers a portion of the City’s fixed costs; and, a volumetric charge for all classes, which recovers a portion of the City’s fixed costs and variable costs relating to water supply. The volumetric charge is tiered, meaning the rate increases based on total usage. Tier 1 includes water use up to 11 hundred cubic feet (HCF); tier 2 includes water from 12-15 HCF, and tier 3 includes any water use of 16 HCF or greater in any billing cycle. The tier widths correspond to the availability of the City’s water supply sources in normal conditions.

Proposed Water Rates

DESCRIPTION CURRENT
RATES

PROPOSED

STARTING
9/1/23

PROPOSED

STARTING
7/1/24

PROPOSED

STARTING
7/1/25

PROPOSED

STARTING
7/1/26

PROPOSED

STARTING
7/1/27
Bi-Monthly Fixed Charges
Meter Size
5/8" $139.78 $135.50 $146.34 $158.05 $170.70 $184.36
3/4" $139.78 $135.50 $146.34 $158.05 $170.70 $184.36
SFR 1" $139.78 $135.50 $146.34 $158.05 $170.70 $184.36
1" $256.44 $288.70 $311.80 $336.75 $363.69 $392.79
1 1/2" $451.28 $544.05 $587.58 $634.59 $685.36 $740.19
2" $648.00 $850.46 $918.50 $991.98 $1,071.34 $1,157.05
3" $1,309.44 $1,820.76 $1,966.43 $2,123.75 $2,293.65 $2,477.15 4" $2,023.96 $3,250.68 $3,510.74 $3,791.60 $4,094.93 $4,422.53 6" $3,963.26 $7,182.95 $7,757.59 $8,378.20 $9,048.46 $9,772.34 Volumetric Charges
All Classes
Tier 1 $6.50 $5.99 $6.47 $6.99 $7.55 $8.16
Tier 2 $7.23 $12.06 $13.03 $14.08 $15.21 $16.43
Tier 3 $12.91 $13.95 $15.07 $16.28 $17.59
Agenda Item #11.2.

How Will the Proposed Wastewater Rate Changes Affect my Bill? Beginning in September 2023, the typical single-family household with a 5/8” meter using an Average Winter Consumption of 8 Hundred Cubic Feet (5,984 gallons) per bi-monthly billing cycle will see a 50% increase on their bi-monthly bill for the next 10 months, with a 4% increase each July 1 after that for the next five years:
8/2022
Single Family Impacts (5/8” meter, 8HCF Average Winter Consumption) *The typical home in St. Helena has an Average Winter Consumption of 8 HCF bi-monthly. $250
$225
$200
$275
$300
$325
$350
$375
$400
9/2023 7/2024 7/2025 7/2026 7/2027
$216.63
$337.50
$337.50
$216.63
$351.00
$351.00
$13.50
$120.87
$365.04
$365.04
$14.04
$379.64
$379.64
$14.60
$394.83
$15.19
Current Bimonthly Water Bill
Difference From Prior Year (+)
9/2023 Rate
7/2024 Rate
7/2025 Rate
7/2026 Rate
7/2027 Rate
Agenda Item #11.2.

The City’s wastewater rates for residential customers include a base charge, which is a fixed charge imposed regardless of how much wastewater is discharged into the wastewater system, and a use charge. The use charge is calculated based on Average Winter Consumption, or AWC. The rates for non-residential customers are structured the same way, except that the fixed charge varies by the size of the meter and the use charge fluctuates based on the type of non-residential customer served by the City, to account for variation in both flows and strength (quality) of wastewater generated.

Proposed Wastewater Rates
Agenda Item #11.2.

BI-MONTHLY BASE

CHARGES

CURRENT
RATES

PROPOSED

STARTING
9/1/23

PROPOSED

STARTING
7/1/24

PROPOSED

STARTING
7/1/25

PROPOSED

STARTING
7/1/26

PROPOSED

STARTING
7/1/27
Residential
Base Charge $127.35 $179.26 $186.44 $193.90 $201.66 $209.73 Use Charge (AWC) $5.58 $9.89 $10.29 $10.71 $11.14 $11.59 Non-Residential
Base Charge
5/8" $176.68 $250.51 $260.54 $270.97 $281.81 $293.09
1" $441.72 $567.57 $590.28 $613.90 $638.46 $664.00

1.5" $883.42 $1,096.00 $1,139.84 $1,185.44 $1,232.86 $1,282.18 2" $1,413.48 $1,730.12 $1,799.33 $1,871.31 $1,946.17 $2,024.02 3" $2,826.98 $3,738.16 $3,887.69 $4,043.20 $4,204.93 $4,373.13 4" $4,417.14 $6,697.37 $6,965.27 $7,243.89 $7,533.65 $7,835.00 6" $8,834.28 $14,835.22 $15,428.63 $16,045.78 $16,687.62 $17,355.13 Use Charge (per HCF)
Car Wash $3.86 $6.73 $7.00 $7.28 $7.58 $7.89
Religious Places/
Community Centers
$4.29 $7.28 $7.58 $7.89 $8.21 $8.54
Commercial $5.07 $8.42 $8.76 $9.12 $9.49 $9.87
Groceries and
Mortuaries
$13.62 $20.65 $21.48 $22.34 $23.24 $24.17
Laundry $4.42 $7.46 $7.76 $8.08 $8.41 $8.75
Mixed Retail $8.52 $13.50 $14.04 $14.61 $15.20 $15.81
Lodging with Food $10.22 $15.83 $16.47 $17.13 $17.82 $18.54 Lodging without Food $5.54 $9.00 $9.36 $9.74 $10.13 $10.54 Restaurant $13.50 $20.30 $21.12 $21.97 $22.85 $23.77
Napa Valley College $4.22 $7.18 $7.47 $7.77 $8.09 $8.42 Service Station $5.83 $9.55 $9.94 $10.34 $10.76 $11.20
Winery Pre-Treated $5.39 $8.87 $9.23 $9.60 $9.99 $10.39 Winery Non-Treated $23.75 $34.27 $35.65 $37.08 $38.57 $40.12 Schools $2.10 $7.18 $7.47 $7.77 $8.09 $8.42
Agenda Item #11.2.

The City of St. Helena relies heavily on water sales to fund a complex water system that procures, treats, and delivers safe, reliable water to your home or business. When customers are asked to use less, such as during droughts, it leads to lower revenues. Lower revenues are a challenge for the City, as many of the costs associated with operating and maintaining a water system are fixed. Drought rates, or surcharges, work to offset reduced revenues when the City is in a declared water shortage emergency.

In the event that the City Council implements drought stages, temporary drought surcharges may be assessed in addition to water use rates. These would ensure the water utility is financially whole and avoid further increasing future rates or having to forego critical capital reinvestment.

The following schedule shows proposed drought surcharges that would be adopted with the water and wastewater rates. While the surcharges must be adopted at the same time as other rates, they will only be implemented if the City Council declares a water shortage emergency.

DROUGHT SURCHARGES PHASE I PHASE II PHASE III
FY 2024
Tier 1 $0.89 $2.99 $5.97
Tier 2 $1.79 $6.01 $12.02
Tier 3 $1.92 $6.43 $12.87
FY 2025
Tier 1 $0.97 $3.23 $6.45
Tier 2 $1.94 $6.50 $12.99
Tier 3 $2.08 $6.95 $13.90
FY 2026
Tier 1 $1.05 $3.49 $6.97
Tier 2 $2.10 $7.02 $14.03
Tier 3 $2.25 $7.51 $15.02
FY 2027
Tier 1 $1.14 $3.77 $7.53
Tier 2 $2.27 $7.59 $15.16
Tier 3 $2.43 $8.12 $16.23
FY 2028
Tier 1 $1.24 $4.08 $8.14
Tier 2 $2.46 $8.20 $16.38
Tier 3 $2.63 $8.77 $17.53
Drought Rates
Agenda Item #11.2.

FIRELINE SIZE CURRENT
RATES

PROPOSED

STARTING
9/1/23

PROPOSED

STARTING
7/1/24

PROPOSED

STARTING
7/1/25

PROPOSED

STARTING
7/1/26

PROPOSED

STARTING
7/1/27
Meter Size
4" $26.66 $116.78 $126.13 $136.23 $147.13 $158.91
6" $77.46 $285.71 $308.57 $333.26 $359.93 $388.73
8" $165.06 $586.82 $633.77 $684.48 $739.24 $798.38
Private Fireline Rates
How do I Protest the Proposed Increases?
You have the right to protest the proposed rate increases. To be valid each written protest must (1) state the name of the identified property owner or ratepayer; (2) provide the location of the identified property (by street address or assessor’s parcel number); (3) include an original signature of the submitting property owner or ratepayer.

Written protests may be submitted by mail or in person prior to or during the public hearing or prior to the conclusion of the public hearing on June 27, 2023, to: St. Helena City Clerk’s Office, 1088 College Avenue, St. Helena, CA 94574.

Only one written protest per affected property will be counted. Telephone, e-mail, and fax protests will not be accepted. For your convenience, you may opt to use the enclosed protest form.

Written protests must be received by the City Clerk prior to the conclusion of the public hearing. The Clerk will not accept or consider any protest received after the conclusion of the public hearing.

At the public hearing, the City Council will accept and consider all written protests and hear all oral comments on the Proposed Changes. Oral comments will not be counted as protests unless accompanied by a written protest. At the conclusion of the public hearing, the City Council will consider adoption of the proposed changes as follows: (1) If less than a majority of property owners or ratepayers file a protest, the City Council will consider increasing water rates, effective September 1, 2023. (2) If a majority of affected property owners or ratepayers protest the increase before the conclusion of a required public hearing, the City is prohibited by law from increasing water rates.

Please note that there is a 120-day statute of limitations from the effective date of the resolution or ordinance adopting the rates to challenge any of the rates described herein.

For more information, please to the City of St. Helena’s Water and Wastewater Rate Study website at
https://bit.ly/3HKQnB4
Agenda Item #11.2.

City Clerk’s Office
1088 College Avenue
St. Helena, CA 94574
The Public Hearing before City Council will cover
proposed rate increases and rate structure
changes for water and wastewater services. If
adopted, the proposed rate adjustments would
become effective September 1, 2023. All interested
persons are invited to appear at the Public Hearing
on June 27, 2023 to give oral or written testimony,
as well as written protests, regarding proposed
rates adjustments. Details on the written protest
process can be found in this Notice.

Approximately every five years, the City evaluates
water and wastewater rates to ensure sufficient
revenue is available to provide reliable service.

Results of the Cost of Service Study recommended
changes to water and wastewater rate structures
and showed that rate increases for water and
wastewater service are needed over the next five
years to continue to operate and maintain the
systems, repair and replace aging infrastructure,
secure water supplies, improve water quality, meet
legal and environmental regulations, and keep
up with increases in costs. Details regarding the
proposed rate structure changes and increases are
detailed on the following pages and in the Cost of
Service Study available at https://bit.ly/3HKQnB4.

How To Join
For City Council meeting and agenda
information, and how to participate in person or
virtually, go to https://sthelena.civicweb.net
NOTICE

OF PUBLIC

HEARING
Scan the QR code or visit to learn more
https://sthelena.civicweb.net/
June 27, 2023 / 6 p.m.

St. Helena City Council Chambers
Vintage Hall Board Room – Second Floor
465 Main Street, St. Helena, CA
Agenda Item #11.2.

Ajustes de tarifas de agua potable
y aguas residuales propuestos y
cambios en la estructura de tarifas
MAYO 2023
Estimado vecino,
Después de un amplio aporte público, la ciudad de St. Helena propone cambios y aumentos en la estructura de tarifas de agua potable y aguas residuales. Estos aumentos pagarán las inversiones requeridas en equipos e infraestructura críticos. Está recibiendo este aviso en conformidad de la Proposición 218, que requiere que la Ciudad informe a los propietarios y clientes de agua potable y aguas residuales que se están considerando los aumentos de tarifas propuestos. Los ajustes de tarifas propuestos se basan en un Estudio de Costo de Servicio realizado por personal de la Ciudad y expertos financieros, con aportes y recomendaciones del Comité Asesor de Estudio de Tarifas de Agua Potable y Aguas Residuales de la Ciudad (RSAC). Las recomendaciones de tarifas se presentaron al Concejo Municipal de St. Helena el 14 de Marzo de 2023. El Estudio de costo del servicio y la información sobre este proceso público están disponibles en https://bit.ly/3HKQnB4.

Mi agradecimiento a todos los que participaron en el proceso hasta la fecha. Desde los miembros del Concejo Municipal y el RSAC hasta las personas que brindaron su opinión en los eventos de puertas abiertas y las reuniones públicas: todos los comentarios fueron extremadamente valiosos y nos ayudaron a crear un plan inclusivo que ayudará a garantizar que las tarifas de los servicios públicos se alineen con los valores de St. Helena y proporcionen la financiación necesaria. Para sistemas de agua y aguas residuales estables y que funcionen bien.

Atentamente,
Anil Comelo
Administrador de la ciudad

AVISO DE AUDIENCIA PUBLICA
27 de Junio del 2023 / 6 p.m.

Cámaras del Concejo Municipal de St.

Helena, Sala de juntas Vintage Hall –
Segundo piso
465 Main Street, St. Helena, CA
Escanea el código QR o visita para saber
más https://sthelena.civicweb.net
Agenda Item #11.2.

St. Helena necesita una inversión responsable
Otros factores importantes
Más allá de financiar infraestructura crítica, los ajustes de tarifas que la Ciudad está considerando contrarrestarán la inflación y otros costos crecientes en todos los ámbitos, desde el costo de comprar y producir agua hasta financiar operaciones, mantenimiento y cumplimiento normativo y ambiental. Según la ley estatal, los ingresos generados por los aumentos en las tarifas de agua potable y aguas residuales solo deben usarse para financiar los costos reales de los servicios de agua potable y aguas residuales, incluido el costo de la deuda para financiar proyectos de mejora de capital.

Categoría de proyecto Proyectos Beneficio
Sistema de agua
potable
• Torre de entrada de Bell Canyon
• Oleoducto de interconexión de Napa
• Planta de Tratamiento de Agua
Transmisión Principal
• Programa Anual de Reemplazo de
Tuberías Principales de Agua
Piezas críticas de infraestructura
que garantizan un nivel de servicio
confiable para los clientes actuales y
futuros de St. Helena
Sistema de aguas
residuales
• Modernización de plantas de
tratamiento
• Reemplazo de tubería de alcantarillado
• Modernización de la estación de
bombeo
Garantice un nivel de servicio confiable
continuo mientras cumple con los
requisitos de permisos ambientales
Datos más inteligentes • Contadores de agua inteligentes Acceso del cliente al monitoreo del uso del agua en tiempo real
Revise todo el Programa de mejora de capital de 10 años en el sitio web de la ciudad Más de $ 55 millones identificados para financiar infraestructura crítica La ciudad de St. Helena hace todo lo posible para brindar a los residentes, empresas y visitantes un servicio de agua seguro y de alta calidad que es esencial para su vida cotidiana. Todos y todo dependen de sistemas de agua potable y aguas residuales que funcionan las 24 horas del día, los 7 días de la semana. Estos sistemas proporcionan saneamiento, protección contra incendios y agua, haciendo posible la vida moderna.

Mantener y actualizar adecuadamente estos sistemas, garantiza que protejamos y utilicemos de manera eficiente nuestros recursos naturales.

Además, hay impactos del cambio climático y la sequía cíclica. Las temperaturas extremas, las precipitaciones impredecibles y los incendios forestales hacen que nuestra comunidad sea vulnerable a los problemas de suministro de agua. Debido a que gran parte de nuestra agua potable proviene de lluvias regionales irregulares, debemos contar cada gota y hacer que cada gota cuente.

Gran parte de la infraestructura de agua de California tiene más de 100 años y necesita reemplazos y actualizaciones. Como muchos otros servicios públicos, la infraestructura de agua de St. Helena ha servido más allá de su vida útil. La modernización de nuestra infraestructura obsoleta ahora puede ayudar a evitar reparaciones costosas, interrupciones del servicio y desperdicio de agua en el futuro. Estos proyectos críticos se financian principalmente con tarifas y ayudarán a la Ciudad a actualizar cada sistema a los estándares modernos para continuar brindando un servicio confiable y de calidad en los años venideros.

Agenda Item #11.2.

Participación Ciudadana, Colaboración y Transparencia
Como parte del proceso público, la Ciudad convocó un Comité Asesor de Estudio de Tarifas de Agua Potable y Aguas Residuales para ayudar a guiar el estudio de tarifas. El comité, compuesto por siete miembros que representan a diferentes grupos de partes interesadas en la comunidad, se reunió en 11 reuniones públicas durante el año pasado. Estudiaron los problemas de cerca para garantizar que las recomendaciones que hicieron al Concejo Municipal se alinearan estrechamente con los valores de la comunidad. El comité revisó varias alternativas de tarifas presentadas por el consultor financiero y se decidió por una estructura de tarifas de agua mejorada diseñada para lograr tres objetivos:

Promover la conservación y
la eficiencia del agua, para
que los clientes que usan
más agua tengan un incentivo
económico para conservar.

Entregar equidad, para que todos
los clientes paguen su parte justa.

Garantizar la estabilidad
financiera de las empresas
de servicios públicos, para
que la infraestructura pueda
mejorarse y servir a la comunidad
en los años venideros.

Los participantes se reúnen en la Casa Abierta del 6 de marzo del 2023 organizada por el Comité Asesor de Estudio de Tarifas dirigido por Ciudadanos.

Agenda Item #11.2.

Algunos de los beneficios clave de las tarifas de agua escalonadas incluyen:

Fomentar la conservación del agua: Al aumentar el precio por unidad de agua consumida para niveles más altos, las tarifas de agua escalonadas brindan un incentivo económico para que los consumidores reduzcan su uso de agua, especialmente para fines no esenciales, como el riego al aire libre o el uso discrecional por parte de las empresas. Esto puede ayudar a promover un uso más sostenible y responsable de los recursos hídricos, lo cual es especialmente importante en las regiones que enfrentan escasez de agua y sequía.

