St. Helena City Council
June 27, 2023

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 36 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 36 Table 4-4: Projected New Water Connection Growth

A B C D E F G
Line Account Growth FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 SFR 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%
2 MFR 0.9% 0.9% 0.9% 0.9% 0.9% 0.9%
3 Commercial 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
4 Industrial 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
5 Landscape 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
6 Raw 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
7 Fire 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Table 4-5: Count of Water Connections

A B C D E F G H
Line
Description Actual FY
2022
Projected
FY 2023
Projected
FY 2024
Projected
FY 2025
Projected
FY 2026
Projected
FY 2027
Projected
FY 2028
1 Number of
Water Meters
2 5/8" 2,002 2,011 2,020 2,029 2,038 2,047 2,056
3 3/4" 35 35 35 35 36 36 36
4 SFR 1" 261 262 263 265 266 267 269
5 1" 123 123 124 124 125 125 126
6 1 1/2" 70 70 71 71 71 71 72
7 2" 63 63 63 63 64 64 64
8 3" 8 8 8 8 8 8 8
9 4" 11 11 11 11 11 11 11
10 6" 13 13 13 13 13 13 13
11 8" 0 0 0 0 0 0 0
12 Total 2,586 2,597 2,608 2,620 2,631 2,642 2,654
13 14
Number of
Fire Lines
15 4" 57 57 57 57 57 57 57
16 6" 29 29 29 29 29 29 29
17 8" 15 15 15 15 15 15 15
18 Total 101 101 101 101 101 101 101

4.1.4. Projected Water Sales
City staff provided Raftelis with total annual water use data by customer class for FY 2018-19 through FY 2021-

22. Raftelis worked closely with City staff and the RSAC to develop water use projections over the study period.

Water demand projections depend on two key assumptions: new connection growth and water demand per connection. Beginning in FY 2023, annual water use is projected at the customer class level by increasing prior year water use based on both assumed connection growth and water demand per connection. Table 4-6 shows projected water use by customer class over the study period based on the current water rate structure. Line 1 shows the water use demand factor used to increase, decrease, or maintain water usage projections from the previous year. An analysis of historical water demand was conducted to help inform new baseline water Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 37 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 37 demand expectations for normal conditions. Historically, per capita water demands were higher and in the past 10 years the City has experienced two multi-year droughts, Covid-19 disruptions, major wildfires, and a local water emergency in which water allocations were implemented for the first time. Raftelis relied on FY 2019 as the last “normal” condition year and blended historical demands, recently witnessed rebounds in demands, and conservative projections to arrive at the baseline demand of 1,300 AFY. For context, the prior rate study baseline water demand was estimated at 1,500 AFY while the lowest level of demand in FY 2022 was around 1,000 AFY.

Table 4-6: Projected Water Use Under Existing Rate Structure – Baseline Demand Conditions

A B C D E F G H
Line Description
Actual
FY 2022
Estimated
FY 2023
Projected
FY 2024
Projected
FY 2025
Projected
FY 2026
Projected
FY 2027
Projected
FY 2028
1 Demand
Factor
Actual
Demand
Estimated
Demand 115% 100% 100% 100% 100%
2 3 Total Usage
4 SFR 165,016 189,768 219,274 220,319 221,369 222,424 223,484 5 MFR 58,803 67,623 78,431 79,100 79,775 80,456 81,143
6 Commercial 100,020 115,023 132,276 132,276 132,276 132,276 132,276 7 Industrial 88,441 101,707 116,963 116,963 116,963 116,963 116,963 8 Fire 184 212 243 243 243 243 243
9 Landscape 9,264 10,654 12,252 12,252 12,252 12,252 12,252 10 Raw 4,379 5,036 5,791 5,791 5,791 5,791 5,791
11 Total Usage
(HCF) 426,107 490,023 565,230 566,945 568,670 570,406 572,153 12 Total Usage
(AF) 978 1,125 1,298 1,302 1,305 1,309 1,313

4.2. Financial Plan
Section 4.2 details the development of the proposed Water Enterprise financial plan for the City 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 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 water rate revenues required to achieve sufficient cash flow, maintain adequate reserves, and meet debt coverage requirements in every year of the plan.