Promoción de la justicia y la equidad: las tarifas de agua escalonadas pueden ayudar a garantizar que los hogares y las empresas que usan más agua paguen su parte justa del costo de la prestación de servicios de agua, al tiempo que protegen a las poblaciones vulnerables de los altos precios de las necesidades esenciales de agua. Al cobrar precios más altos por usos lujosos del agua, como regar el césped o llenar piscinas, las tarifas de agua escalonadas también pueden desalentar el consumo derrochador y reducir la carga sobre el sistema de agua.

Las tarifas de agua escalonadas son una herramienta poderosa para promover el uso responsable del agua, reducir el desperdicio de agua y promover la conservación, y respaldar las inversiones necesarias para mantener un sistema de agua confiable y sostenible. Este enfoque también garantizará que los costos de la Ciudad se recuperen de aquellos clientes que impulsan a la Ciudad a incurrir en tales costos.

El Concejo Municipal está considerando la adopción de tarifas de agua escalonadas, que son un sistema de fijación de precios utilizado por los servicios públicos de agua municipales para cobrar el volumen de agua utilizado por los hogares, las empresas y otros consumidores de agua. El sistema consiste en dividir la cantidad total de agua utilizada por un consumidor en diferentes niveles de precios, cada uno con un precio diferente por unidad de agua consumida.

El primer nivel tiene un precio más bajo por unidad de agua y cubre las necesidades diarias esenciales como cocinar, bañarse y saneamiento básico. A medida que los niveles de consumo aumentan más allá de este nivel inicial, el precio por unidad de agua consumida aumenta, y los niveles posteriores reflejan el mayor costo de suministro, tratamiento y distribución de mayores volúmenes de agua. ¿Cambiará la forma en que me cobran por el servicio de aguas residuales? No. Si el Concejo Municipal lo aprueba, las tarifas de aguas residuales aumentarán, pero no la forma en que la Ciudad cobra por el servicio.

Preguntas frecuentes
Agenda Item #11.2.

¿Cómo afectarán a mi factura los cambios propuestos en la tarifa del agua? A partir de Septiembre del 2023, el hogar unifamiliar típico con un medidor de 5/8” que usa 16 cien pies cúbicos (11,968 galones) por ciclo de facturación bimensual verá una disminución promedio de 17 centavos en su factura bimensual durante los próximos 10 meses, con un aumento de 8% cada 1 de Julio después de eso durante los próximos cinco años:

Impactos unifamiliares (medidor de 5/8”, uso bimensual de 16HCF) Los escenarios se basan en el tamaño de medidor de 5/8” más común e incluyen la carga volumétrica. La entrada de Agosto del 2022 utiliza las tarifas actuales de temporada baja (invierno). La nueva estructura de tarifas propuesta elimina las tarifas de temporada.

Cien pies cúbicos (HCF) = 748 galones.
$250
$275
$300
$325
$350
$375
$400
9/2023 7/2024 7/2025 7/2026 7/2027
$261.86 $261.86 $261.69
$282.63
$305.24
$329.65
$261.69
9/2023 Tarifa
7/2024 Tarifa
7/2025 Tarifa
7/2026 Tarifa
7/2027 Tarifa
-$0.17
$282.63
$20.94
$305.24
$22.61
$329.65
$24.42
$356.03
$26.37
Factura de agua bimestral actual
Diferencia del año anterior (-)
Diferencia del año anterior (+)
8/2022
Agenda Item #11.2.

A partir del 1 de septiembre del 2023
Las tarifas de agua potable propuestas por la Ciudad incluyen un cargo fijo bimensual, que fluctúa según el tamaño del medidor que sirve a la propiedad y recupera una parte de los costos fijos de la Ciudad; y, un cargo volumétrico para todas las clases, que recupera una parte de los costos fijos y costos variables de la Ciudad relacionados con el suministro de agua. El cargo volumétrico está escalonado, lo que significa que la tarifa aumenta según el uso total. El Nivel 1 incluye el uso de agua hasta 1100 pies cúbicos (HCF); el nivel 2 incluye agua de 12 a 15 HCF, y el nivel 3 incluye cualquier uso de agua de 16 HCF o más en cualquier ciclo de facturación. Los anchos de gradas corresponden a la disponibilidad de las fuentes de abastecimiento de agua de la Ciudad en condiciones normales.

TARIFAS DE AGUA POTABLE PROPUESTAS
Descripción Actual

PROPUESTO

A PATIR DEL
9/1/23

PROPUESTO

A PATIR DEL
7/1/24

PROPUESTO

A PATIR DEL
7/1/25

PROPUESTO

A PATIR DEL
7/1/26

PROPUESTO

A PATIR DEL
7/1/27
Cargos Fijos Bimestrales
Tamaño del medidor
5/8" $139.78 $135.50 $146.34 $158.05 $170.70 $184.36
3/4" $139.78 $135.50 $146.34 $158.05 $170.70 $184.36
SFR 1" $139.78 $135.50 $146.34 $158.05 $170.70 $184.36
1" $256.44 $288.70 $311.80 $336.75 $363.69 $392.79
1 1/2" $451.28 $544.05 $587.58 $634.59 $685.36 $740.19
2" $648.00 $850.46 $918.50 $991.98 $1,071.34 $1,157.05
3" $1,309.44 $1,820.76 $1,966.43 $2,123.75 $2,293.65 $2,477.15 4" $2,023.96 $3,250.68 $3,510.74 $3,791.60 $4,094.93 $4,422.53 6" $3,963.26 $7,182.95 $7,757.59 $8,378.20 $9,048.46 $9,772.34 Cargos Volumétricos
Todas las clases
Nivel 1 $6.50 $5.99 $6.47 $6.99 $7.55 $8.16
Nivel 2 $7.23 $12.06 $13.03 $14.08 $15.21 $16.43
Nivel 3 $12.91 $13.95 $15.07 $16.28 $17.59
Agenda Item #11.2.

¿Cómo afectarán mi factura los cambios propuestos en las tarifas de aguas residuales? A partir de Septiembre del 2023, el hogar unifamiliar típico con un medidor de 5/8” que usa un consumo promedio de invierno de 800 pies cúbicos (5,984 galones) por ciclo de facturación bimensual verá un aumento del 50 % en su factura bimensual durante los próximos 10 meses, con un aumento de 4% cada 1 de Julio después de eso durante los próximos cinco años:
8/2022
Impactos unifamiliares (medidor de 5/8”, consumo promedio de invierno de 8HCF) *La casa típica en St. Helena tiene un consumo promedio de invierno de 8 HCF cada dos meses. $250
$225
$200
$275
$300
$325
$350
$375
$400
9/2023 7/2024 7/2025 7/2026 7/2027
$216.63
$337.50
$337.50
$216.63
$351.00
$351.00
$13.50
$120.87
$365.04
$365.04
$14.04
$379.64
$379.64
$14.60
$394.83
$15.19
Factura bimensual actual de aguas residuales
Diferencia del año anterior (+)
9/2023 Tarifa
7/2024 Tarifa
7/2025 Tarifa
7/2026 Tarifa
7/2027 Tarifa
Agenda Item #11.2.

Las tarifas de aguas residuales de la Ciudad para los clientes residenciales incluyen un cargo base, que es un cargo fijo que se impone independientemente de la cantidad de aguas residuales que se descarguen en el sistema de aguas residuales, y un cargo por uso. El cargo por uso se calcula en función del consumo promedio de invierno o AWC. Las tarifas para clientes no residenciales se estructuran de la misma manera, excepto que el cargo fijo varía según el tamaño del medidor y el cargo por uso fluctúa según el tipo de cliente no residencial atendido por la Ciudad, para tener en cuenta la variación en ambos caudales y fuerza (calidad) de las aguas residuales generadas.

Tarifas propuestas para aguas residuales
Agenda Item #11.2.

CARGOS BASE

BIMENSUALES

LAS TASAS

ACTUALES

PROPUESTO

A PATIR DEL
9/1/23

PROPUESTO

A PATIR DEL
7/1/24

PROPUESTO

A PATIR DEL
7/1/25

PROPUESTO

A PATIR DEL
7/1/26

PROPUESTO

A PATIR DEL
7/1/27
Residencial
Carga básica $127.35 $179.26 $186.44 $193.90 $201.66 $209.73 Cargo por uso (AWC) $5.58 $9.89 $10.29 $10.71 $11.14 $11.59 No residencial
Carga básica
5/8" $176.68 $250.51 $260.54 $270.97 $281.81 $293.09
1" $441.72 $567.57 $590.28 $613.90 $638.46 $664.00

1.5" $883.42 $1,096.00 $1,139.84 $1,185.44 $1,232.86 $1,282.18 2" $1,413.48 $1,730.12 $1,799.33 $1,871.31 $1,946.17 $2,024.02 3" $2,826.98 $3,738.16 $3,887.69 $4,043.20 $4,204.93 $4,373.13 4" $4,417.14 $6,697.37 $6,965.27 $7,243.89 $7,533.65 $7,835.00 6" $8,834.28 $14,835.22 $15,428.63 $16,045.78 $16,687.62 $17,355.13 Cargo por uso (por HCF)
Lavado de autos $3.86 $6.73 $7.00 $7.28 $7.58 $7.89
Lugares Religiosos/
Centros Comunitarios
$4.29 $7.28 $7.58 $7.89 $8.21 $8.54
Comercial $5.07 $8.42 $8.76 $9.12 $9.49 $9.87
Comestibles y
funerarias
$13.62 $20.65 $21.48 $22.34 $23.24 $24.17
Lavadero $4.42 $7.46 $7.76 $8.08 $8.41 $8.75
Venta minorista mixta $8.52 $13.50 $14.04 $14.61 $15.20 $15.81 Alojamiento con
Alimentación
$10.22 $15.83 $16.47 $17.13 $17.82 $18.54
Hospedaje sin
Alimentos
$5.54 $9.00 $9.36 $9.74 $10.13 $10.54
Restaurante $13.50 $20.30 $21.12 $21.97 $22.85 $23.77
Colegio del Valle de
Napa
$4.22 $7.18 $7.47 $7.77 $8.09 $8.42
Estación de servicio $5.83 $9.55 $9.94 $10.34 $10.76 $11.20 Bodega Pre-Tratados $5.39 $8.87 $9.23 $9.60 $9.99 $10.39 Bodega No Tratada $23.75 $34.27 $35.65 $37.08 $38.57 $40.12 Escuelas $2.10 $7.18 $7.47 $7.77 $8.09 $8.42
Agenda Item #11.2.

La ciudad de St. Helena depende en gran medida de las ventas de agua para financiar un complejo sistema de agua que obtiene, trata y entrega agua segura y confiable a su hogar o negocio. Cuando se pide a los clientes que usen menos, como durante las sequías, se reducen los ingresos. Los ingresos más bajos son un desafío para la Ciudad, ya que muchos de los costos asociados con la operación y el mantenimiento de un sistema de agua son fijos. Las tarifas por sequía, o recargos, funcionan para compensar la reducción de los ingresos cuando la Ciudad se encuentra en una emergencia declarada de escasez de agua.

En caso de que el Ayuntamiento implemente etapas de sequía, además de las tarifas de uso de agua, se podrán evaluar recargos temporales por sequía. Esto aseguraría que la empresa de servicios públicos de agua esté financieramente completa y evitaría aumentar las tarifas en el futuro o tener que renunciar a reinversiones críticas de capital.

El siguiente cronograma muestra los recargos por sequía propuestos que se adoptarían con las tarifas de agua y aguas residuales. Si bien los recargos deben adoptarse al mismo tiempo que otras tarifas, solo se implementarán si el Ayuntamiento declara emergencia por escasez de agua.

RECARGOS POR SEQUÍA Fase I Fase II Fase III
FY 2024
Nivel 1 $0.89 $2.99 $5.97
Nivel 2 $1.79 $6.01 $12.02
Nivel 3 $1.92 $6.43 $12.87
FY 2025
Nivel 1 $0.97 $3.23 $6.45
Nivel 2 $1.94 $6.50 $12.99
Nivel 3 $2.08 $6.95 $13.90
FY 2026
Nivel 1 $1.05 $3.49 $6.97
Nivel 2 $2.10 $7.02 $14.03
Nivel 3 $2.25 $7.51 $15.02
FY 2027
Nivel 1 $1.14 $3.77 $7.53
Nivel 2 $2.27 $7.59 $15.16
Nivel 3 $2.43 $8.12 $16.23
FY 2028
Nivel 1 $1.24 $4.08 $8.14
Nivel 2 $2.46 $8.20 $16.38
Nivel 3 $2.63 $8.77 $17.53
Tasas de sequía
Agenda Item #11.2.

TAMAÑO DE
LÍNEA DE FUEGO ACTUAL

PROPUESTO

A PATIR DEL
9/1/23

PROPUESTO

A PATIR DEL
7/1/24

PROPUESTO

A PATIR DEL
7/1/25

PROPUESTO

A PATIR DEL
7/1/26

PROPUESTO

A PATIR DEL
7/1/27
Tamaño del medidor
4" $26.66 $116.78 $126.13 $136.23 $147.13 $158.91
6" $77.46 $285.71 $308.57 $333.26 $359.93 $388.73
8" $165.06 $586.82 $633.77 $684.48 $739.24 $798.38
Tarifas de línea de incendios privada
¿Cómo protesto los aumentos propuestos?
Tiene derecho a protestar por los aumentos de tarifas propuestos. Para que sea válida, cada protesta por escrito debe (1) indicar el nombre del propietario de la propiedad identificado o del contribuyente; (2) proporcionar la ubicación de la propiedad identificada (por dirección postal o número de parcela del tasador); (3) incluir una firma original del propietario de la propiedad o del contribuyente que presenta la solicitud.

Las protestas por escrito pueden enviarse por correo o en persona antes o durante la audiencia pública o antes de la conclusión de la audiencia pública el 27 de Junio del 2023 a: Oficina de la secretaria de la ciudad de St. Helena, 1088 College Avenue, St. Helena, CA 94574.

Solo se contará una protesta por escrito por propiedad afectada. No se aceptarán protestas por teléfono, correo electrónico y fax. Para su comodidad, puede optar por utilizar el formulario de protesta adjunto.

Las protestas por escrito deben ser recibidas por el Secretario Municipal antes de la conclusión de la audiencia pública. El Secretario no aceptará ni considerará ninguna protesta recibida después de la conclusión de la audiencia pública.

En la audiencia pública, el Concejo Municipal aceptará y considerará todas las protestas escritas y escuchará todos los comentarios orales sobre los Cambios Propuestos. Los comentarios orales no se contarán como protestas a menos que vayan acompañados de una protesta por escrito. Al finalizar la audiencia pública, el Concejo Municipal considerará la adopción de los cambios propuestos de la siguiente manera: (1) Si menos de la mayoría de los propietarios o contribuyentes presentan una protesta, el Concejo Municipal considerará aumentar las tarifas de agua a partir del 1 de Septiembre del 2023. (2) Si la mayoría de los propietarios o contribuyentes afectados protestan por el aumento antes de la conclusión de una audiencia pública requerida, la ciudad tiene prohibido por ley aumentar las tarifas de agua.

Tenga en cuenta que existe un plazo de prescripción de 120 días a partir de la fecha de vigencia de la resolución u ordenanza que adopta las tarifas para impugnar cualquiera de las tarifas descritas en este documento.

Para obtener más información, visite el sitio web del
estudio de tarifas de agua potable y aguas residuales de la ciudad de St. Helena en https://bit.ly/3HKQnB4
Agenda Item #11.2.

City Clerk’s Office
1088 College Avenue
St. Helena, CA 94574
cubrirá los aumentos de tarifas propuestos y los
cambios en la estructura de tarifas para los servicios
de agua potable y aguas residuales. Si se aprueban,
los ajustes de tarifas propuestos entraran en vigor
el 1 de Septiembre del 2023. Se invita a todas las
personas interesadas a participar en la Audiencia
Pública el 27 de Junio del 2023 para presentar
testimonios orales o escritos, así como protestas
por escrito, en relación con los ajustes de tarifas
propuestos. Los detalles sobre el proceso de protesta
por escrito se pueden encontrar en este aviso.

Aproximadamente cada cinco años, la Ciudad evalúa
las tarifas de agua y aguas residuales para garantizar
que haya suficientes ingresos disponibles para brindar
un servicio confiable. Los resultados del Estudio del
Costo del Servicio recomendaron cambios en las
estructuras de tarifas de agua y aguas residuales
y mostraron que se necesitan aumentos de tarifas
para el servicio de agua y aguas residuales durante
los próximos cinco años para continuar operando y
manteniendo los sistemas, reparar y reemplazar la
infraestructura obsoleta, asegurar los suministros
de agua , mejorar la calidad del agua, cumplir con
las regulaciones legales y ambientales y mantenerse
al día con los aumentos en los costos. Los detalles
sobre los cambios y aumentos propuestos en la
estructura de tarifas se detallan en las siguientes
páginas y en el Estudio de Costo del Servicio
disponible en https://bit.ly/3HKQnB4.

ÚNASE
Para obtener información sobre la agenda y la
reunión del Concejo Municipal, y cómo participar
en persona o virtualmente, visite
https://sthelena.civicweb.net
La audiencia pública ante el Concejo Municipal

AVISO DE

AUDIENCIA

PUBLICA
Escanea el código QR o visita para saber
más https://sthelena.civicweb.net/
27 de Junio del 2023 / 6 p.m.

Cámaras del Concejo Municipal de
St. Helena, Sala de juntas Vintage
Hall – Segundo piso, 465 Main Street, St.

Helena, CA
Agenda Item #11.2.

Esteemed members of the City Council,
My name is Mario Trinchero. I am a resident of St. Helena whose family and family business have been a part of this city since 1947. My first foray into public service was volunteering for the Water and Wastewater Rate Study Advisory Committee where I was unexpectedly elected Chairman. You could call the experience a Baptism by Fire. I must say my prime takeaway from those meetings was an entirely new dimension of respect for public servants.

Water affects us all, and I considered it a prime obligation to ensure that all customers’ needs were considered fairly. Unfortunately, my arguments against the rate structure recommended to the Council by that committee did not sway a majority of the members, and so in a last-ditch effort to avert what I consider a dangerous blunder I submit those arguments for your consideration.

I have no qualms with the desired infrastructure plan agreed upon by the Committee. The Water and Wastewater enterprises need that money for improvements that the entire community relies upon, businesses and residents alike. However, I have serious concerns about the rate structure proposed by the Committee to secure that revenue.

The proposed universal 3 tier structure is, to put it gently, grotesquely inequitable. The only advantage is that it is an easy sell to people who either cannot or will not consider the legal ramifications and full impact to all customers. Throughout the proceedings of the Committee, only two voices were ever raised on the behalf of businesses, one of them being myself. The remainder of the Committee and the members of the public providing comment had one clear agenda: make businesses pay an outsized share for all users’ water. Businesses are often accused of “putting their thumb on the scale.” In this case, it was residents projecting their own actions upon a handful of scapegoats.

Point 1: Prop 218 can be summarized by a single statement: Rates paid by a customer must be tied to the cost of service of that customer. Many things tie into the cost of service: procurement (which varies by source), base delivery costs, peaking (variations in that usage rate), and conservation. A revenue-neutral cost of service per customer class was presented to the committee by Raftelis on January 12, 2023. Combined commodity (non-fixed) COS for single family and multifamily residential customers was $2,557,224.00. Commercial was $1,092,338.00. Industrial was $1,036,503.00. And yet, when one looks at the projected FY2024 income from rates (non-fixed charges), industrial users pay 114% of their cost, commercial users pay 155% of their cost, and Residential pays only 93%. As a percentage of total variable revenue collected from all 3 classes, residential users would provide only 45% of variable revenues while representing 55% of the total variable cost of service. This comes primarily at the cost of commercial users, who supply 32% of variable revenue from all 3 classes, while representing only 23% of the variable cost of service. This inequity must be addressed for the rates to stand up to Prop 218 requirements.

Point 2: Tier break points only make a meaningful difference to small customers, the largest class of which being single family residential.

Projected usage and connections for FY2024 tell a clear story. The industrial customers would pay the Tier 3 “Napa Water” rate for 97% of their water. Commercial customers would pay Napa rates for 80% of their water. Single family residential (excluding multi-family) would pay Napa rates for only 10% of their water. The average single-family residence only needs 8 units to cover their average winter consumption, which lands solidly in Tier 1. Everything beyond that average use is discretionary irrigation, allowing the average residential user to exercise great control over their bill just by moderating how much water they dump on the ground. The system works great for residents, Agenda Item #11.2.

especially large irrigators, but leaves businesses holding the bill. This is hardly an equitable or legally defensible position.

Wineries, hotels, restaurants, and other large users are dependent upon a minimum amount of water below which they either cannot operate or must suffer the financial impact of reduced production and clientele. They do not have the option of simply reducing or eliminating irrigation to reduce their usage by 30%, 40%, or 50%. As you can see from the above graphs generated using data from the Raftelis rate presentations on December 29 and January 12, 80% of commercial use is billed at Tier 3, and that trend is further exacerbated up to 97% for larger industrial customers. Any hope of trimming usage to Tier 2 levels is shattered, let alone Tier 1. The tiers only make a difference to residential customers whose basic needs average 8 units per billing cycle.

Another point I’d like to make for the people who claim a uniform rate for businesses is inequitable is this: When 80-100% of a user’s usage falls into a single tier, how is that functionally different than assigning that user a uniform rate? In effect, this is a uniform rate, only the Committee has elected to have 78% of the total cost of the most expensive source dropped on businesses. The concept of “one tier structure for all” sounds good as a sales pitch, but rapidly erodes under scrutiny. The act of setting Agenda Item #11.2.

tiers where a vast majority of users within one or two classes are locked into the highest tier by their basic needs is nothing but a half-hearted attempt to conceal having business users subsidize residential users, regardless of their relative costs to serve. Not only is this unethical, it violates Prop 218 and invites a class-action lawsuit by those classes.

Point 3: When one looks at the projected use of these classes, industrial and commercial accounts alone would pay for 78% of all the water from Napa. 34% of that total is shouldered by 27 industrial users. 19% is shouldered by a single industrial customer. If Napa water exists as security for the entire community and one fifth of the cost of that water security provided to the rest of the customers by access to Napa water is shouldered by a single customer, that gives a single customer a tremendous amount of power over the income required to secure that source. Is it in the best interest of residents to concentrate that much power in the hands of a single business? Broadly, paying for “use it or lose it” Napa water hinges upon the usage of 340 commercial and industrial customers. Should several of those large customers decide the cost of water merits heavy usage reduction measures (the largest one certainly does) then a sizeable proportion of revenue intended to cover water the enterprise is required to pay for evaporates. Financial stability was the number one goal of this rate adjustment, and this reality directly counteracts that.

Point 4: Fully differentiating the tiers exclusively by water source forces large customers, many of whom cannot cut back without compromising their businesses, to pay for expensive Napa water almost exclusively. Given Point 3, those two classes would pay for most of it. Residents pay mostly for Bell Canyon and Stonebridge water; the cheapest sources, while representing by far the largest class of users and still having access to the security that Napa water is able to provide.

If businesses pay for most of Napa Water, then they are legally entitled to most of it. What happens in those times when Bell Canyon is nearly empty and Stonebridge cannot keep up with demand? Are we to tell residents they have to cut usage to the bone, take sponge baths and relieve themselves in their backyards while businesses have full access to Napa water? "Grotesque" is the word I would use to describe that inequity. However, that very situation is invited by the proposed rate structure if it is to be supported legally.

Point 5: Given point 2, since large customers would be paying mostly for Napa water, a strong legal argument can be made that those same businesses should pay for a much smaller share of the infrastructure costs not related to Napa Water. The water enterprise and residents NEED large customers to help pay for those projects, and those large customers have a right to the benefit of those projects: the water. It is illegal to deprive any user the benefits of the rates they pay.

Based on the agreed upon CIP plan from the December 29 presentation, the following projects would need to be applied to commercial and industrial users at 20% and 5% rates respectively:
• W-109:Bell canyon intake tower: $3.3millon
• W-86:Spring mountain pressure zone: $3million
• W21-01:Kearney and Andrea water main replacement: $875 thousand • W-101:Rehabilitation of Tank 2 at Lower reservoir: $940 thousand • W18-111: Water treatment plant assessment: $200 thousand • Water treatment Plant: $8.4million
• PWTM-2: Water treatment plant transmission main replacement: $9million A grand total of $25.7 million worth of critical infrastructure projects where commercial users should only pay a portion of $5.1million and industrial users should only pay for a portion of $1.3million.

Agenda Item #11.2.

Both of those quantities would be partially covered by residential users, so the actual amounts recovered towards those projects from businesses would be much smaller.

Similarly, the share of Napa water-related projects would rise to 80% and 97%, respectively. However, that list is much shorter:
• W-80 Dwyer Road booster pump station: $900k
• PWTM-1 Napa Intertie Pipeline replacement: $5.7million Only $6.6million worth of projects would see a large share taken off residential users. The tradeoff is hardly equitable.

The proposed CIP plan is far and away the largest driver of necessary rate increases. Legally absolving businesses of the responsibility to pay a full share would place a colossal financial burden on residents. In order to make the proposed structure legally defensible, the proposed rates must be adjusted so that residents are saddled with a greater percentage of outstanding CIP while businesses, much more capable of paying, are covering them at a steeply discounted rate. If businesses are paying most of their rates towards Napa water, then this is an equitable split. However, residents are sure to be angered by this outcome.

Point 6: As Raftelis pointed out to the Committee on several occasions, the proposed rate structure is unique in California. There is no record of legal precedent backing it up. The task of defending its legitimacy will fall entirely on the City should even one customer file suit, let alone an entire class.

Conclusion:

Obviously, splitting the CIP and giving businesses priority access to Napa water over residents are not viable options. Having one class of customers carry the weight of another is not legally defensible.

Depriving any user of the benefits of the rates they pay is blatantly illegal. The proposed rate structure invites litigation from multiple angles up to and including class-action suits. Legal defensibility was not one of the top 3 priorities of the rate study, however, any rate structure that is not legally defensible won’t survive long enough to be of any use to the Enterprise. Even in the extraordinarily doubtful case the rate structure recommended by the Committee is successfully defended, those kinds of delays would further defer the infrastructure projects that the entire community, residents and businesses, desperately need.

Businesses use and rely upon Bell Canyon and Stonebridge water just as residents use and rely on Napa water. Placing the burden of one source or the other on a handful of users is a hostile act of community division, financially irresponsible, and blatantly illegal.

There is a better way. It was the first rate structure proposed by Raftelis on January 12, summarized as follows:
• Cost of service is calculated for each class and the proportion of revenues that need to be recovered from each class are tied to that Cost of Service. This is key to legal defensibility. • Supply costs for Napa Water are spread across all tiers within all classes, then differentiated between Bell Canyon and Stonebridge wells to provide an inclined rate structure to incentivize conservation.
• Tier break points are determined using empirical meter data, which is a great boon to legal defensibility and incentivizes conservation for all classes with realistic targets. Tier 1 is typically assigned as the average of low winter periods to cover basic needs. Higher tier break points as in the case of Residential rates are determined empirically using the average summer usage of the class.

Agenda Item #11.2.

• Costs in individual tiers can be adjusted by adjusting the proportions of supply costs carried by that tier. However, a fully differentiated supply will run into the same problems discussed in point 2, albeit within individual classes and could appear punitive towards large households with greater basic needs.

That structure has a lot going for it:
• To counter above point 1, a standard cost of service analysis fully drives the revenue target for a given class. A prop 218 legal challenge on those grounds can be handily dismissed. • To counter point 2, tier break points within a given class are driven by usage patterns within the same class. Every customer class has more control over their bills by having realistic targets.
• To counter point 3, financial stability is enhanced as expensive, “Use it or Lose it” water from Napa is spread across all classes and tiers, all but guaranteeing that it will always be covered.

No one customer shoulders 19% of the cost of a single source. • To counter point 4, all customers pay a more equitable share of all sources. This grants equal rights to all sources to all customers.
• To counter point 5, since all classes pay for an equitable share of all sources, all classes should pay the same share of all CIP. Any legal challenge on that basis can be handily dismissed, and all customers can rest easy knowing they are not being singled out to fund any given project. • To counter point 6, the first rate structure proposed has grown very commonplace in California and has withstood dozens, if not hundreds of legal challenges. Most of those challenges never made it to court. Precedent alone can ward off most legal challenges, preserving the City’s time and funds for governance.
• And finally, the work required to set up this structure has largely already been completed by Raftelis. All that remains is triple-checking that the inputs are accurate, which city staff and Raftelis are already doing. A pivot to this structure would represent a negligible expense and very little time, especially compared to the probable legal fallout of the ill-advised structure.

Simply put, the rate structure presented on January 12 is by far the better rate structure. It is more fiscally responsible, more defensible, more equitable, incentivizes conservation for all customers using realistic targets, and makes no false claims of equality while shamelessly penalizing businesses and subsidizing residents. I humbly submit the above as the best of my ability to spell out the perils of the rate structure officially recommended by the Committee and the benefits of the January 12 structure.

For the sake of all customers of the Water and Wastewater Enterprises, I hope City Council will make a better decision than the Committee.

Sincerely,
Mario Trinchero
2022 Water and Wastewater Rate Study Advisory Committee Chair Resident, Plant Engineer, and Business Owner
Sources for data and figures were taken from Raftelis’ presentations officially submitted as part of the rate study, most notably those presented on December 29, and January 12.

Source for usage of largest industrial customer was average of 2022, 2020, 2019, 2018, and 2017 bills using city meter data, procured directly from customer.

Statements regarding precedent of tiered structures for different classes taken from Committee Q&A with Prop 218 legal expert on February 16.

Agenda Item #11.2.

Excel file used to generate these figures is available at City Council’s request.

Agenda Item #11.2.

TRIENCHERQ
April 19, 2023
City of St. Helena City Council
Attn: City Clerk
1088 College Avenue, St. Helena, CA 94574
Mayor Paul Dohring, Vice Mayor Eric Hall,
Anna Chouteau, Lester Hardy, & Billy Summers
Regarding: Water and Wastewater Rate Study, "Alternative #2” Water Rate Structure, and Prop 218 Compliance
Dear City Council:

Sutter Home Winery, Inc. ("Sutter Home”) submits this letter objecting to the "Alternative #2” water rate model endorsed by City Council on March 14, 2023. The Alternative #2 model improperly shifts the cost of service and capital improvements projects onto commercial and industrial users while reducing single family residential rates. In doing so, the Alternative #2 rate model fails to comply with Prop 218's requirements that property related fees not exceed the proportional cost of service to each parcel. The factual and legal reasons that Alternative #2 falls short are detailed below. Sutter Home requests that the City Council adopt a water rate model that complies with Prop 218.

The City's Alternative #2 Water Rate Model
As the Council knows, the City established a seven—person Water and Wastewater Advisory Committee (the "Committee”) in May 2022 to evaluate and prioritize capital improvements projects ("CIP”)and recommend appropriate water and wastewater rates. By a 4-2 vote, the Committee recommended the ”Alternative #2” water rate model} After a public hearing on March 14, 2023, City Council accepted the Committee's recommendations including the Alternative #2 water rate.

The Alternative #2 model consists of a three—tier pricing structure that does not differentiate between user types. Instead, pricing for each tier is based on an assigned water source and the cost to secure each tier of water from one of three sources supplying the City. Tier 1 is based on costs to procure water from the City's BellCanyon reservoir. Tier 2 is based on costs to procure 1 Mario Trinchero served as chairman of the Committee, and he serves as Plant Engineer at Sutter Home. We agree with Mario Trinchero’s comments submitted to the City Council regarding the Alternative #2 rate model and incorporate those comments by reference.

POST OFFICE. BOX 248 v ST. HELENA 0 (IA 9~l5"4~(]l4S ~ 707.963.3104 v TFE\‘UINES.CO:\l Agenda Item #11.2.

St. Helena City Council
April19, 2023

water from the City's Stonebridge groundwater wells. Tier 3 is based on costs to purchase water from the City of Napa. These sources range in cost with Tier 1 BellCanyon water being cheapest and the Tier 3 purchased water being most expensive. Alternative #2 assumes that single family residential users (SFR)will use mainly Tier 1 BellCanyon water.

Historic water use by industrial users is a fourth of use by SFRusers, and that trend is projected to continue? SFR use exceeds all other types of water users combined. SFRcustomers constitute 83% of connections and use 53% ofthe City's water use. Notwithstanding the predominance of SFR users, the City's consultant stated to City Councilthat SFR rates will be reduced at the same time overall rate revenue is increased by 28%.3 In addition to the Alternative #2 model, the City is proposing a drought rate.4 When a drought requires more conservation and the purchase of addition (more expensive water), the drought rate is applied as a percentage to all rate payers.-'5Therefore, SFR rates are increased by a percentage based on Tier 1 water even though Tier 1 sources are much less likely to be supplying the City during a drought. Commercial and industrial rate payers have an added percentage to already higher rates.

Comments to the City Councilfrom one member of the Committee argued that profitable businesses, specifically hotels and wineries, can absorb the cost of higher water rates simply by increasing prices of their goods and services.5That Committee member and members of the public advocated for Alternative #2 as providing lower costs of living to SFR users that would attract employees to live in the City.

Prop 218's Reguirements
The Rightto Vote on Taxes Act (commonly known as "Prop 218") requires voter approval to levy or increase local taxes. Certain property related service fees, including water service, are exempt from the voter approval requirement only if those fees comply with the "Section 6” requirements of Prop 218.
[Section] 6. Property Related Fees and Charges.
"(b) Requirements forExisting, New or Increased Fees and Charges. Afee or charge 2 Raftelis presentation to Committee on November 9, 2022, pages 8 & 9 available online at https://www.cityofsthelena.org/sites/default/?les/?leattachments/water_and_wastewater__rate_study_advisory_c ommittee/page/25371/november_9_2022_st._helena_rate_studies_?nancia|_plan_review.pdf 3 City Council hearing video at 1:36:46 available online at https://sthelena.civicweb.net/document/72440/?splitscreen=true&media=true. 4 As con?rmed by the City's consultant during its March 14, 2023 meeting, a drought rate is subject to Prop 218 requirements. Drought penalties are not. 5 City Council hearing video at 1:43:43 available online at https://sthelena.civicweb.net/document/72440/?splitscreen=true&media=true. 6 Comments of Ms. Arlene Corsetti to City Council on March 14, 2023 at 1:55:43 of the video recording available online at https://sthe|ena.civicweb.net/document/72440/?sp|itscreen=true&media=true.

POST OFFICE BOX 248 * ST. HELENA ~ ("A 9-'l-S'4—D24$ « .‘DT.‘)63.3104 « TFE\\"'INES.C0.\{ Agenda Item #11.2.

St. Helena City Council
April 19, 2023

shall not be extended, imposed, or increased by any agency unless it meets all of the following requirements:
”(3) The amount of a fee or charge imposed upon any parcel or person as an incident of property ownership shall not exceed the proportional cost of the service attributable to the parcel.
"(4) No fee or charge may be imposed for a service unless that service is actually used by, or immediately available to, the owner of the property in question. Fees or charges based onpotential or future use of a service are not permitted. Standby charges, whether characterized as charges or assessments, shall be classified as assessments and shall not be imposed without compliance with Section 4. 7 When evaluating whether a water rate increase complies with Prop 218, California courts exercise independent judgment, and it is the agency's burden to prove that Prop 218's requirements are met.8”Because Proposition 218's underlying purpose was to limit government's power to exact revenue and to curtail the deference that had been traditionally accorded legislative enactments on fees, assessments, and charges, a more rigorous standard of review is warranted.”9 Stated another way, a court uses its own judgment to determine whether the City has proven that the Alternative #2 rate model does not exceed the proportional cost of the service attributable to parcels with industrial uses such as Sutter Home's Main Street facility. As explained below, the City has not met its burden here.

The City's Proposed Alternative #2 Water Rate does not compILwith Prop 218 The premise of Alternative #2 is that many lower volume users can pay for less expensive water while smaller numbers of higher volume users pay for more expensive water. However, the City's water is comingled; there are not three water systems delivering water from three separate sources. Alternative #2’s allocation of water costs is arbitrary and not based on the actual cost to procure the City's total water supply. While completely ignoring the differing cost of multiple water supplies is an error,-1° so too is assigning higher cost water to select types of users.“
In City ofPalmdale v. Palmdale Water District, a California court rejected inequality between tiers of users even when based on the goal of water conservation.-12Similar to the City of St.