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

4.2.1.1. Calculated Water Rate Revenues
Raftelis projects annual water rate revenues from Water Service Charges, Fire Line Service Charges, and Water Volume Rates over the study period based on current FY 2022 water rates (from Table 4-1), projected number Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 38 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 38 of water meters/private fire lines (from Table 4-5), and projected annual water use (from Table 4-6). Table 4-7 shows projected Water Service Charge and Fire Line Service Charge revenues under current rates over the study period, calculated as follows:

Fixed Charge Revenue = [ FY 2021-22 bi-monthly charge] × [Number of connections] × [6 Bills per year] Table 4-7: Projected Fixed Charge Revenue from Existing Rates

A B C D E F G
Line Description FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Water Meters
2 5/8" $1,686,496 $1,693,992 $1,701,525 $1,709,097 $1,716,706 $1,724,354 3 3/4" $29,458 $29,564 $29,669 $29,776 $29,883 $29,990
4 SFR 1" $219,939 $220,987 $222,040 $223,098 $224,162 $225,230 5 1" $189,896 $190,545 $191,200 $191,860 $192,526 $193,197 6 1 1/2" $190,227 $190,921 $191,621 $192,325 $193,036 $193,751 7 2" $245,490 $246,041 $246,596 $247,155 $247,718 $248,285 8 3" $62,987 $63,123 $63,259 $63,397 $63,535 $63,675
9 4" $133,743 $133,906 $134,069 $134,234 $134,401 $134,568 10 6" $309,654 $310,177 $310,704 $311,236 $311,771 $312,311 11 8" $0 $0 $0 $0 $0 $0
12 Total $3,067,890 $3,079,254 $3,090,683 $3,102,177 $3,113,736 $3,125,361 13 14 Fire Lines
15 4" $9,118 $9,118 $9,118 $9,118 $9,118 $9,118
16 6" $13,478 $13,478 $13,478 $13,478 $13,478 $13,478
17 8" $14,855 $14,855 $14,855 $14,855 $14,855 $14,855
18 Total $37,451 $37,451 $37,451 $37,451 $37,451 $37,451 19 20 Total $3,105,341 $3,116,705 $3,128,134 $3,139,628 $3,151,187 $3,162,812 Table 4-8 shows projected Water Volume rate revenue, by class under current rates over the study period, calculated as follows:

Water Volume Rate Revenue = [ FY 2022 rate per HCF] × [Annual Water Use in HCF] Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 39 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 39 Table 4-8: Projected Commodity Charge Revenues Under Current Water Rates

A B C D E F G
Line Description FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 SFR $1,400,713 $1,618,497 $1,626,210 $1,633,961 $1,641,748 $1,649,572 2 MFR $494,742 $573,810 $578,707 $583,647 $588,629 $593,653 3 Commercial $842,801 $969,221 $969,221 $969,221 $969,221 $969,221 4 Industrial $743,835 $855,411 $855,411 $855,411 $855,411 $855,411 5 Fire $1,536 $1,766 $1,766 $1,766 $1,766 $1,766
6 Landscape $79,493 $91,416 $91,416 $91,416 $91,416 $91,416 7 Total $3,563,120 $4,110,121 $4,122,732 $4,135,422 $4,148,191 $4,161,040 Table 4-9 shows additional miscellaneous rate revenue projections associated with raw water customers. Raw water contract rates are outside of the scope of this rate study and are therefore not included with other rate revenues.

Table 4-9: Projected Raw Water Rate Revenues

A B C D E F G
Line Description FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 NA NVC Irrigation In Field $804.75 $851.00 $897.25 $943.50 $989.75 $1,036.00 2 2805 Spring Mtn Rd $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 3 ELM. Pumphouse $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
4 NA Stonebridge Irrigation Pope Street $2,998.02 $3,170.32 $3,342.62 $3,514.92 $3,687.22 $3,859.52 5 Elmhurst Pump Station $0.13 $0.14 $0.14 $0.14 $0.15 $0.15 6 NA Wappo Park $7.83 $9.34 $10.82 $12.39 $14.07 $15.85 7 Total Raw Commodity Revenue $3,811 $4,031 $4,251 $4,471 $4,691 $4,912

4.2.1.2. Other Water Revenues
Table 4-10 shows all other Water revenues. All FY 2023 other revenues are based on the City’s FY 2023 budget and escalated annually by the miscellaneous inflation rate (from Table 4-3). 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 4-3).

Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 40 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 40 Table 4-10: Other Water Enterprise 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 Engineering Fees $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 3 Raw Water Permit Fees $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 4 Backflow Testing & Insp Fees $150 $150 $150 $150 $150 $150 5 Other Revenue $8,500 $8,500 $8,500 $8,500 $8,500 $8,500 6 Finance Charges $18,000 $18,000 $18,000 $18,000 $18,000 $18,000 7 Water Meter Install Fee $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 8 CARE Program ($27,000) $0 $0 $0 $0 $0
9 10 Non-Operating Revenues
11 Investment Earnings $50,000 $25,358 $42,293 $57,362 $71,696 $92,637 12 13 Water Impact Fee Revenues
14 Investment Earnings $1,779 $2,115 $2,455 $2,798 $3,145 $3,495 15 Other Revenue $18,164 $18,164 $18,164 $18,164 $18,164 $18,164 16 Water Impact Fees $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 17 18 Total Other Revenue $92,093 $94,787 $112,062 $127,474 $142,155 $163,446

4.2.1.3. Summary of Projected Water Revenues
Table 4-11 shows a summary of all projected Water revenues under current rates over the study period. This includes all projected revenues shown in Table 4-7 through Table 4-10. This revenue summary represents expected revenues in the absence of any rate increase over the study period.

Table 4-11: Summary of Projected Water Enterprise 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 Fixed Revenue $3,105,341 $3,116,705 $3,128,134 $3,139,628 $3,151,187 $3,162,812 2 Commodity
Revenue $3,563,120 $4,110,121 $4,122,732 $4,135,422 $4,148,191 $4,161,040 3 Misc Revenue $3,811 $4,031 $4,251 $4,471 $4,691 $4,912 4 Other Revenue $92,093 $94,787 $112,062 $127,474 $142,155 $163,446 5 Total Revenue $6,764,364 $7,325,644 $7,367,180 $7,406,995 $7,446,225 $7,492,209 Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 41 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 41

4.2.2. Water Operations & Maintenance Expenses
City staff provided the adopted Water Enterprise O&M expense budget for FY 2023 as well as estimates on any temporary/one-time expenses. Raftelis adjusts future year estimates using inflationary factors (from Table 4-3).

Table 4-12 shows a summary of all Water Enterprise O&M expenses over the rate-setting period.

Table 4-12: Projected Water Enterprise 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 $260,342 $276,476 $293,569 $310,377 $328,112 $346,871 3 Council $21,927 $23,270 $24,695 $26,145 $27,682 $29,309 4 Administration $299,603 $319,487 $340,621 $358,514 $377,285 $397,052 5 Finance $593,299 $630,162 $668,011 $700,425 $733,195 $767,596 6 Attorney $159,500 $170,665 $182,612 $191,742 $201,329 $211,396 7 Public Works
8 Administration $857,395 $912,977 $971,107 $1,019,525 $1,069,365 $1,121,735 9 Public Buildings $31,400 $33,018 $34,477 $35,725 $36,788 $37,885 10 Street Maintenance $33,400 $35,070 $36,543 $37,822 $38,881 $39,970 11 Water Distribution $844,304 $914,912 $966,784 $1,013,053 $1,059,504 $1,108,237 12 Water Treatment $2,468,107 $2,934,965 $3,118,131 $3,232,809 $3,348,704 $3,469,096 13 Temp/Part Time $1,614,000 $0 $0 $0 $0 $0
14 Total $7,183,277 $6,251,002 $6,636,549 $6,926,137 $7,220,845 $7,529,145

4.2.3. Water Debt
Table 4-13 shows the projected debt service obligations for Water over the study period. Existing debt service consists of the 2012B Installment Agreement and Loan Agreement (Direct Borrowing). Proposed Water Enterprise debt service is also shown. 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.

Table 4-13: Water 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 2012B Installment Agreement - Water $410,517 $410,361 $409,969 $412,552 $409,617 $410,009 3 Loan Agreement (Direct Borrowing) $540,160 $541,053 $541,178 $540,305 $538,551 $541,432 4 5 Proposed Debt Service $0 $613,350 $613,350 $1,956,877 $1,956,877 $1,956,877 6 7 Total Debt Service $950,677 $1,564,764 $1,564,497 $2,909,734 $2,905,045 $2,908,318 Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 42 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 42

4.2.4. Water Enterprise Capital Improvement Plan
Table 4-14 shows the City’s planned capital improvement plan (CIP) for the Water utility. All values account for assumed CCI. Significant projects include Napa Intertie pipeline and pump station projects, the Bell Canyon Intake Tower replacement, and Water Treatment Plant Transmission Main replacement. With the exception of the Water Main Annual Replacement Program Allowance funded with GO Bond proceeds, all other projects are assumed to be rate funded with future cash and revenue bond proceeds.

Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 43 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 43 Table 4-14: Water 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 W-109 Bell Canyon Intake Tower Replacement $0 $0 $361,004 $3,372,495 $0 $0 2 W-80 Dwyer Road Booster Pump Station $0 $0 $986,580 $0 $0 $0 3 W18-113 SCADA Improvements - Offsite Communications $0 $0 $175,392 $364,114 $375,765 $0 4 W-86 Spring Mountain Pressure Zone Improvements (Holmes Tank Upgrade) $0 $0 $0 $346,470 $1,609,005 $1,660,493 5 PWTM-1 Napa Intertie Pipeline Replacement (Breeze Inactive) $0 $0 $1,252,957 $2,601,138 $2,684,374 $0 6 Smart Water Meters $0 $0 $431,903 $896,630 $925,322 $0 7 W21-01 Kearney & Andrea Water Main Replacement $0 $919,490 $0 $0 $0 $0 8 W-101 Rehabilitate Tank 2 at Lower Reservoir $0 $987,000 $0 $0 $0 $0 9 W18-111 WTP Condition Assessment $0 $210,000 $0 $0 $0 $0 10 Napa Intertie Pump Station Replacement (Construction) $0 $0 $0 $227,571 $117,427 $605,922 11 Napa Intertie Pump Station Replacement (DESIGN) $0 $420,000 $2,082,780 $0 $0 $0 12 Water Treatment Plant (Water Treatment Plant Rehabilitation) $0 $0 $0 $0 $0 $0 13 PWTM-2 Water Treatment Plant Transmission Main Replacement $0 $0 $1,743,835 $3,620,201 $3,736,048 $0 14 W18-118 Water Main Annual Replacement Program Allowance $0 $302,400 $315,706 $327,702 $338,189 $349,011 15 PWRR-1 Yr 6-10 - Water Main Annual Replacement Program allowance (not funded by GO Bond) $0 $0 $0 $0 $0 $0 16 PWRR-1 Future Allowance for Pipeline R/R (Years11-15) $0 $0 $0 $0 $0 $0 17 PFAS Sampling Project $0 $26,250 $0 $0 $0 $0 18 Disinfection By Products Project $0 $52,500 $0 $0 $379,288 $391,425 19 Risk and Resilience Assessment Report dated January 2022 - Additional recommended items $0 $78,750 $82,215 $0 $0 $0 20 Cyber-Security Implementation $0 $26,250 $27,405 $0 $0 $0 21 Asset Management Program Development $0 $0 $0 $56,893 $0 $0 22 Asset Management Software Assessment & Optimization planning $0 $0 $0 $17,068 $0 $0 23 CMMS Purchase & Setup $0 $0 $0 $0 $58,713 $0 24 ArCommercialIS Purchase & Setup $0 $36,750 $16,443 $0 $0 $0 25 Allocated RW CIP $0 $262,500 $0 $0 $0 $0 26 Total CIP $0 $3,321,890 $7,476,219 $11,830,282 $10,224,132 $3,006,851 Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 44 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 44 Table 4-15 shows the assumed funding sources for Water CIP projects over the study period. Proposed debt proceeds are assumed to fund most of the Water CIP projects over the planning period to minimize increases to rates. All remaining CIP not funded by existing/remaining bond proceeds, or future revenue bonds, is assumed to be funded by cash reserves generated from rates (i.e. pay-as-you-go funding). Figure 4-1 shows a summary of total Water Enterprise CIP expenditures by funding source over the study period.

Table 4-15: Water 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 Funded $0 $302,400 $315,706 $327,702 $338,189 $349,011 2 Rate Funded $0 $0 $0 $0 $0 $726,366
3 Bond Funded $0 $3,019,490 $7,160,513 $11,502,580 $9,885,943 $1,931,474 4 Total Funded CIP $0 $3,321,890 $7,476,219 $11,830,282 $10,224,132 $3,006,851 Figure 4-1: Water Capital Improvement Plan
Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 45 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 45

4.2.5. Water Financial Policies
Required Debt Coverage
The Water utility is required to meet debt service coverage requirements on its outstanding water revenue bonds. The required minimum debt coverage ratio is 1.20, meaning that the utility’s net operating revenues (i.e. total operating revenues less operating expenses) must achieve 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.