Helena, the majority of water supplied in Palmdale went to SFR users, and a main driver of the 7 California Constitution, art. XIIID (emphasis supplied). 8 Silicon Valley Taxpayers Assn., Inc v. Santa Clara County Open Space Auth. (2008) 44 Cal.4"“431, 444. 9 Silicon Valley, 44 Ca|.4”‘ at 448.
1° Capistrano Taxpayers Assn, Inc. v. City ofSan Juan Capistrano (2015) 235 Cal.App.4‘“1493, 1500. 11 City ofPalmdale v. Palmdale Water Dist. (2011) 198 Cal.App.4"‘926, 936. 12 Palmdale, 198 Cal.App.4“‘at 935-38.

POST OFFICE BOX 248 ° ST. HELENA ' CA ‘7~li'~'lrl)24S ~ .‘l),‘.‘J(,~,Z.3ll'I~l * Tl’E\‘\7lI\lF.S.(ZO.\.l Agenda Item #11.2.

St. Helena City Council
April 19, 2023

adopted water rate was to maintain rate stability for those SFRusers.“ The rate consultant in Palmdale (Raftelis) also presented a defensible water rate model, but the water district board ignored that recommendation. 14 The Palmdale water rates on irrigation users were vastly disproportional to other users, and the Palmdale court rejected those larger fees because there was no showing that delivering higher volumes of water to those served parcels was disproportionately more expensive than other users.“ Alternative #2 similarly disproportionally affects higher volume users (industrial and commercial) without any showing that the actual cost of delivering water to those users is higher than delivering water to a much larger number of SFR users. The statements made by a Committee member and the public indicate that Alternative #2 was intended to charge industrial users more to advance policy goals of more affordable housing and lower costs for SFR users. Those lower costs will continue to accrue to SFR users that build new homes even though new SFR users add new demand to the water system.

Another failure of Alternative #2 is to acknowledge that the Tier 3 water supply is additive to the City's overall water supply. Even under the unsupported assumption that SFR users will use only Tier 1 water, the purchased water supply of Tier 3 water adds to the City's overall supply.

Shifting all the cost for this water supply onto industrial and commercial users is akin to shifting the cost of recycled water only onto those users using recycled water. In the Capistrano case, a California court held that costs of recycled water improvements were properly spread across all users even if a given user dose not directly use that recycled water supply.“ Especially in drought years, water delivered to SFR users will include water from Tier 3 sources, but SFR users will be charged as though the water came from the Tier 1 source. Similar to the recycled water in Capistrano, increasing the water supply is properly spread across all users, not only on certain users.

Lastly, the drought rate exacerbates the failings of the normal Alternative #2 rate model. SFR users will pay a flat rate increase on lower cost water while industrial and commercial users will pay that percentage on higher cost water. This flat rate increase (unevenly applied) does not relate to the cost of providing water in a drought scenario. 13 Ibid. at 928-29. 14 Id. 15 Palmdale, 198 Cal.App.4“‘at 937-38. 15 Capistrano, 235 Cal.App.4‘“at 1500.

POST OFFYCE BOX 348 ~ ST. HF.LF.N:\ ' CA 94.374-0l4.\‘ - Tll”.‘)63,3104 - TFE\VINES.CIO2\'l Agenda Item #11.2.

St. Helena City Council
April 19, 2023

Based on the above, A|ternative#2 does not comply with Prop 218, and the resulting costs imposed on commercial users and industrial users like Sutter Home are significant. Sutter Home strongly encourages the City to reject Alternative #2 and to move forward with a water rate model that complies with Prop 218.
eter Larso
. eneral Co sel & SVP Corporate Affairs
cc: AnilComelo, City Manager
Ethan Walsh, City Attorney
Robert Torres - Bob Torkelson
POST OFFICE BOX 248 ' ST. HELEN.*\ ~ CA 9~l:7'4»O24S v 7D’..963.3l0-l v TFE\WINES.COM Agenda Item #11.2.

4/18/2023
For the attention of:

Mayor Paul Dohring
Vice Mayor Eric Hall
Council Member Anna Chouteau
Council Member Lester Hardy
Council Member Billy Summers
Dear Members of the St. Helena City Council,
The businesses represented by the signatories to this letter represent some of the large volume customers of the Public Water Enterprise managed by the City.

We have a strong disagreement with the “Alternative 2” rate structure proposed by the Advisory Committee. We feel they saddle a handful of businesses with an outsized share of the cost of Napa water for the benefit of smaller yet far more numerous residential customers.

Prop 218 mandates that rates paid by a customer must be tied to the cost to serve that customer. Overcharging one set of customers to benefit others is illegal.

The proposed universal tiers only make practical sense for single family residential customers. Any business of significant need would pay top tier rates for most of their water with little ability to control their bill, as a business’s need for water is driven by clientele and production. Businesses have little choice but to cope with the cost increase, whereas most residential customers need only reduce their irrigation.

Fully differentiating tier costs by source has the effect of forcing businesses to pay for most of the water from Napa. Water from Napa exists as security for the entire community, including residents. Therefore, forcing businesses to shoulder the majority of the cost of Napa water while giving residents the benefit of that security is a subsidy disconnected from the cost to serve, and therefore illegal.

It also effectively reserves less expensive local water from Bell Canyon and the Stonebridge Wells for residents, despite delivering all water through the same pipe network. Residents would be paying for cheap sources while receiving water from Napa, and businesses would be paying for expensive Napa water while being delivered cheap, local water. Without separate pipe networks, there is no way to verify.

All of the above concerns would be addressed by the original rate structure proposed by Raftelis on January 12, summarized as follows:
• Rates paid by each customer are tied to the costs to serve that customer. • Supply costs for Napa water are spread across all tiers within all classes. • Differentiation between tiers is based on differences in costs to deliver water from Bell Canyon and Stonebridge Wells, as those costs are not fixed as with Napa water. • Tier break points are related to empirical meter data relating to each class, and so are relevant to each class.

Agenda Item #11.2.

This structure has become very commonplace in California and readily withstands legal challenges for one simple reason: it’s fair. We do not ask for special consideration or subsidy, only equitability.

We agree that revenues must be increased to address the aging and neglected infrastructure required to provide continued service to all customers and are glad to see the Enterprise investing in its own longevity. That said, the rate structure that collects those revenues must be equitable and legal. We strongly urge the City Council to reject the rate structure proposed by the Advisory Committee in favor of the fair structure proposed by Raftelis.

Sincerely,
Debbie and Jennifer Fradelizio – Gillwoods Café
Jay, Matt, and Mark Smith – Sunshine Foods
Bob Torkelson – Sutter Home Winery
Joel Gott – Gotts Roadside & Station St. Helena
Shova Sherpa – Himalayan Sherpa Kitchen
Christopher Kostow – The Charter Oak
Karen and John Mitchell – Model Bakery
Agenda Item #11.2.

From: TOM BELT
To: Public Comment
Subject: [External] Water Neutral Policy
Date: Tuesday, May 9, 2023 11:03:11 AM
Dear St. Helena City Council,
St. Helena's current water neutral policy is deficient in projecting the indoor water use occupants will use in future new housing projects. The City's current water neutral policy allows developers to submit housing projects for development using guidelines that severely underestimate what the actual indoor water use will be once the development is completed.

It is a fact that St. Helena's Phase 2 and Phase 3 water rationing restrictions currently provide existing residents the ability to use more water during drought periods than the volumes projected to be used in new housing development during average rainfall periods. This is simply unrealistic and will add further hardship to existing water customers if the current water neutral policy is left unchanged.

The recently approved Pope Street five-house development projected the water use will be 25 gallons per day per occupant based upon four occupants per household.

The Hunter Project using the number of occupants sited in the EIR will use 34.9 gallons per day per occupant. Even the Farmstead Hotel develop underestimates what the actual water use will be in that project. St. Helena's current Phase 2 drought restrictions allow residents to use 65 gallons per day per occupant.

The existing water neutral guidelines and the in-lieu standards used to approve new housing in St. Helena are simply unrealistic. Recent inquiries to the California Department of Housing Development, California's Green Building Guidelines, Napa County's Building Commission and California's Senator Dodd's office all confirmed the city's current water neutral policy has never been verified as an accurate guide for projecting indoor residential water use.

Tom and Margot Belt
Agenda Item #11.2.

Report to the City Council
Regular City Council - 09 May 2023
Agenda Section: NEW BUSINESS
Subject: Consideration and Proposed Approval of a Resolution Adopting City Council Goals and Discussion Regarding Staff Workplan for FY 2024.

CEQA
Determination:

Not a CEQA project
Prepared By: April Mitts, Assistant City Manager
Reviewed By: Anil Comelo, City Manager
Approved By: Anil Comelo, City Manager

BACKGROUND
Since 2017, the City Council has developed three-year broad organizational goals and 12-month strategic objectives to accomplish the goals.

Council last updated the Goals during the FY 2022 budget cycle.

DISCUSSION
During the last several months, the currently constituted City Council (with one new member since 2021) has in a variety of ways reviewed the previous goals, and provided guidance to staff on an updated set of goals which are listed below:

1. Financial Sustainability

2. Infrastructure and Environmental Sustainability

3. Water Security

4. Community Information and Engagement

5. Quality of Life
City Council has the responsibility of establishing broad goals and the City's leadership has the responsibility to develop a workplan to achieve them. To that end, City executives have been working towards developing and refining the FY 2023-24 workplan based on Agenda Item #12.1.

identified priorities. This has been a long and methodical process and below is a summary of activities to-date which has culminated with the workplan that is being displayed to the City Council and the community. While it is not necessary for the City Council to provide input on how the established goals are achieved, the purpose of this presentation is to share the expansive nature of the workplan and the desire of the executive team to make progress on a number of important arenas. Hopefully, this presentation will also provide information to the community regarding the enormity of the workplan and the inadequacy of the City's current staffing model. This presentation therefore is also directly related to other discussions/decisions the City will need to make relative to budget, workplan, staffing, employee compensation, land development, Who We Are, revenue options, etc.

The following is a summary of the activities leading up to the development of the current workplan.
2017 to 2021
The City Council set in motion a series of studies, working committees, and reports to categorize assets, provide cost estimates for replacement/repair, and develop funding strategies for the replacement/repair of assets.

October 2022 - Customer Service Staff Discussion
On October 13, 2022, a group of staff members from multiple departments participated in a candid and wide-ranging discussion regarding customer service lead by the City's leadership team. The discussion was prompted by the following set of questions/issues:

1. Areas for customer service enhancement (e.g. what is not working?)

2. Areas requiring better coordination between departments

3. Areas where things are falling through the cracks

4. Reducing employee hardship

5. Common service requests

6. Best methods of delivery

7. Identification of other challenges
December 2022 - All Staff Meeting
On December 1, 2022, an All Staff meeting was attended by 53 full-time City employees.

The half-day meeting included several items to help employees have a better understanding of the current and upcoming major projects, workloads across departments, and identify opportunities to enhance collaboration. The meeting included presentations by each department head which identified recent accomplishments, listed current projects, and identified upcoming challenges and opportunities. It was interesting to note that most department heads, independently identified community expectations and lack of adequate resources/staffing as major challenges.

Agenda Item #12.1.

December 2022 - Community Survey
On December 7, 2022, the City entered into a contract with Godbe Research to conduct a Community Survey. Survey participants were selected randomly to participate in this survey. The survey incorporated questions regarding quality of life, budgeting, and highlevel satisfaction questions, all of which will inform policy discussions and will allow the City to establish a baseline for future biennial surveys.

Recognizing the importance of community input and the value that it has on identifying priorities, a statistically valid Community Survey was conducted with the following research objectives:
• Gauge overall perceptions of quality of life in Saint Helena and important issues facing the City;
• Gauge overall satisfaction with the City’s provision of services; • Assess importance of and satisfaction with City specific services, programs and facilities;
• Gauge perceptions of social equity in the City;
• Assess perceptions of City funding and preferences for generating revenue; and • Identify any differences in opinions based on demographic characteristics The survey results were presented at the February 14, 2023 City Council meeting.

January 2023 - Baker Tilly Council and Department Head Priority Interviews The City retained the services of Management Partners (now Baker Tilly) to facilitate a Council conversation to establish Council priorities. In preparation for the January 23, 2023 Council retreat, the Baker Tilly facilitators held individual interviews with each Council Member and members of the City's executive team. Baker Tilly prepared a staff questionnaire to gather a list of current projects and staff's input about upcoming challenges and opportunities.

January 23, 2023 - City Council Retreat
On January 23, 2023, the City Council participated in a half-day City Council retreat which included all City Council Member, Baker Tilly, City Manager Comelo, Assistant City Manager Mitts, and City Attorney Walsh. This retreat provided an opportunity for the following:
• Enabled Councilmembers to get to know each other a little better (including individual values, priorities, and communication style) • Receive a preview of the Community Survey
• Receive a preview of the City's Financial Forecast
• Opportunity for Council to hear themes from the Council and Department Head interviews conducted by Baker Tilly
The facilitators began the retreat by asking each Council Member to share their thoughts about attributes of high-performing Councils and what they want their legacy to be.

Agenda Item #12.1.

Through this exercise Council identified seven desired legacies which are highlighted below (the full report by Baker Tilly is available as Attachment 1):

1. Make things better for St. Helena

2. Make progress on water supply issues

3. Improve our fiscal outlook

4. Make improvements to Main Street

5. Get back to a culture of kindness, model positive behavior

6. Face tough decisions and make good choices

7. Recover the health of our community
In concluding the retreat, the facilitator asked the Council Members what they expected from one another and what they expect from themselves for effective governing. The responses are listed below:
• Increase the frequency of Council discussions (i.e. every six months) • Consider implementing a strategic planning process that engages the community (five-year)
• Integrate the existing work plan with priorities from the retreat • Review the City's Vision and Mission Statement's with fresh eyes • Create an official "bike rack" for new ideas*
*A bike rack are items that are brought up outside of the formal Priority/Workplan setting process that cannot receive immediate attention.

The outcome of the discussion and Council prioritization, coupled with other previous activities, resulted in the five City Council goals shown below. Staff is seeking formal adoption of the following as the City Council goals:

1. Financial Sustainability

2. Infrastructure and Environmental Sustainability

3. Water Security

4. Community Information and Engagement

5. Quality of Life
March 2023 - Executive Retreat
On March 2, 2023, the City Manager and Assistant City Manager facilitated a half-day retreat for the City's Executive team. During this retreat the City's leadership team reviewed the current goals and workplan, identified additional priority items being worked on by City staff, identified new workplan items as they relate to the newly identified Council priorities from the January 23rd Council retreat, and reviewed the organizational effectiveness and service delivery excellence initiative (presented earlier in tonight's meeting). In addition to the five Council Goals, the City Manager has identified two additional Goals which are included in the Draft FY 2024 Council Goals and Workplan section below.

Agenda Item #12.1.

May 9, 2023 - City Council Meeting Department Head Presentations - FY 2023-24 Budgets
At the Council meeting on May 9, 2023, Department heads presented preliminary budget information which included the following:

1. Recent noteworthy accomplishments and activities

2. Current department priorities

3. Challenges

4. Opportunities

5. Significant budget requests, included some unfunded requests

6. Staffing Requests
FY 2024 Council Goals and Staff Workplan
Following these series of events and Council direction, staff assembled a list of the initial Council Goals and staff workplan. The initial list included feedback from City Council, the community survey, City staff, the City's Executive leaders, as well as the currently adopted workplan.

The initial workplan served as a starting point listing all of the City's "wish list" which may be accomplished with unlimited resources (staffing and financially). The initial list consisted of seven Goals, 95 workplan items, and 217 individual tasks. It is important to note, most of these initial tasks are above and beyond City staff's regular workload. About 90% of staff time is devoted to providing routine services to the community, thus these workplan items will need to be accomplished with a fraction of the City's resources.

Once assembled, City Manager Comelo and Assistant City Manager Mitts met with department heads to further prioritize and refine the workplan based on identified priorities. This is an agressive workplan and, as noted above, is expansive and highlights the desire of the executive team to make progress on a number of important arenas.

However, the enormity of the workplan and the inadequacy of the City's current staffing model may prove impossible to achieve all of the desired objectives in the timeframes identified. Table 1 and Table 2 (next page) provides a summary of the workplan for FY 2023-24 and beyond. The workplan will be updated periodically based on progress towards goals and shifts in individual workplan items. Attachment 3 provides a list of each objective by Goal. Within this document you will notice some items noted in green. Staff recognizes these items are interesting and provide value; however, they are not items being prioritized on this workplan.

Agenda Item #12.1.

Table 1 - Goals by Topic
City Council Goals Total
Objectives
Objectives
for
FY 2024
Goal 1 Financial Sustainability 9 4
Goal 2 Infrastructure and Environmental
Sustainability 46 27
Goal 3 Water Security 11 6
Goal 4 Community Information & Engagement 20 14
Goal 5 Quality of Life 44 22
Other Goals/Items
Goal 6 Employee Recruitment, Retention, and
Morale 9 6
Goal 7 Organizational Effectiveness 19 13
CIP CIP Projects* 54 15
TOTALS 212 107
Table 2 - Goals by Department
Department Total Objectives Objectives for
FY 2024
City Manager 38 23
Administrative Services 17 11
Community Development 16 5
Fire 5 3
Police 9 6
Library 3 3
Parks & Recreation 20 13
Public Works 50 28
CIP 54 15
TOTALS 212 107
*Capital Improvement Program Projects
In addition to the City Council Goals and staff workplan (objectives), the City has numerous Capital Improvement Program (CIP) Projects on the horizon. Included in the table above is the DRAFT number of CIP projects which is currently being refined by staff and is subject to change. The FY 2024 CIP list will be presented to City Coucil for approval as part of the FY 2024 budget adoption process.