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 14 months of annual operating expenses (which includes both O&M and debt service), and the minimum reserve target is equal to 10 months of annual O&M expenses. Table 4-16 shows projected operating and capital 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 4-16: Projected Water 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 – 14 Months $9,489,613 $9,118,393 $9,567,887 $11,475,183 $11,813,539 $12,177,040 2 Reserve – 10 Months $6,778,295 $6,513,138 $6,834,205 $8,196,559 $8,438,242 $8,697,886

4.2.6. Status Quo Water Financial Plan
Raftelis develops a status quo (i.e., current rate revenues) financial plan to evaluate the need for future revenue adjustments (i.e. increases to gross rate revenues). The status quo financial plan assumes that current FY 2023 rates remain unchanged over the study period.

Table 4-17 combines projected Fund 561 revenues (from Table 4-11), O&M expenses (from Table 4-12), and debt service (from Table 4-13) to generate operating cash flow projections under the status quo. In the absence of any revenue adjustments, the Water Operating Fund (Fund 561) 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 #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 46 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 46 Table 4-17: Water Operating Cash Flow (Fund 561)– 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 $6,672,271 $7,230,857 $7,255,117 $7,279,521 $7,304,070 $7,328,764 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 Adjustment Totals $0 $0 $0 $0 $0 $0 12 Total Revenues from Rates $6,672,271 $7,230,857 $7,255,117 $7,279,521 $7,304,070 $7,328,764 13 Other Operating Revenue $7,150 $34,150 $34,150 $34,150 $34,150 $34,150 14 Investment Income $50,000 $15,234 $8,074 $0 $0 $0 15 Total - Revenues $6,729,421 $7,280,241 $7,297,341 $7,313,671 $7,338,220 $7,362,914 16 17 Operating Expenses 18 Operating Expenses $5,569,277 $6,251,002 $6,636,549 $6,926,137 $7,220,845 $7,529,145 19 One Time Expenses $1,614,000 $0 $0 $0 $0 $0 20 Total - Operating Expenses $7,183,277 $6,251,002 $6,636,549 $6,926,137 $7,220,845 $7,529,145 21 22 Net Revenue -$453,856 $1,029,239 $660,792 $387,534 $117,374 -$166,231 23 24 Existing Debt Service $950,677 $951,414 $951,147 $952,857 $948,168 $951,441 25 Proposed Debt Service $0 $613,350 $613,350 $1,956,877 $1,956,877 $1,956,877 26 Annual Debt Service $950,677 $1,564,764 $1,564,497 $2,909,734 $2,905,045 $2,908,318 27 28 Net Cash After Debt Service -$1,404,533 -$535,524 -$903,704 -$2,522,200 -$2,787,671 -$3,074,549 29 30 Debt Service Coverage
31 Calculated Coverage -0.48 0.66 0.42 0.13 0.04 -0.06 32 Target Coverage 1.20 1.20 1.20 1.20 1.20 1.20 Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 47 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 47 Table 4-18 shows projected reserve balances and debt coverage under the status quo financial plan for the entire Water utility, including both the Water Operating Fund (Fund 561), Water Capital Project Fund (Fund 763), and the Water Impact Fund (764). Sources of funds include rate and non-rate revenues (from Table 4-11) as well as debt proceeds. Use of funds include O&M expenses (from Table 4-12), debt service (from Table 4-13), and CIP expenditures (from Table 4-15). All ending balance and debt coverage figures are projected values.

Target reserve balances shown are from Table 4-16.

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 Water 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.

Table 4-18: 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 $2,102,348 $1,600,808 $731,426 ($1,756,107) ($4,508,765) 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 5 Total Revenue Adjustments $0 $0 $0 $0 $0
6 Other Operating Revenue $34,150 $34,150 $34,150 $34,150 $34,150 7 Investment Income $15,234 $8,074 $0 $0 $0
8 Water Capital Revenues $0 $0 $0 $0 $0
9 Water Impact Fee Revenues $35,279 $35,619 $35,962 $36,309 $36,659 10 Bond Proceeds CIP Funding $3,019,490 $7,160,513 $11,502,580 $9,885,943 $1,931,474 11 SRF Proceeds $0 $0 $0 $0 $0
12 Go Bond Proceeds $302,400 $315,706 $327,702 $338,189 $349,011 13 Interfund CIP Funding $0 $0 $0 $0 $0
14 General Fund Loan (+Funds/-Payment) $0 $0 $0 $0 $0
15 Total Source of Funds $10,637,411 $14,809,179 $19,179,915 $17,598,661 $9,680,057 16 17 Use of Funds
18 Operating Expenses $6,251,002 $6,636,549 $6,926,137 $7,220,845 $7,529,145 19 One Time Expenses $0 $0 $0 $0 $0
20 Water Impact Fund Expenses $1,296 $1,296 $1,296 $1,296 $1,296 21 Rate Funded $0 $0 $0 $0 $726,366
22 Bond Funded $3,019,490 $7,160,513 $11,502,580 $9,885,943 $1,931,474 23 Interfund Loan Funded $0 $0 $0 $0 $0
24 Existing Debt Service $951,414 $951,147 $952,857 $948,168 $951,441 25 Proposed Debt Service $613,350 $613,350 $1,956,877 $1,956,877 $1,956,877 26 Water Capital Expenses $0 $0 $0 $0 $0
27 SRF CIP $0 $0 $0 $0 $0
28 GO Bond $302,400 $315,706 $327,702 $338,189 $349,011 29 Total Use of Funds $11,138,951 $15,678,560 $21,667,449 $20,351,318 $13,445,610 30 31 Ending Balance $1,600,808 $731,426 ($1,756,107) ($4,508,765) ($8,274,318) Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 48 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 48

4.2.7. Proposed Water Financial Plan
The Water utility must increase its revenues from water 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 4-19. Revenue adjustments represent annual percent increases to total rate revenue relative to rate revenue generated by the prior year’s water rates.

Table 4-19: Proposed Water 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 28% 8% 8% 8% 8%
Table 4-20 combines projected Fund 561 revenues (from Table 4-11), O&M expenses (from Table 4-12), and debt service (from Table 4-13) to generate operating cash flow projections under the proposed financial plan.

By implementing the proposed revenue adjustments, we project that the Water Fund (Fund 561) will maintain sufficient operating cash flow and debt coverage through the study period. Appendix A shows the proposed 10-year pro forma for the entire Water utility, including both the Water Fund (Fund 561), Water Capital Project Fund (Fund 763), and the Water Impact Fund (764). Under the proposed financial plan, reserve balances and debt coverage are projected to achieve target policies and minimum requirements in all years of the rate-setting period.

Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 49 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 49 Table 4-20: Water Operating Cash Flow (Fund 561) – 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 $6,672,271 $7,230,857 $7,255,117 $7,279,521 $7,304,070 $7,328,764 3 4 Revenue Adjustments Adjustment 5 FY 2023 0.0% $0 $0 $0 $0 $0 $0 6 FY 2024 28.0% $2,024,640 $2,031,433 $2,038,266 $2,045,139 $2,052,054 7 FY 2025 8.0% $742,924 $745,423 $747,937 $750,465
8 FY 2026 8.0% $805,057 $807,772 $810,503
9 FY 2027 8.0% $872,393 $875,343
10 FY 2028 8.0% $945,370
11 Revenue Adjustment Totals $0 $2,024,640 $2,774,357 $3,588,746 $4,473,241 $5,433,735 12 Total Revenues from Rates $6,672,271 $9,255,497 $10,029,474 $10,868,267 $11,777,311 $12,762,498 13 Other Operating Revenue $7,150 $34,150 $34,150 $34,150 $34,150 $34,150 14 Investment Income $50,000 $25,358 $42,293 $57,362 $71,696 $92,637 15 Total – Revenues $6,729,421 $9,315,004 $10,105,917 $10,959,779 $11,883,157 $12,889,285 16 17 Operating Expenses 18 Operating Expenses $5,569,277 $6,251,002 $6,636,549 $6,926,137 $7,220,845 $7,529,145 19 One Time Expenses $1,614,000 $0 $0 $0 $0 $0 20 Total - Operating Expenses $7,183,277 $6,251,002 $6,636,549 $6,926,137 $7,220,845 $7,529,145 21 22 Net Revenue -$453,856 $3,064,002 $3,469,368 $4,033,642 $4,662,312 $5,360,140 23 24 Existing Debt Service $950,677 $951,414 $951,147 $952,857 $948,168 $951,441 25 Proposed Debt Service $0 $613,350 $613,350 $1,956,877 $1,956,877 $1,956,877 26 Annual Debt Service $950,677 $1,564,764 $1,564,497 $2,909,734 $2,905,045 $2,908,318 27 28 Net Cash After Debt Service -$1,404,533 $1,499,239 $1,904,872 $1,123,908 $1,757,267 $2,451,822 29 30 Debt Service Coverage 31 Calculated Coverage -0.48 1.96 2.22 1.39 1.60 1.84 32 Target Coverage 1.20 1.20 1.20 1.20 1.20 1.20
Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 50 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 50 Figure 4-2 shows projected debt coverage (blue line) relative to the debt coverage requirement (gray line) over the study period. Debt coverage is expected to drop in FY 2025-26 and FY 2028-29 due to additional bond issuances, before increasing in future years.