Cannabis
City Council had previously directed staff to return to Council with an analysis of potential St. Helena based Cannabis businesses. Since this was a specific City Council direction, staff has included the issue as part of the above Goals and listed it for completion in FY 2025. The reason for the scheduling of the research and analysis in FY 2025 is current Agenda Item #12.1.

staffing capacity. This issue is complex and will require the attention of several high level staff and the City Attorney’s Office and there are many more urgent issues that demand focus and the allocation of our limited resources.

In the interim, the City Council and the community may benefit from the policy paper put out by UC Davis in 2021 that discusses both the pros and cons for local entities to consider (Attachment 2). It may be a good starting point and has some great information on both sides. There is also a great summary for Recommendations for Policymakers (PDF page 15 - document pg. 157).

Pay-for-Performance
Pay-for-Performance is a compensation model used as part of a wider continuous performance management initiative. With a more traditional compensation method, all employees at the same level are paid the same amount, regardless of whether they under or over-perform. In contract, with a pay-for-performance program, employees can be motivated to meet desired metrics/goals by offering tangible rewards. In the private sector, such variable pay systems are often implemented for executives and sales professionals. For executives, such incentives are tied to certain organizational performance metrics and for sales staff it is generally tied to sales-related metrics.

Depending on the metrics used, these can be effective tools to incentivize employees to achieve the desired goals. In the case of the City's executive team and other senior staff, such incentives might serve to signal priority and help focus atttention on key issues/projects. In some cases, the identified goals could be specific to a department, as well as general goals with shared responsibilities.

Depending on City Council sentiment, staff will return at a subsequent meeting with a proposal for the adoption of a pay-for-performance plan.

FISCAL IMPACT
The fiscal impact associated with workplace tasks varies depending on the task.

RECOMMENDED ACTION
Adopt City Council Goals for FY 2024.

ATTACHMENTS
Attachment 1 - Council Goals and Workplan 2024
Attachment 2 - Baker Tilly Final Report
Attachment 3 - Review of Policy Research - 2021 - Kavousi - What do we know about opportunities and challenges for localities from
Attachment 4 - Resolution
Attachment 5 - Council Goals and Priorities 050923 CC Meeting Agenda Item #12.1.

Workplan Number Council Goal 1
Financial Sustainability
Estimated
Fiscal Year Completed
Lead
Department

1.100 Implement Financial Sustainability Strategies

1.110 Develop Long Range Financial Plan FY 2024 Q1 City Manager

1.120 Explore Shared Services FY 2024 Q4 City Manager

1.130 Complete Impact Fee Study and User Fee Study (including inclusionary fees and housing fees) for City Council adoption FY 2024 Q2 Administrative Services

1.200 Economic Development (Subsections 1.210-1.250)

1.210 Develop Downtown Specific Plan FY 2026 Community Development

1.220 Prepare and implement Business Continuity Strategy During Construction of Phase I Downtown Streetscape Project FY 2024 Q4 City Manager

1.230 Enhance vitality of local businesses and assist with marketing local businesses FY 2025 City Manager

1.240 Provide Administration of Business Assistance grant program (CDBG Funded) FY 2026 Administrative Services

1.250 Determine the feasibility of implementing a facade improvement program FY 2025 City Manager

1.300 Conduct analysis of "business affordability" - St. Helena vs. comp set City Manager 1 of 9

Agenda Item #12.1.

Workplan Number Council Goal 2
Infrastructure and Environmental Sustainability
Estimated
Fiscal Year Completed
Lead
Department

2.100 Prepare an Infrastructure Strategic Plan and Establish a Reporting Process

2.110 Update Financial & CIP Policies FY 2024 Q1 City Manager

2.120 Publish 20-year project list that includes costs, timing, funding sources FY 2024 Q4 Public Works

2.130 Provide status of current CIP projects on a semi-annual basis FY 2024 Q2 Public Works

2.140 Ensure resources required to execute infrastructure list are incorporated into Long Range Financial Plan FY 2025 Public Works

2.200 Research and Explore Alternative Energy (solar) on City Facilities FY 2024 Q4 Public Works

2.300 Exploration of solar on water/wastewater infrastructure

2.400 Analyze and Expand EV Fleet/Alternative Fuel Fleet FY 2024 Q4 Public Works

2.410 Expand EV Charging Infrastructure FY 2027 Public Works

2.500 Analyze suitability of Artifical Turf FY 2025 Parks & Recreation

2.600 PUBLIC WORKS DIVISIONS

2.610 SEWER

2.611 Update Discharge Permit Update for new WWTP FY 2025 Public Works

2.612 Update Sanitary Sewer Management Plan and post to State Website FY 2024 Q1 Public Works

2.613 Update Fats, Oils & Grease inspection/permitting process in collab w/ Napa Co Public Health and Business Permit Process/Renewal FY 2024 Q4 Public Works

2.614 Develop Recycled Water Master Plan FY 2024 Q4 Public Works

2.620 STREETS

2.621 Develop Local Roadway Safety Plan FY 2024 Q4 Public Works

2.622
Update Street Master Plan/CIP/AB1600 - to include:

1. Citywide speed survey

2. General Plan Circulation Element

3. Various prior studies related to Active Transportation/SR2S, Walk Audits, Parking Studies, Cultivate Downtown St. Helena, etc.

4. Traffic Calming Strategies

5. Traffic Calming Request Process/Policy
FY 2024 Q2 Public Works

2.623 Complete a pilot project to slow down traffic and make street safe for biking/walking FY 2024 Q1 Public Works

2.624 Develop and adopt VMT thresholds in accordance with State law FY 2024 Q1 Public Works

2.625 Implement Traffic Mitigation for Spring Mountain Road, Pratt, Madrona, Crane FY 2025 Public Works

2.630 STORMDRAIN

2.631 Develop Phase II and Phase III timelines for Measure H GO Bond Projects FY 2024 Q4 Public Works

2.632 Develop strategy/study for creation of Storm Drain Enterprise Fund for Possible Ballot Measure FY 2025 Public Works 2 of 9

Agenda Item #12.1.

2.640 ENGINEERING

2.641 Refine cost recovery process for Development/Encroachment Permits/CIP FY 2024 Q4 Public Works

2.642 Finalize 2019 Standard Details/Design Standards FY 2024 Q2 Public Works

2.643 Integrate CIP project deliveries, e.g. Streets, Utilities, Parks, WTP Condition Assessment, Rate Study, Project Tracking FY 2024 Q4 Public Works

2.650 PARKING Public Works

2.651 Initiate Parking Study FY 2026 Community Development

2.652 Create Hunt's Grove Parking Lot FY 2025 Public Works

2.660 Review and Update EMG Facilities Assessment FY 2024 Q2 Public Works

2.670 Create Utilities infrastructure in GIS FY 2024 Q4 Public Works

2.680 Install wastewater meters for wineries and other users with unique characteristics to improve cost of service/fee nexus Public Works

2.685 Initiate Spray Fields Master Plan Public Works

2.690 Explore pedestrian activiation of Money Way beginning with garbage/recycling consolidation FY 2024 Q4 Public Works

2.700 Climate Action

2.710 Collaborate with regional partners to develop implementation of Climate Action Plan Initiative FY 2024 Q4 City Manager

2.720 Explore innovative incentives to enourage environmentally friendly actions including conversion and installation of electrical appliances in homes and increase the use of electric agricultural equipment FY 2024 Q4 Community Development

2.721 Identify City's Heat Pumps Community Development

2.722 Develop plan to replace heat pumps with environmentally better options Community Development

2.730 Work with Napa County to put in a free willow mat to stop the erosion at the bank next to our WWTP Public Works

2.740 Trees (Subsections 2.741 & 2.742)

2.741 Support/promote a Earth Day event/Tree Planting at our Urban Forest (Redwood Forest) FY 2024 Q4 Parks & Recreation

2.742 Work with Napa RCD/Million Trees to plant the right trees whenever the City cuts down/replaces trees FY 2024 Q4 Public Works

2.750 Collaborate with community group to add pollinator garden in a suitable location FY 2024 Q2 Library

2.760 Encourage more residents into the MCE deep green program and establish community-wide participation goals FY 2024 Q3 Public Works

2.770 Adopt a Foodware Ordinance (AB 1276) Community Development

2.780 Explore partnering with MCE for potential UpValley biomass facility FY 2026 Public Works

2.790 Initiate Upper Valley energy resilience program FY 2026 Public Works

2.800 Continue Implementation of Riverwatch/Water Audit Requirements FY 2024 Q4 City Manager

2.900 Develop RHNA-required infrastructure impact plan FY 2027 Public Works

2.1000 Perform Walkability/Bikeability Analysis FY 2025 Public Works

2.1010 Analyze St. Helena Vine Trail route options and facilitate Council decision making on preferred route FY 2024 Q2 Public Works

2.1020 Explore E-Bikes via grant for the City FY 2025 Public Works 3 of 9

Agenda Item #12.1.

Workplan Number Council Goal 3
Water Security
Estimated
Fiscal Year Completed
Lead
Department

3.100 Update Water Supply Policies

3.110 Update Water Neutrality Policy and Safe Yield Analysis FY 2024 Q4 Public Works

3.200 Water Contract Review

3.210 Reveiw and Revise Carpenter Water Agreement FY 2024 Q2 City Manager

3.220 Evaluate feasibility of modifications to existing gagreements with large water users to establish firm caps in order to safeguard water supply City Manager

3.300 Commence compliance review of projects with Conditions of Approval requiring water neutrality FY 2025 Public Works

3.400
Review concrete recommendations from recent county processes related to our water resources (LAFCO Municipal Service Review, the Groundwater Sustainabiltiy Plan Advisory Committee, the Napa County Drought Contingency Plan, etc.) and determine how we can use the information to inform our decision-making FY 2024 Q4 Public Works

3.500 Review Current Water Allocations During Phase II and Phase III Water Emergencies for any Recommended Changes FY 2024 Q4 Public Works

3.600 Review and Evaluate Current Penalty Structure for the Phase II and Phase III Water Emergency FY 2025 Admin. Services

3.700 Develop and Refine Incentive Programs FY 2024 Q4 Public Works

3.800 Regional Water Supply Strategies

3.810 Evaluate and pursue additonal water sources (Alternative Municipal Wells, Sites Reservoir in Colusa County, Adventist Health Wells, Rector Dam surplus water, etc.) FY 2025 Public Works

3.820 Conduct an assessment of the Physical Security of Plants FY 2025 Public Works

3.900 Investigate feasibility of using recycled/reclaimed wastewater for either groundwater recharge or for mixing with our domestic water supplies FY 2024 Q4 Public Works
4 of 9

Agenda Item #12.1.

Workplan Number Council Goal 4
Community Information and Engagement
Estimated
Fiscal Year Completed
Lead
Department

4.100 Create a Communications Plan for Public Information and Engagement

4.110 Develop 5 Informational Videos FY 2024 Q4 City Manager

4.120 Implement a mobile-based application for residents to submit and track concerns and requests FY 2024 Q3 Parks & Rec

4.130 Refresh and Updated Website FY 2024 Q4 Parks & Rec

4.131 Develop process & technology to update City's website with current status of significant infrastructure projects and rolling financial forecasts FY 2024 Q4 Parks & Rec

4.140 Make presentations to community groups to create better understanding of City issues FY 2024 Q4 City Manager

4.150 Educate and encourage community to contact specific departments for services FY 2024 Q2 City Manager

4.160 Create and publicize FAQs web pages so that residents know who to contact when issues arise FY 2024 Q1 City Manager

4.170 Update City's phone tree FY 2024 Q1 City Manager

4.180 Develop comprehensive PR program to highlight successes in St. Helena and encourage more business investment FY 2024 Q2 City Manager

4.190 Communication of Updated CIP Status FY 2025 City Manager

4.200 Develop a Citizens Academy to provide residents with an opportuniy to learn about the different facets of local government and connect with fellow community partners and organizations FY 2025 City Manager

4.300 Evacuation Drills with Large Complexes within the City FY 2024 Q1 Police

4.310 City Evacuation Drill - Zonehaven Quadrant 1 FY 2024 Q4 Police

4.320 City Evacuation Drill - Zonehaven Quadrant 2 FY 2025 Police

4.330 City Evacuation Drill - Zonehaven Quadrant 3 FY 2026 Police

4.340 City Evacuation Drill - Zonehaven Quadrant 4 FY 2027 Police

4.400 Conduct Community Survey in 2023 and 2025 FY 2024 Q2 City Manager

4.500 Incorporate budget performance measurements into the bi-annual budget FY 2024 Q4 Administrative Services

4.600 Refresh City's branding with Coordinated Style Guide, Website, and Logo Update FY 2025 City Manager

4.700 Implement new Parks & Recreation registration and reservation software to provide better service and response time to community requests FY 2024 Q4 Parks & Rec
5 of 9

Agenda Item #12.1.

Workplan Number Council Goal 5
Quality of Life
Estimated
Fiscal Year Completed
Lead
Department

5.100 Encourage Housing Alternatives to Meet the Community's Interest and Incomes

5.1010 Launch a “This is St. Helena” campaign from the eyes of the youth. FY 2026 City Manager

5.110
Address Workforce Housing through Policy Actions, e.g.:
- Development Agreements (ongoing)
- Housing Element Update (90% complete)
- Inclusionary Housing Ordinance (part of Zoning code update) - code adoption Summer 2023 FY 2024 Q1 Community
Development

5.1100 Provide annual Police Policy Update Report to City Council FY 2024 Q4 Police

5.1200 Provide Gun Safety Outreach and Education to the Community FY 2024 Q4 Police

5.1300 Apply for Age Friendly Designation for St. Helena Multi-year Parks & Recreation

5.1400 WILDFIRE PREPARATION AND PREVENTION

5.1410 Implementation of FEMA Hazard Mitigation Grant awarded to St. Helena FY 2025 Fire

5.1420 Host a Hazard Mitigation for Wildland Urban Interface Areas of St. Helena Community Outreach & Workshop FY 2024 Q1 Fire

5.1430 Certify St. Helena as a "Fire Safe Community" FY 2025 Fire

5.1440 Maintain Community Compliance With Updated Hazard Mitigation Plan FY 2024 Q4 Fire

5.1500 Design and Lead Annual Emergency Operations Center (EOC) Tabletop Exercise FY 2024 Q1 Fire

5.1600 Complete playground equipment replacement at Crane Park. FY 2024 Q4 Parks & Recreation

5.1700 Complete Conversion of tennis court to pickleball courts at Crane park FY 2024 Q1 Parks & Recreation

5.1800 Develop a Volunteer Program FY 2025 City Manager

5.1810 Create structured intake and tracking process for new and ongoing volunteers FY 2024 Q3 City Manager

5.1820 Establish a regular park beautification volunteer opportunity (Ex: Weeding Wednesdays) FY 2024 Q1 City Manager

5.1830 Identify community partners who have volunteer opportunities and streamline registration process for residents FY 2024 Q4 City Manager

5.1840 Utilize community volunteers to help freshen St. Helena's curb appeal and community spirit by implementing self-administered and self-funded beautification projects FY 2025 City Manager

5.1850
Facilitate the establishment of a non-profit St. Helena Community foundation to continously raise money and manage small-scale community enrichment programs that improve physical attractiveness and curb appeal
FY 2024 Q1 Parks & Recreation

5.1900 Research and present to Council the opportunities and challenges of Cannabis distribution in the City FY 2025

5.200
Consider and synthesize stakeholder housing recommendations and recommend short and long-term housing initiatives to the City Counicl, including advancing the use of one or more of city-owned parcels (including Adams Street) for affordable housing
FY 2025 Community Development

5.300 Community Enhancements

5.310 Explore the feasibility of offering Community WiFi FY 2025 Public Works

5.320 Work in partnership with School District to provide structured use and increased access to community facilities FY 2024 Q4 Parks & Recreation

5.330 Develop More Public Bathrooms FY 2025 Public Works 6 of 9

Agenda Item #12.1.

5.400 Community Programs

5.410 Arts & Culture Program

5.411 Create a Public Art Policy FY 2024 Q4 Parks & Recreation

5.412 Complete a current state assessment and draft a comprehesive strategy to develop future arts & cultural programming, events, and partnerships FY 2025 Parks & Recreation

5.413 Explore Ideas for new performing arts venues/facilities, tie into Parks & Recreatoin Master Plan (if appropriate), repurpose obsolete assets FY 2025 Parks & Recreation

5.414 Develop funding strategies for new performing arts venues/facilities (see above) FY 2025 Parks & Recreation

5.420 Enhance Special Events/Community Gatherings/Programs Parks & Recreation

5.421 Explore programming, events, and gathering opportunities for teens and young adults by engaging with City Council Youth Represetatives, high school service clubs, and survey tools FY 2024 Q4 Parks & Recreation

5.422 Increase participation, access, and inclusion of our Latinx community in recreation programs, events, and engagement processes FY 2024 Q2 Parks & Recreation

5.423 Amphitheater City Manager

5.424 Increase Services/Programming to Spanish Speaking FY 2024 Q4 Library

5.500 Offer additional outdoor recreation activites and increased access to open space and trails leading to a more Walk and Bike Friendly Community FY 2024 Q4 Parks & Recreation

5.510 Complete Phase I - Citywide Active Transportation Plan/Safe Routes to School Plan (Madrona/Spring St.

Pedestrian Improvements) FY 2024 Q4 Public Works

5.520 Complete Phase II - Citywide Safe Routes to School (SR2S) analysis FY 2025 Public Works

5.530 Advance progress on development of walking trails FY 2025 Community Development

5.540 Assess baseline condition of sidewalks and develop approved program for long-term maintenance and repair of City sidewalks FY 2025 Public Works

5.600 Develop Downtown Plaza/Square Plan FY 2024 Q4 Community Development

5.610 Initiate Gateway and Wayfinding Signage Program to Create a Sense of Space FY 2025 Community Development

5.620 Collaborate with the St. Helena Historical Society to recognize the Chinese in St. Helena & their historical significance FY 2024 Q4 City Manager

5.630 Develop recommendations that would install appropriate wayfinding signage, historical markers, including consideration of entry welcome signs FY 2025 Community Development

5.700 Complete Zoning Code Update FY 2024 Q1 Community Development

5.800 Complete a Parks & Recreation Master Plan FY 2025 Parks & Recreation

5.900 Consider Developing a Youth and Families Master Plan for increased accountability, stronger collaboration and better coordination of services FY 2026 City Manager
7 of 9

Agenda Item #12.1.

Workplan Number City Manager Goal 6
Develop Multi-Prong Strategy to Enhance Morale, and Retain & Recruit Highly Skilled Personnel Estimated
Fiscal Year Completed
Lead
Department

6.100 COMPENSATION

6.110 Provide Market Based Competitive Compensations FY 2024 Q1 City Manager

6.120 Research implemention of Pay for Performance FY 2024 Q3 City Manager

6.200 RECRUITMENT

6.210 Develop Recruitment Videos that Highlight St. Helena as a Great Place to Work FY 2024 Q4 City Manager

6.220 Explore development of City Employee Housing Options FY 2026 City Manager

6.225 Explore changes in compensation structure including housing incentives to enchance recruitment and retention
FY 2025 Administrative Services

6.300 RETENTION

6.310 Develop Employee Recruitment and Retention Strategy FY 2024 Q4 Administrative Services

6.320 Develop a formal crosstraining and skill expansion plan FY 2024 Q4 Administrative Services

6.330 Prepare employee succession plan and/or strategy to help retain employees and minimize turnover costs FY 2024 Q2 Administrative Services

6.340 Develop and implement a robust Performance Appraisal Program FY 2024 Q2 Administrative Services 8 of 9

Agenda Item #12.1.

Workplan Number City Manager Goal 7
Improve Organization Effectiveness and Enhance Service Delivery to the Community Estimated
Fiscal Year Completed
Lead
Department

7.100 Complete Public Works Standards Update FY 2024 Q1 Public Works

7.200 Commence discussions with NVC for potential purchase and partial leaseback of Upvalley Campus FY 2025 City Manager

7.300 Develop "express lane" approval for broader category of routine permits FY 2024 Q2 Community Development

7.400 Implement internal staffing, process and technology to improve performance and speed FY 2024 Q2 City Manager

7.500 Improve coordination across internal departments for approvals; reduce "silo" effects (new development) FY 2024 Q4 City Manager

7.600 Institute 2-year budget cycle FY 2024 Q1 Administrative Services

7.700 Adopt outside-in operating mentality (look at it from the customers perspective) FY 2024 Q4 City Manager

7.800 Develop Internship Program FY 2024 Q1 Administrative Services

7.900 Provide semi-annual updates on workplan status/completed tasks FY 2024 Q2 Administrative Services

7.1000 TECHNOLOGY IMPLEMENTATION

7.1010 Implement NeoGov Software FY 2024 Q4 Administrative Services

7.1020 Review and Update Library Technology Policy and Procedure FY 2024 Q2 Library

7.1030 Implement Countywide State and Federal DOJ mandated reporting system, radio encryption system, and software/training in conjunction with the County of Napa FY 2024 Q4 Police

7.1040 Implement Online permitting software FY Community Development

7.1050 Evaluate services MarinIT is providing and explore alternate options FY 2025 Administrative Services

7.1060 Provide training on current IT Software FY 2024 Q4 Administrative Services

7.1100 Develop a Training and Development Program FY 2025 Administrative Services

7.1200 Explore Shared Dispatch Services with Calistoga - Ties to Goal 1 FY 2024 Q2 Police

7.1300 Update Procurement Policies (Ordinance) FY 2025 Administrative Services

7.1400 Coordinate Council Study Session to analyze options related to developing a robust Code Enforcement Program (potentially with the City of Calistoga) that is efficient, readily understandable, and predictable Community Development 9 of 9

Agenda Item #12.1.

February 15, 2023
City of St. Helena
City Council Workshop
Held January 23, 2023
Agenda Item #12.1.

Agenda Item #12.1.

City Council Workshop
Error! No text of specified style in document. Baker Tilly i
Workshop Report......................................................................................................................................1 Workshop Overview........................................................................................................................1 Opening Comments.........................................................................................................................3 Ice Breaker Exercise..........................................................................................................................4 Council and Community Themes..................................................................................................5 Financial Outlook.............................................................................................................................7 Accomplishments.............................................................................................................................8 Short- and Longer-Term Priorities and Strategies.......................................................................9 Getting to Success...........................................................................................................................10 Wrap-up and Next Steps...............................................................................................................12 Agenda Item #12.1.

Agenda Item #12.1.

City Council Workshop
Workshop Report Baker Tilly
1 Workshop Report
The City of St. Helena held a City Council workshop on January 23, 2023 from 9 a.m. to 3:30 p.m. at the Native Sons Hall. The workshop provided an opportunity for Councilmembers to hear themes from the Council interviews conducted by Baker Tilly and a recent community survey conducted by Godbe Research, receive a preview of Baker Tilly’s forthcoming presentation of the City’s financial forecast, discuss goals and strategies, and establish priorities. This report contains a summary of the results of the workshop session.

The Baker Tilly team of Nancy Hetrick, Christine Butterfield, and Steve Toler facilitated the workshop.

Workshop Overview
Objectives
• Establish City Council goals and priorities.
• Identify shared expectations of working together to get results.

Agenda Item #12.1.

City Council Workshop
Workshop Report Biker Tilly
2 Participants
City Council
Staff
• Anil Comelo, City Manager
• April Mitts, Assistant City Manager
• Ethan Walsh, City Attorney
Agenda
• Welcome and call to order by the Mayor
• Review workshop agenda, purpose, and objectives
• Participate in ice breaker exercise
• Review and discuss themes from Council interviews and the community survey
• Review the City’s financial outlook
• Discuss goals and strategies
• Establish priorities
• Discuss shared expectations for getting results
• Wrap up and next steps
Agenda Item #12.1.

City Council Workshop
Workshop Report Baker Tilly
3 Workshop Ground Rules
At the start of the workshop, the facilitators suggested several ground rules to help the group have a successful workshop.
• Be curious
• Speak one at a time
• Listen to understand
• Show respect for all
• Individually participate in the dialogue
Bike Rack
The facilitators explained that items that were brought up but could not receive immediate attention would be added to a “bike rack.” The following item was added to the bike rack during the workshop. • Reminder that language matters
• Focus on what is good for the community vs. climate change theory
Workshop Preparation
In preparation for the workshop, the facilitators held individual interviews with each Councilmember and discussed workshop objectives with the City Manager and Assistant City Manager. Baker Tilly prepared a staff questionnaire to gather a list of current projects and staff’s input about upcoming challenges and opportunities. Baker Tilly also prepared an agenda and presentation along with other materials to guide discussions during the session.

Opening Comments
Mayor Dohring convened the workshop and asked for the roll call. All Councilmembers were present. The Mayor welcomed everyone, thanked Councilmembers for attending and asked for public comment. Seeing none, the Mayor turned the meeting over to the City Manager.

City Manager Comelo reviewed the purpose of the workshop and then turned it over to the facilitators. Nancy, Christine, and Steve introduced themselves, and reviewed the workshop agenda, objectives, and ground rules.

Agenda Item #12.1.

City Council Workshop
Workshop Report Biker Tilly
4 Ice Breaker Exercise
The facilitators began the workshop by asking each Councilmember to share their thoughts about attributes of high-performing Councils and what they want their legacy to be. The attributes that were identified as contributing to high performance are listed below.
• Strong listening skills
• Pragmatism
• Respect for all
• Making room for all
perspectives; each
represents the entire
community
• Effective communication
and responsiveness
• Partnership; we are one
team
• Room to show passion and
leverage strengths
• We affirm one another
• Quality policy built on
dialogue and discussion
• Respect differences and
listen to understand
• Be open, do not pre-judge
ideas (be present)
• Feel the “team-ness”
• Be open to changing
perspectives
• “I’ve come to contribute”
• Listen to learn
• Trust, including being
consistent; going to
individuals directly to
address issues
• Avoid surprises
The desired legacies of this Council are listed below.
• Make things better for St. Helena
• Make progress on water supply issues
• Improve our fiscal outlook
• Make improvements to Main Street
• Get back to a culture of kindness, model positive behavior • Face tough decisions and make good choices
• Recover the health of our community
Agenda Item #12.1.

City Council Workshop
Workshop Report Baker Tilly
5 Council and Community Themes
The facilitators then transitioned the Council to a focused discussion about priorities. To do this, the facilitators provided background information including:
• Themes from the City Council interviews,
• Survey results regarding community priorities administered by another consultant, and
• Preliminary observations presented by Steve Toler who is leading Baker Tilly’s team supporting St. Helena’s financial sustainability.

The facilitators began by presenting the major themes identified during the Council interviews. They are listed below.
• Reduce the number of Council priorities;
• Balance priorities with limited capacity/resources;
• Make infrastructure improvements;
• Address water security and scarcity (i.e., recycled, supply, conservation);
• Balance business and tourism interests with quality of life; • Improve communications, public engagement, and public education; and
• Foster effective working relationships as a City Council.

The facilitators then presented priorities from department director surveys. They are listed below.
• Ensure budget sustainability, implement funding and revenue strategies and grant opportunities;
• Invest in infrastructure projects, equipment and technology updates;
• Maintain service levels;
• Increase/expand community programs and engagement;
• Comply with mandates and legislation (i.e., hybrid/electric fleet); and
• Address staff retention, recruitment, and capacity.

Godbe Research conducted a community survey from December 7 to 15, 2022. There were 364 responses.1 To further the conversation about priorities, the facilitators highlighted some key results pertaining to community satisfaction and perceptions about the City’s performance. 1 Godbe Research 2022 Resident Satisfaction Survey, December 2022.

Agenda Item #12.1.

City Council Workshop
Workshop Report Baker Tilly
6 Tables 1, 2, and 3 include the results presented to Council. Table 1 includes overall community satisfaction categories.

Table 1. General Satisfaction, Resident Satisfaction Survey Conducted by Godbe Research Godbe Research Survey Questions and Responses Percent
Overall quality of life in St. Helena
Satisfied 78.2%
Dissatisfied 21.7%
St. Helena as a Place to Raise a Family
Satisfied 75.2%
Dissatisfied 10.9%
Table 2 presents issues identified by community members that responded to the survey while Table 3 sorts community service satisfaction from high, to low. High is depicted by the green shading while low is represented by the red shading.

Table 2. Important Issues from Resident Satisfaction Survey by Godbe Research Important Issues Facing St. Helena Percent
Water supply/water quality 38.6%
No rent control/affordable housing 25.1%
Cost of living/financial stability/inflation 18.8%
Road repairs/potholes 18.2%
Infrastructure 14.4%
Table 3. Resident Satisfaction with Services, Programs, and Facilities, by Godbe Research Agenda Item #12.1.

City Council Workshop
Workshop Report Baker Tilly
7 Financial Outlook
As noted above, Baker Tilly is assisting the City with developing a longrange financial forecast. The forecast and budget strategies will be presented to Council in late February 2023. Steve Toler presented a preliminary overview of the project purpose, key trends and typical financing strategies to assist the City Council with the process of goal setting and prioritization at the workshop. He presented the information below about the purpose of a long-range financial plan.

Long-Range Financial Planning
• Updated revenue trends
• Realis�c long-range
opera�onal needs
• Addressing unfunded/
underfunded capital
needs
• An�cipa�ng community
needs and opera�onal
capacity to meet those
needs
Realis�c longrange forecast
• Iden�fying budget
strategies to address gaps
such as
o Revenue enhancements
o Cost containment
o Service delivery changes
o Service level reduc�ons
Addressing any
exis�ng fiscal
gaps
• Streamlining service
delivery
• Iden�fying ongoing
revenue opportuni�es
• Iden�fying one-�me
funding needs for capital
needs
Building
addi�onal
capacity
20 Financial Outlook
• City’s General Fund forecast
prepared for FY 2022 -23
budget
• Forecast indicated reserves
above minimum target
• Forecast indicates
breakeven opera�ons
• Infla�onary pressures and
increasing capacity will
nega�vely impact outlook
• Updates will be provided at
the February 28 mee�ng
22 Agenda Item #12.1.

City Council Workshop
Workshop Report Baker Tilly
8 Steve also discussed how policy makers can utilize the forecast to inform decisions and address financial gaps.

The facilitators asked Council for their initial observations of the forecast project approach and trends. Their remarks are listed below. • Consider including additional information to evaluate the impact of past recessions on services, programs, and staffing • Expenditures reflect 90% to 95% of the work plan and the resources are committed. What’s available for new projects and how realistic is our forecast?
• Balance revenue growth with increased fees and rates
• Share examples of similarly sized communities; “The
community keeps saying, just get grants”
• Love the “dials” concept
• Consider sorting projects from urgent to fund, good to fund, nice to fund
Accomplishments
The facilitators led the group in a review of recent accomplishments by the City. The purpose of this discussion was to recognize and celebrate successes and reflect on the progress that has been made on Council’s priorities.

The facilitators asked the group what they are most proud of and what factors contributed to the successful outcomes. A summary is provided below.
• Climate initiatives, yet there is more to do.

Long-Range Budget Strategy Examples
Cost controls and
expenditure shi�s
• Streamline service
delivery
• New fees to address
City-incurred costs
• Cost alloca�on
methodology
changes
• Transfers to/from
special revenue or
capital funds
Service delivery
alterna�ves
• Shared services
• Contrac�ng services
• Insourcing services
• Public/private
partnerships
Revenue
Enhancements
• Expand base to
increase tax
revenues
• Increase tax rates
• Increase cost
recovery on fees
and charges
• One-�me and
ongoing external
funding op�ons
(e.g., grants)
Service level
reduc�ons
• Reduce
maintenance
standards
• Reduce work week
• Reduce/eliminate
non-essen�al
services
24 Agenda Item #12.1.

City Council Workshop
Workshop Report Baker Tilly
9 • We have the Napa Valley College lease, but there are continuing issues, when will we move in?
• Water management amid the drought
o Proposed penalties; conservation
o Proud of the response so far
• Responded to a series of major issues simultaneously, including:
o Extreme fires
o Collapse of City Hall
o Water emergency
• Practiced evacuations, continue learning
• Main Street is rebounding, still a lot of work to support its revival • Farmstead hotel has been approved
• Increased affordable housing
• Increased water conservation; and conservation rates have remained up
• Maintained a stable environment amid all the crises
• Make more time to celebrate accomplishments going forward Short- and Longer-Term Priorities and Strategies
The facilitators reviewed the identified priorities and led a discussion and dot voting exercise to develop Council’s short- and longer-term strategies to accomplish the priorities.

Sustainable Organization
Infrastructure and Sustainability
Water Security
Community Engagement and Education
Quality of Life
The outcome of the discussion and Council prioritization results are provided below.

Sustainable Organization
• Implement financial sustainability strategies (5 votes) • Manage priorities and provide regular updates to Council and the public
• Implement policies to attract and retain staff
• Explore long-term city hall location/facility options Infrastructure and Sustainability
• Prepare an infrastructure strategic plan and establish a reporting process (4 votes)
Agenda Item #12.1.

City Council Workshop
Workshop Report Baker Tilly
10 • Adopt a comprehensive Capital Improvement Program
• Implement a plan for downtown improvements, including Main Street
• Revisit pavement management plan to prioritize City road improvements
• Implement a climate action plan
Water Security
• Update water supply policies (4 votes)
• Develop and implement water reclamation and conservation plans
• Continue to implement wastewater treatment improvements • Explore feasibility of shared staffing model
Community Engagement and Education
• Create a communications plan for public information and engagement (3 votes)
• Develop inclusion policies and implement engagement and outreach
Quality of Life
• Encourage housing alternatives to meet the community’s interest and incomes (3 votes)
• Maintain or enhance community programs; develop, update and educate about fire and emergency preparedness
• Recruit and attract businesses that support/improve quality of life • Educate the public about water conservation strategies Getting to Success
The group reflected on what it means to govern as a team and the roles and responsibilities of Council and City staff. The facilitators provided information on best practices that make councils work well and reviewed the importance of effective governance.

Agenda Item #12.1.

City Council Workshop
Workshop Report Baker Tilly
11 The facilitators referred to the article, Attributes of Exceptional Councils, from the Institute for Local Government (ILG) and discussed attributes of high-performing Councils. Six attributes of high-performing Councils are provided below.

Attributes of High-Performing Councils
 Have a sense of team; a partnership with the city manager to govern and manage the city
 Have clear roles and responsibilities that are understood and adhered to
 Honor the relationship with staff and each other
 Routinely conduct effective meetings
 Hold themselves and the city accountable
 Have members who practice continuous improvement
Councilmembers spent the next segment of the workshop reflecting on how they govern effectively together. The group reviewed and discussed the ILG article and the examples of Council norms that were handed out by the facilitators.

The group then reflected on norms, which dictate how Council operates as a governing body. As the Council continues to grow as a team, they have the opportunity to review meeting procedures and governing best practices.

The facilitator asked Councilmembers what they expect from one another and what they expect from themselves for effective governing. The responses are listed below.

Everyone Has a Role to Play in a City’s Success
31 Council
sets the
priori�es and
policies
Day-to-day
work of the
City is done by
staff
Partnership is
cri�cal for
success of the
City
Agenda Item #12.1.

City Council Workshop
Workshop Report Baker Tilly
12 • Increase the frequency of Council discussions (i.e., every six months.
• Consider implementing a strategic planning process that engages the community (five year).
• Integrate the existing work plan with priorities from today’s workshop.
• Review the City’s vision and mission statements with fresh eyes. • Create an official bike rack for new ideas.

Wrap-up and Next Steps
Council requested that staff review the previous Council priorities list and report on accomplishments. They asked that staff also propose an approach to aggregate that information with the information generated through the Council workshop.

To conclude the workshop, Nancy explained that Baker
Tilly would prepare this summary report.

Councilmembers expressed their gratitude to staff for
their hard work and dedication.

Agenda Item #12.1.

Rev Policy Res. 2022;39:143–169. wileyonlinelibrary.com/journal/ropr | 143
Received: 26 July 2021 | Revised: 19 September 2021 | Accepted: 23 October 2021 DOI: 10.1111/ropr.12460

ORIGINAL ARTICLE
What do we know about opportunities and
challenges for localities from Cannabis
legalization?
Parisa Kavousi | Taylor Giamo | Gwen Arnold |
Mateo Alliende | Elisabeth Huynh | Jaclyn Lea |
Rachel Lucine | Alexandria Tillett Miller | Alana Webre | Aneka Yee | Adrianna Champagne-Zamora | Keith Taylor
This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited. © 2021 The Authors. Review of Policy Research published by Wiley Periodicals LLC on behalf of Policy Studies Organization Environmental Science and Policy,
University of California, Davis, Davis,
California, USA
Correspondence
Gwen Arnold, Environmental Science
and Policy, University of California,
Davis, Davis, CA, USA.

Email: [email protected]
Abstract
Thisreview article assaysthe scholarly and popular press literature on the opportunities and challenges the growing legalized cannabis industry offers U.S. local governments and communities. Localities are an important focus because in many states with legalized cannabis,
local jurisdictions have authority to prevent or condition its cultivation, sale, and use. Opportunities potentially flowing to localities from legalization include increased tax revenues and land values, business expansion, and
increased employment; public health and safety benefits; and the potential for legalization to advance social and racial inclusion. Challenges include the possibility that economic benefits will be more limited than anticipated; complex regulatory environments facing local governments and cannabis businesses, possible increases in pollution, blight, and public health and safety concerns; and less advancement of social and racial equity than
hoped by advocates. We offer recommendations for
scholars investigating cannabis governance concerns
and practitioners directly grappling with them.

Agenda Item #12.1.

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INTRODUCTION
Thirty-six U.S. states allow cannabis usage and cultivation for medical or recreational purposes, despite its federal illegality (Hartman, 2021). The rate of American adults supporting legalization has climbed steadily over time, from 12% in 1969, 30% in 2000, more than 50% just a decade later, and nearly 70% in 2020 (Brenan, 2020). Decisions by many state and local governments to classify cannabis provision as an “essentialservice” during the COVID-19 pandemic demonstrate this shift (see Angell, 2020). U.S. cannabis industry sales are projected at $92 billion in 2021 (Kugelman, 2021). A policy and perceptual sea change is clearly swelling.

We assay the state of knowledge on opportunities and challenges legalized cannabis offers localities, a term we use to encompass actors involved in the governance of sub-state jurisdictions (e.g., counties, cities, towns) and the communities they serve. Localities are an important focus because in many states with legalized cannabis, localities can prevent or condition its cultivation, sale, and use. For example, in California, if fewer than 50% of local voters supported state legalization, a local government does not have to develop a cannabis permitting regime (Lux, 2019); as of 2019, only about one-third of California cities and counties allowed cannabis businesses (Adinoff & Reiman, 2019). Similarly, in Oregon a community general referendum can allow a local government to prohibit cannabis sale or use (Carnevale et al., 2017). In Michigan, 250 communities have banned cannabis businesses (Adinoff & Reiman, 2019). Many other U.S. localities are developing regulations to facilitate the transition from illicit to licit cannabis operations (Valachovic et al., 2019).

We aim to provide a roadmap for the field of cannabis policy scholarship, highlighting timely unanswered questions and puzzles across the range of domains implicated in the governance of cannabis-related activities. Much of the policy scholarship around cannabis is currently fragmented, e.g., with economic development scholars investigating emerging taxation regimes, health policy researchers analyzing how different legalization approaches impact cannabis usage, crime-concerned researchers studying implications of legalization for public safety, and so on. It is important that scholars and practitioners grasp the full range of impacts from cannabis legalization because communities grapple with that full suite. While these opportunities and challenges could and should be examined at multiple governance scales, we focus on local governance because this is where “rubber hits the road” for stakeholders. Local governments increasingly are using land use and police power authority, taxation, investment, and programming to shape how their residents engage with cannabis.

We also hope to confront and reduce the stigma of studying cannabis and seriously address its governance. This stigma is inherently entrenched and complicit in the subjugation of marginalized groups disproportionately harmed by the United States's long-running war on drugs.

Moving cannabis into mainstream policy scholarship means centering the unequal burdens of cannabis criminalization borne by Black and Brown people; the difficulties people of color, small businesses, and formerly illicit operators experience trying to participate in the legalized market;

KEYWORDS
Cannabis, drugs, governance, legalization, local government, locality, marijuana
15411338, 2022, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/ropr.12460, Wiley Online Library on [29/04/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License Agenda Item #12.1.

| CANNABIS LEGALIZATION 145
and distributional inequities in the industry's economic benefits and public health, environmental, and social impacts. Policy scholars must urgently attend to these issues.

The paper proceeds as follows: We briefly overview U.S. cannabis regulation, summarize the economic, public health and safety, and equity opportunities cannabis legalization offers localities, then detail the challenges legalization poses for localities in terms of costs, regulatory burden, and potential threats to the environment, public safety and health, community character, and equity. We summarize key lessons and priorities for researchers and practitioners in the cannabis governance space, then conclude.

U.S. CANNABIS REGULATION
U.S. law recognizes two types of Cannabis sativa: (1) drug-type, containing ≥0.3% of the psychoactive component delta-9-tetrahydrocannabinol (THC), and (2) non-drug type, or hemp, with <0.3% THC (Land, 2020).1 Some U.S. states began prohibiting one or both in the 1910s, and the national government followed, first with strict regulations in the U.S. Marijuana Tax Act of 1937 and then a total ban in the U.S. Controlled Substances Act of 1970 (Gieringer, 1999).

The 1960s–1970s saw a rising legalization movement, fed by anti- Vietnam War fervor, the return of troubled soldiers, and the hollowing out of rural communities. Some states and localities decriminalized cannabis possession, allowing people to hold small quantities without being arrested or imprisoned (Hartman, 2021). The reform effort was buoyed by increasing attention to cannabis's medicinal properties, such as potentially reducing anxiety and pain. However, it was subject to sharp pushback in the late 1970s and 1980s, when anti-drug sentiment and policy led to widespread recriminalization (Dufton, 2017).

Tides shifted again in the late 1990s, when California legalized medical cannabis in 1996, followed by Alaska, Oregon, and Washington in 1998, and eventually joined by 32 additional states (NORML, 2021). States' embrace of medical cannabis was encouraged by a 2009 U.S. Department Justice memo directing U.S. attorneys not to focus federal resources on anti-cannabis enforcement in states that legalized medical use. The opioid crisis may have helped build momentum; opioid overdose deaths appeared lower in states where medical cannabis was legal, 1999–2010 (Bachhuber et al., 2014; Bridgeman & Abazia, 2017), and in 2017 New York and Illinois began explicitly allowing patients to replace opiates with cannabis (Voelker, 2018). State legalization of recreational cannabis began in 2012, with ballot propositions in Colorado and Washington; today, 18 states allow recreational cannabis (Leins & Alas, 2021).

In the wake of state legalization, many local governments began to use land use, police power, and taxation authorities to regulate or ban cannabis activities locally, often explicitly encouraged by state statutes (Carnevale et al., 2017; Lux, 2019; Payan et al., 2021). Yet state and local regimes legalizing cannabis contradict federal law, which considers cannabis a Schedule 1 drug and bans its production, distribution, and use (Hannah & Mallinson, 2018). This disconnect produces a range of consequences undergirded by uncertainty and risk (Karch, 2021). By securing state orlocal cannabis licenses, operators make themselves vulnerable to potential federal prosecution (Martiroysan, 2017).

Local police may attempt to prevent growth and distribution, potentially partnering with federal law enforcement (Polson & Petersen-Rockney, 2019). Landowners leasing land or facilities to cannabis operations can be held liable for criminal activity and their property seized by the federal government, even in states and localities that permit cannabis activities (Fersko et al., 2018).

Federal illegality creates financial challenges (Plakias et al., 2021). More than 99% of U.S. banks and credit unions do not lend to cannabis operations (Mallinson et al., 2020), since such 15411338, 2022, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/ropr.12460, Wiley Online Library on [29/04/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License Agenda Item #12.1.

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banks are required to report suspicious transactions to the federal government (Bronfein, 2016; Polson & Petersen-Rockney, 2019). Many insurance companies, bound by similar federal laws, will not insure cannabis operators (Polson & Petersen-Rockney, 2019; Wright, 2020). Cannabis businesses are not eligible for federal bankruptcy protections or federal tax incentives (Mallinson et al., 2020). In consequence, cannabis businesses are generally considered investment risks (Karch, 2021). They are primarily cash-based, which complicates paying vendors, employees, and taxes, and reduces transparency (Mallinson et al., 2020).

The salience of the federal threat may be declining (Hannah & Mallinson, 2018; Karch, 2021).

The George W. Bush administration threatened to prosecute people administering medical cannabis programs, but the Obama White House discouraged federal prosecution. In 2014, Congress adopted an amendment prohibiting federal enforcement of cannabis restrictions in states where medical use is legal and has renewed the amendment annually. Although the Trump administration rescinded guidance discouraging prosecution, federal prosecution for cannabis crimes actually declined notably in 2018 and 2019, likely due to limited enforcement resources (CRS, 2020; Mallinson et al., 2020).

OPPORTUNITIES LEGALIZATION OFFERS LOCALITIES
Economic benefits
Overall economic impacts
The cannabis industry's economic impact is large and growing. In 2020, U.S. legal cannabis sales were estimated at $19 billion (Bhattarai, 2021), up from $12.1 billion in 2019 (BDSA, 2021) and $10.8 billion in 2018 (Murphy, 2019). Since the majority of the world's cannabis sales remain illicit (Yakowicz, 2021), legal operators may have substantial growth opportunities. In a survey of Colorado local government officials, many who chose to legalize locally cited the opportunity to gain tax revenue and spur local economic growth (Johns, 2015).

Government revenue
Cannabis cultivation can bring localities significant revenues. States current lacking legal recreational markets could earn $10 to $450 million annually in excise revenues (Boesen, 2021).

Washington and Colorado alone were earning at least $12 million per month from the cannabis industry in mid-2016 (Carnevale et al., 2017).2 State governments typically levy excise and sales taxes, while localities can levy local sales, property, and special taxes. For example, Oregon local governments can add a 3% tax on top of the state's 17% tax (Firth et al., 2020). Illinois cannabis retail is subject to the 6.25% normal state sales tax, an additional tax that scales with potency, and potential local taxes up to an additional 3.5% (MPP, 2021). New York's new recreational cannabis tax scheme provides for a 9% sales tax, 3% local tax, 1% county tax, and additional possible taxes related to THC content (Cazentre, 2021).

These tax regimes can benefit localities. McGinty and coauthors' (2016) analysis of cannabis news coverage in major U.S. media outlets, 2010–2014, found that the most common arguments for recreational legalization touted tax revenues for public goods like education. In California, a portion of state cannabistax revenues go to communities disproportionately affected by past drug 15411338, 2022, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/ropr.12460, Wiley Online Library on [29/04/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License Agenda Item #12.1.

| CANNABIS LEGALIZATION 147
policies (Office of the Attorney General of California, 2016). In Santa Cruz, cannabis tax revenues help fund the county's nurse-family partnership programs (Krieger, 2019). In Washington, tax revenues support public education and public health interventions, including efforts to discourage underage drug usage (Carnevale et al., 2017). Some states and localities levy an “impact fee” requiring cannabis operations to help cover municipal costs related to the industry's local operation (Bartlett, 2021). Local governments use cannabis tax or fee revenues for public park maintenance, litter cleanup, policing, schools, drug treatment, researching the cannabis industry's impacts, job training, emergency shelters, and general operations, among other purposes (Bartlett, 2021; Hodgson, 2021; Office of the Attorney General of California, 2016; Rosario, 2021; Santos, 2021).

Ideally, these tax revenues exceed governments' costs of regulation, but finding the optimal tax rate can be challenging (Carnevale et al., 2017; Caulkin et al., 2012; Polson & Peterson-Rockney, 2019). Taxes that are too high may push buyers to the illicit market; if that market flourishes, governments may have to spend more to root it out while collecting lower-than-anticipated revenues (Carnevale et al., 2017; Chappell, 2019). California, for example, took in much lower than expected state tax revenues after moving from a loosely regulated medical market to a fully regulated retail one; analysts blame the state's high excise taxes and large, varied local taxes(Chappell, 2019; Daniels, 2019). Roughly half of California's cannabis sales are projected to still be illicit by 2024; in states with arguably less burdensome tax regimes, like Colorado and Oregon, fewer than 30% of sales are expected to be illicit (Chappell, 2019).

Savings from reduction in government criminal justice expenditures Cannabis legalization can reduce costs for governments and therefore taxpayers (Pacula & Sevigny, 2014). One of the most prominent pro-legalization arguments in the U.S. is the potential to reduce costly burdens on the criminal justice system (McGinty et al., 2016). Nationally, legalization of cannabis would save nearly $14 billion annually in enforcement costs, roughly $10.5 billion of which are borne by state and local governments (Miron, 2010). Most of these costs, in fact, are incurred by county and local law enforcement agencies (Caulkins, 2010).

Business expansion
A locality with legalized cannabis typically sees agricultural sector expansion, with growth in sales of farm supplies, generators, soil, and hardware, and investment in agricultural technology, research, and development (Owens, 2019; Polson & Peterson-Rockney, 2019). There is often growth in professional services, packaging, equipment sales and maintenance, security, and the financial investment sector, the latter particularly important because of the cannabis industry's limited access to conventional banking and lending.

Legalization encourages cannabis grow operations to expand outside of hidden, inaccessible areas (Kelly & Formosa, 2020). Cultivation requires infrastructure, potentially creating jobs in construction, forest management, firewood production, heavy equipment operation, and trucking (Valachovic et al., 2019). For example, an economic assessment for 2018–2019 in Willits, a small city in Mendocino County, California, reported that the cannabis industry produced about $18 million in construction activity and a “significant number” of new jobs (Gurewitz, 2019). 15411338, 2022, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/ropr.12460, Wiley Online Library on [29/04/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License Agenda Item #12.1.

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The service sector expands when new workers arrive and need places to shop, eat, and recreate. A 2020 analysis in Washington suggests that the cannabis industry generated roughly $1.8 million in gross state product via spending on local goods and services by employees in the cannabis industry or related sectors (Nadreau & Fortenberry, 2020). The cannabis distribution sector expands as operators produce and market a range of new products (Caulkin et al., 2012), as does the testing industry; the market for documenting cannabis quality is expected to be worth $1.8 billion by 2025 (Mehra, 2021).

In some places, cannabis is becoming a prestigious market with a touristic draw (Butsic et al., 2017; Keul & Eisenhauer, 2019). For example, non-residents are consistently responsible for nearly 10% of Colorado's cannabis sales; 9 months after Illinois launched its recreational program, nearly 30% of purchases were by non-residents (Long, 2020). Legalization increased hotel rooms rented per month in Colorado by 51,000 and added more than $23 million in revenues, 2011–2015 (Meehan et al., 2020). Demand is growing forinformed, professional dispensary workers; some organizations now offer cannabis sommelier certification programs (e.g., The Ganjier, 2021). Tours that take people to cannabis-themed destinations are gaining popularity (Keul & Eisenhauer, 2019). Appellations of origin and geographical indications widely used in the wine and tourism industry are gaining a toehold in cannabis. Growers and distributors are promoting cannabis strains associated with unique regions and terroirs (e.g., Crowder, 2020).

Job growth
Legalization presents a range of job opportunities at farms and cannabis businesses. In 2018 the legal U.S. market employed between 121,000 and 150,000 people (Schulz, 2019); other estimates are higher, at more than 211,000 (Murphy, 2019). Between 2015 and 2017, the legal industry in Colorado, Washington, and California employed roughly 12.4 full-time workers per $1 million in revenue (Schulz, 2019). The U.S. cannabis industry is one of the fastest-growing in the country, with jobs growing 68%, 2018–2019 (Nobile, 2020). This growth can benefit local economies, especially if cannabis operators hire locally (Wilson et al., 2019). Notably, the cannabis industry often pays well. Fifty-nine percent of cannabis growers recently surveyed in California reported paying seasonal workers above minimum wage (Valachovic et al., 2019; Wilson et al., 2019).

Higher rents and property values
Legalization increases demand for cultivable land, warehouse and distribution space, and housing, resulting in higher rents for landowners (Schwab & Butsic, 2017; Zhang et al., 2017). Lease prices for cannabis dispensaries and cultivation facilities can be 50%–75% greater than the market average for conventional retail, due to the industry's legal precarity (Nemeth & Ross, 2014).

Evidence increasingly suggests that property values and land prices increase where cannabis islegalized (Burkhardt & Flyr, 2019; Butsic et al., 2017; Caulkin et al., 2012; Cheng, 2018; Conklin et al., 2020; Fetick, 2018; Polson & Peterson, 2019). U.S. cities with retail dispensaries saw average home values increase by nearly $23,000 more than cities where cannabis was prohibited, 2014– 2019 (Babich, 2021). In Colorado and Washington, housing in neighborhoods where dispensaries opened experienced a 7% price appreciation (Kim et al., 2020). It is however worth noting that some studies (e.g., Thomas & Tian, 2017; Tyndall's, 2019, examining Washington overall and Vancouver respectively) find that cannabis operations reduce housing values. 15411338, 2022, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/ropr.12460, Wiley Online Library on [29/04/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License Agenda Item #12.1.

| CANNABIS LEGALIZATION 149
Public health and safety improvements
Legalizing cannabis may help improve public health and safety, since legalizing jurisdictions typically develop regulations for cultivation, sale, and use (Silver, 2020; Valdes-Donoso, 2019).

By contrast, the quality of illicit market cannabis is often questionable (Adams, 2019). A recent analysis comparing 3 legal market cannabis accessories (e.g., THC cartridges) to 15 purchased illicitly found that the majority of illicit products—but none of the legal ones—contained a residual solvent and/or pesticides (Ferguson et al., 2019). Toxic chemicals were found at nearly 90% of illegal grows raided in California in 2018 (Thompson et al., 2018).

Legalization increases safe access to cannabis, allowing people to reap health benefits ascribed to it without medical examination or registration (Pacula & Sevigny, 2014). Some evidence suggests that legalization enhances accessibility through lower costs to consumers; sale prices of high-potency cannabis products were lower in states that adopted medical cannabis laws between 1990 and 2011 than in states that did not (Anderson et al., 2013).

Moreover, legalization reduces the personal safety risks involved with seeking cannabis illicitly. Young cannabis users in Nevada report valuing the security associated with legal purchase (Amroussia's, 2020). Additionally, some legalization regimes allocate a portion of taxes and fees collected from the cannabis industry for supporting community health care (e.g., Pardo, 2014).

Cannabis's substitutability with other, arguably more damaging addictive products is an important public health consideration. While evidence for cannabis's substitutability for alcohol is mixed (Pacula & Sevigny, 2014; Risso, 2020), a stronger case may be emerging for opioid substitution (Nunberg et al., 2011; Voelker, 2018). This is particularly compelling given that state and local governments regularly spend more than $7 billion annually on criminal justice activities related to opioid abuse, dependence, and overdose, and at least $1.8 billion annually on abuse treatment (Florence et al., 2016). In a 2017 nationwide survey, among adults who reported using both cannabis and opioidsin the past year, 41% said they stopped orreduced opioid use as a result of cannabis use; 46% observed no change and 8% said they used opioids more (Ishida et al., 2019).

Shi and coauthors (2019) found a significant reduction in Schedule III opioid prescriptions, total doses, and spending in a group of eight states which made cannabis recreationally legal, 2010– 2017. Reiman and coauthors' (2017) survey of medical cannabis patients found that, among respondents who used opioids, 97% reported that cannabis helped them decrease opioid use (see Mercurio et al., 2019 for similar qualitative findings, Lucas, 2019 for similar results in Canada, and Corroon et al., 2017 in Washington). In 812 countiesin U.S.states with legal cannabis, higher incidence of cannabis dispensaries was correlated with fewer opioid-related deaths, 2014–2018 (Hsu & Kovacs, 2021).

Finally, cannabis legalization may improve public safety by increasing police effectiveness.

Comparing crime clearances by county and city police agencies in Colorado and Washington, post-legalization, to rates in the rest of the country, Makin and coauthors' (2019) found that rates in Colorado significantly grew for many crime types and grew in Washington for violent crimes and burglary. The authors posited that, freed from having to enforce cannabis prohibition, local police were able to devote more resources to other, more serious crimes. However, Jorgensen and Harper (2020) recently disputed the Makin claim, underscoring the need for greater investigation.
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Advancing equity and justice
Advocates for cannabis legalization argue that it can reduce the disproportionate incidence of arrests and convictions of poor people and minorities for cannabis-related charges (Carnevale et al., 2017). In the U.S., Black people are nearly four times more likely than white people to be arrested for cannabis violations, despite using cannabis at similar rates (Adinoff & Reiman, 2019). Prior to national legalization in Canada, Black people in five major cities were up to four times more likely than white people to be arrested for cannabis violations, and Indigenous people were up to six times more likely in four of five cities examined (Owuso-Bempah & Luscombe, 2021). Arrests, incarceration, bail, and engaging with the legal system all impose costs on already burdened groups (Pacula & Sevigny, 2014). Cannabis-related arrests are notably lower in U.S. states that have legalized; for example, Colorado's cannabis arrests fell by nearly 50% in less than two years following legalization; in Oregon, arrests fell roughly 90% in three years (Adinoff & Reiman, 2019).

The cannabis industry itself can be a growth engine for communities disproportionately affected by anti-drug campaigns (Reyes, 2021). Some states and local governments have made social and racial equity an explicit goal in their cannabis permitting regimes (Mallinson et al., 2020; Reyes, 2021; Smith, 2021). For instance, New York is aiming for half of adult-use licenses to go to applicants meeting social or economic equity criteria. Such applicants can access low or nointerest loans, reduced or waived fees, legal advice, job training, and licensing, compliance, and technical assistance (Adinoff & Reiman, 2019; Smith, 2021). Los Angeles offers special equity permits intended to ensure that sales licenses go to businesses owned by people from communities harmed by drug criminalization and enforcement (Elmahrek, 2020; Reyes, 2021).

CHALLENGES LEGALIZATION POSES FOR LOCALITIES
Costs may limit economic gains
The economic promise of the legalized cannabis industry may not fully manifest.

Theoretically, operating legally should reduce costs for cannabis businesses that no longer have to conceal their operations, making legal cannabis cheaper and helping the legal market flourish while shrinking the illicit one (Bodwitch et al., 2019; Caulkin et al., 2012). But this outcome only obtains if costs posed by new regulations do not exceed costs operators would otherwise bear in the illegal market. Critics argue that many current legal permitting regimes create just this imbalance (Bodwitch, 2019; Everett, 2018). Accessing permits can be difficult and costly, as can be meeting new regulatory standards for purity, testing, distribution, and transportation (Bodwitch, 2019; Kovacevich, 2019; Valdes-Donoso, 2019). For example, establishing a cultivation facility in Long Beach, California, can easily cost $1 million (Connley, 2021).

Loans cannabis businesses can secure from private equity firms or small investor groups tend to be short-term and high-interest (Guttery & Poe, 2018). Warehouses and other facilities often charge lease premiums due to the industry's risks; in Denver, leases for recreational cannabis operators averaged $19.33/sq. ft and $8.34 sq/ft for medical, versus an average industrial rate of $7.38/sq ft (Zhang et al., 2017). Growers frequently report that these costs, plus high taxes and competition with the illegal market, make it hard to achieve profitability (Fertig, 2019; Schroyer, 2020; Schwab et al., 2019; Wagner et al., 2018). Indeed, in California, legal growers face labor shortages and concomitant expectations of high wages (Valachovic et al., 2019) because illicit 15411338, 2022, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/ropr.12460, Wiley Online Library on [29/04/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License Agenda Item #12.1.

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operations—which persist in part because of the costs of operating legally (Butsic et al., 2017; Caulkin et al., 2012; Chappell, 2019; Daniels, 2019; Goldstein & Sumner, 2019)—can pay workers a competitive wage plus do not take out taxes (Bodwitch, 2019; Wilson, 2019).

If legal producers pass these costs to consumers, demand for legal cannabis may decline. The operations best able to absorb these costs are larger, well-financed companies,ratherthan smaller operations more apt to be local and to have previously operated illicitly (Bodwitch, 2019; Connley, 2021; Goldstein & Sumner, 2019; Mallinson et al., 2020; Reyes, 2021; Smith, 2021). In Humboldt County, California, small farms with longer production histories than new, larger operations frequently apply for permits but fail to complete associated paperwork or secure approval due to lack of capacity and regulatory hurdles (Schwab et al., 2019). Similarly, in Los Angeles, fewer than half the businesses which applied for the city's cannabis business social equity program have actually submitted all required documents and plans (Reyes, 2021). California growers who opted against producing legally report their choice was influenced by compliance costs and lack of government incentives for legal operation (Bodwitch et al., 2021).

Finally, although the cannabis industry is often touted as a boon for local tax revenues, localities may not fully leverage this opportunity. Fewer than half of California local governments legalizing cannabis commerce actually tax cannabis locally (Silver et al., 2020). Only about 15% of Colorado local governments surveyed following the state's recreational legalization had considered or imposed local taxes on recreational sales (Johns, 2015).3 This inaction is likely in part because collecting taxes in cash is unfamiliar and complicated (Mallinson & Hannah, 2020) and some localities ban cannabis production and distribution entirely, losing tax revenue potential.

Even for localities that do levy taxes, revenues may fall short of the costs the cannabis industry imposes; for instance, Pueblo County, Colorado, took in more than $3 million in annual cannabis tax revenues in 2016, but this figure was dwarfed by more than $23 million in cannabis-linked spending on policing, emergency services, and social services (Wakefield & Hassan, 2017).

Complex, burdensome, uncertain regulation
Cannabis businesses seeking to operate legally may be deterred by overlapping, ambiguous, and sometimes contradictory regulations at different levels of government (Bodwitch, 2019; Gianotti, 2017). Thirty-seven percent of respondents to a recent survey of California growers flagged inconsistency between county, regional, and state regulations as an obstacle to legal operation.

Troublingly, the majority of respondents also appeared to possess unclear or inaccurate information about regulations (Bodwitch, 2019).

Local governments, particularly in rural areas, often lack resources to develop or effectively implement cannabis regulations. The majority of Colorado municipalities responding to a survey soon after that state's recreational legalization reported that their enforcement of local cannabis regulations was hindered by the time and resources local officials had to devote to inspections, licensing, and permitting, in addition to lack of support from the county and state (Johns, 2015).

The uncertain federal policy environment makes subnational officials hesitant about investing in regulation and enforcement; if the federal government decides to enforce the 1970 Controlled Substances Act, such commitments could make lower-tier governments legally vulnerable and/ or constitute financial losses (Hannah & Mallinson, 2018; Karch, 2021; Mallinson et al., 2020).

Social norms increasingly accepting of cannabis also reduce societal support for governmental enforcement against growers and users, potentially limiting local officials' capacity or willingness to adopt and enforce regulation (Gofen, 2015).
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Community concerns
Environmental harm
Like other forms of agriculture, cannabis grow operations may clear existing greenery to expand farming, potentially yielding deforestation, forest fragmentation, wetland loss, soil erosion, and impacts to sensitive ecosystems (Bauer et al., 2015; Butsic, 2018; Wartenberg et al., 2021). An aerial survey of more than 4000 grow operations in Humboldt County, California, showed that more than 60% were over 500 meters from developed roads, suggesting significant landscape fragmentation (Butsic & Brenner, 2016). Deforestation and land clearing can also destroy important carbon sinks (Mills et al., 2022).

Cannabis production may be water-intensive (Bauer et al., 2015; Wartenberg, 2021), though water usage significantly varies across landscapes and seasons and the crop's water intensiveness has been recently subject to debate and calls for additional research (Dillis et al., 2021). Studies of northern California outdoor grows indicate high groundwater dependence (Dills et al., 2020; Wilson et al., 2019). In three of four California watersheds examined by Bauer and coauthors (2015), water demand from cannabis cultivation likely resulted in complete stream dewatering, damaging species such as salmon and steelhead trout4; this finding is consistent with other research showing grows encroaching on endangered or threatened species' habitats (Butsic, 2018; Wartenberg et al., 2021). This water usage is particularly concerning for groundwater-reliant and/or drought-prone communities.

Indoor operations have significant greenhouse gas (GHG) impacts, releasing roughly 42%– 96% more GHGs than outdoor cultivation (Dillis, 2020). One kilogram of processed cannabis grown indoors generates roughly 4600 kg of CO2, the equivalent of 3 million average U.S. cars (Mills et al., 2022), or 2283–5184 kg CO2-equivalent per kg of dried cannabis flower, with variation by location (Summers et al., 2021). These emissions primarily derive from lights, electricity, natural gas powering environmental controls, and CO2 supplied to enhance plant growth. Indoor cultivation, however, may use less water than outdoor (Dillis et al., 2020).

Indoor grows typically rely on greenhouses where operators can provide intense light (Ashworth & Vizuete, 2017). This light often reaches beyond greenhouses, causing neighbor complaints (Vaughan et al., 2021) and potentially disrupting ecosystem processes (Rich, 2020).

Cannabis grows also generate sound and odor. Operations not connected to a secure power source may use noisy generators which can adversely impact residents and wildlife (Owens, 2019), in addition to requiring more than three times the CO2 of grid-fueled operations (Mills et al., 2022). Though no research has specifically addressed how cannabis odor affects human health (Vaughan et al., 2021), proximate residents have reported headaches, asthma, and respiratory issues (e.g., Settelmeyer & Sedlock, 2017; see also Dillis, 2021).

Blight and crime
Other concerns associated with the cannabis industry can include increased traffic and littering, accidental poisonings, traffic accidents, and arrests for driving under the influence; blighted properties; degraded roads; and theft of farm equipment and water (Chiu, 2021; Polson & Peterson-Rockney, 2019). Local officials might be concerned about having cash-based, federally prohibited businesses in their community, fearing that large on-site cash stocks could be targets for criminals (Bronfein, 2016; Mallinson & Hannah, 2020). Empirical findings in this area are 15411338, 2022, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/ropr.12460, Wiley Online Library on [29/04/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License Agenda Item #12.1.

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mixed. In Sacramento, Kepple and Freisthler (2012) find no association between property and violent crimes and density of medical marijuana dispensaries. In Colorado, arrests for cannabisrelated charges declined 36% between 2012 (legalization) and 2014, largely due to fewer possession arrests (Felix, 2018). Maier and coauthors (2017) find no significant differences in violent and property crime rates between U.S. states that did and did not legalize, 2010–2014. However, an analysis in Oregon between 2007 (pre-recreational legalization) and 2017 (post-legalization) found that rates of some serious crimes, such as aggravated assault, increased relative to states without legalization (Wu et al., 2021). Street segments in Denver with recreational dispensaries saw an 18% increase in property crimes following legalization, while street segments containing medical dispensaries did not experience significant changes (Connealy, 2019).

Concerns about community character
Anti-cannabis stigma can cause localities legalizing cannabis to be viewed as “dirty,” and/or people opposing cannabis may apply this label to cannabis businesses and workers (Polson & Peterson-Rockney, 2019). Colorado localities banning cannabis operations most frequently cited moral objections and concerns about community quality of life (Johns, 2015). Anti-cannabis stigma can have lasting negative consequences on community integration and social capital (Polson & Peterson-Rockney, 2019), producing disaffection that reduces resident engagement in and with government and establishes a context ripe for illicit activity (Everett, 2018; Polson & Peterson-Rockney, 2019).

Some residents also see cannabis as a threat to their vision of a community built around agriculture, tourism, and/or small industry (LaChance, 2019; Polson & Peterson-Rockney, 2019).

Conventional farms may view cannabis grows as competition for agricultural land (LaChance, 2019; Schwab & Butsic, 2017). Indeed, in Santa Barbara and Monterey Counties, California, legal grows occur nearly exclusively in areas zoned for agriculture; in Humboldt, Mendocino, and Trinity Counties, about 50% of legal cannabis farms are located in agriculture zones (Dillis et al., 2021). Cannabisfarmers are often willing to pay more for land than conventional farmers, raising land prices and threatening to push out the latter (Biron, 2020).

Concerns about public health
If consumers use cannabis irresponsibly, cannabis legalization may stress local public health services. Mair and coauthors (2015) found that one additional dispensary per square mile in a zip code was associated with a nearly 7% increase in hospitalizations in California, 2001–2012.

In Colorado, hospitalizations involving potential cannabis exposure increased from 803 per 100,000 hospitalizations, 2001–2009 (pre-legalization), to 2413 per 100,000 in 2014–2015 (postlegalization) (Felix, 2018).

Emergency services may also be strained, and traffic safety reduced, to the extent that there are upticks in residents driving under the influence of cannabis. Fifteen percent of summons for DUIsissued by the Colorado State Police in 2015 involved cannabis(Felix, 2018). Firstresponders engaged in enforcement against illegal grows also may face health risks, such as elevated fungal spore levels on an order consistent with mold remediation (Martyny et al., 2013).

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by social stigma and doctors' inability to provide instructions about cannabis dosage, strains, and mode of use (Mercurio et al., 2019). Doctors themselves may dissuade this substitution, concerned about substituting one addictive substance for another5 (Bottorff et al., 2013; Humphreys & Saitz, 2019).

Local officials may also be cautious about embracing the cannabis industry because of concerns about a trend towards greater THC concentration (Firth et al., 2020). Consumption of THC concentrations above 15% has increased more than 90% since 2014 (Smart, 2017), and some research suggests a linkage between consumption of high-THC products and increased risk for psychosis, mental illnesses, and substance use disorder (DiForti et al., 2014). In California, there has been a strong, positive correlation since the early 2000s between non-fatal cannabis- related hospitalizations per capita and the THC:CBD ratio of cannabis products seized by police (Pacula & Sevigny, 2014). Local officials also may be concerned about safety of edible cannabis products not subject to federal food safety standards and the costs of developing and enforcing relevant standards locally (White et al., 2020).

Public health experts also are concerned that, by normalizing use of a product that can be smoked, cannabis legalization may hinder efforts to reduce tobacco consumption (Caulkins & Kilborn, 2019; Gofen, 2015). An analysis of the extent to which California local governments have integrated into their cannabis permitting and regulatory schemes best practices developed in tobacco control, such as warnings and sale restrictions, suggests that integration is minimal:

As of January 2019, 16% of California jurisdictions allowed retail sale required greater distancing between schools and dispensaries than the state standard, 10% required additional health warnings, and 3% imposed sale restrictions more stringent than the state's (Silver et al., 2020).

Legalization may not substantially advance racial and social justice Current legalization approaches may not be contributing to racial and social justice as much as hoped. For instance, Firth and coauthors (2020) investigated racial disparities in arrest rates in Washington post-legalization. Although cannabis-related arrests dropped overall, relative racial disparities actually grew: Black people were roughly 5 times more likely than whites to be arrested; they had been 2.5 times more likely pre-legalization. This relative increase may result from Black people being more likely to be arrested for distributing or selling cannabis and being overrepresented in the illicit market (ibid.). Nor did legalization appear to change the demographics of those incarcerated in county jails in Washington, despite hopes of decreasing the disproportionate imprisonment of minorities (Stanton et al., 2020).

Economically disadvantaged individuals (who, in the United States, are also more likely to be people of color) may be unable to participate in the legalized market due to its high costs(Adinoff & Reiman, 2019). While state and local social equity programs try to reduce these costs, many have been criticized for sluggish implementation or cooptation by wealthy interests (Connley, 2021; Elmahrek, 2020; Reyes, 2021; Schroyer, 2020). In 2017, U.S. cannabis business owners were roughly 81% White, 6% Latino, 4% Black, and 2% Asian (Connley, 2021), percentages misaligned with 2020 U.S. population demographics (roughly 60% White, 18% Latino, 12% Black, 6% Asian) (U.S. Census, 2020). Moreover, in a number of states, individuals with felony convictions for illicit cannabis activities are ineligible for licensing in the licit one (Adinoff & Reiman, 2019; Rahwanji, 2019), a policy that privileges white people without criminal records and disadvantages people of color disproportionately harmed by drug criminalization (Mallinson & Hannah, 2020; Rahwanji, 2019).
15411338, 2022, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/ropr.12460, Wiley Online Library on [29/04/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License Agenda Item #12.1.