Figure 4-2: Proposed Water Financial Plan – Projected Debt Coverage Figure 4-3 shows the Water utility’s projected ending balance under the proposed financial plan. The light blue bars indicate the ending balance. The total reserve target is represented by the blue line and the reserve target minimum is represented by the yellow line. The Water enterprise is projected to build up cash reserves through the planning period. By the end of the planning period, the Water utility’s reserves are projected to achieve the adopted reserve policy target.

Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 51 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 51 Figure 4-3: Proposed Water Financial Plan – Projected Ending Balances Figure 4-4 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 planning period.

Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 52 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 52 Figure 4-4: Proposed vs. Status Quo Water Financial Plan Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 53 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 53

4.3. Water Cost of Service Analysis
Section 4.3 details the cost of service (COS) analysis performed for the Water utility for FY 2024. The COS analysis allocates the overall rate revenue requirement to customer classes based on their proportion of use and burden on the water system. This provides the basis for the development of proposed water rates through FY 2028.

4.3.1. Methodology
The first step in a COS analysis is to determine the revenue required from water rates. The total revenue requirement results from the financial plans. The framework and methodology utilized to develop the COS analysis and to apportion the revenue requirement to each customer class and tier is informed by the processes outlined in the AWWA’s Manual M1.

COS analyses are tailored to meet the specific needs of each water system. However, there are four distinct steps in every COS analysis to recover costs from customers in an accurate and fair manner:

1. Cost functionalization: O&M expenses and capital assets are categorized by their function in the system. Sample functions may include water supply, treatment, distribution, transmission, customer service, etc.

2. Cost causation component allocation: Functionalized costs are then allocated to cost causation components based on their burden on the system. The cost causation components include water supply, base delivery, extra-capacity, meters, and customer, among others. 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. Unit cost development: The revenue requirement for each cost causation component is divided by the appropriate units of service to determine the unit cost of each.

4. Revenue requirement distribution: The unit cost is utilized to distribute the revenue requirement for each cost causation component to customer classes based on each customer class’s individual service units.

This method of functionalizing costs is consistent with the AWWA’s Manual M1 and is widely used in the water industry to inform COS analyses.

4.3.2. Water Rate Revenue Requirement
Table 4-21 shows the rate revenue requirement for FY 2024 (also referred to as the test year). The revenue requirement is split into operating and capital (Columns C and D), which are later allocated based on either O&M expenses or capital asset valuation. The revenue requirements (Lines 2-6) are equal to FY 2024 operating expenses plus debt service. The revenue offsets (Lines 10-12) include miscellaneous rate revenue not subject to revenue adjustments and all Fund 561 non-rate revenues. These revenues are applied as offsets to the final rate revenue requirement. The adjustment for cash balance (Line 16) is equal to FY 2024 negative net operating cash flow and represents the additional rate revenue required to replenish cash reserves in FY 2024. All values are from the proposed water financial plan operating cash flow (Table 4-20). The final rate revenue requirement (Line 20) is calculated as follows:

Total revenue required from rates (Line 20) = Revenue requirements (Line 7) - Revenue offsets (Line 13) - Adjustments (Line 18)
Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 54 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 54 Table 4-21: FY 2023-24 Water Rate Revenue Requirement

A B C D
Line Description Operating Capital Total
1 Revenue Requirement
2 Operating Expenses $6,251,002 $0 $6,251,002
3 One Time Expenses $0 $0 $0
4 Existing Debt Service $0 $951,414 $951,414
5 Proposed Debt Service $0 $613,350 $613,350
6 Water Capital Expenses $0 $0 $0
7 Total $6,251,002 $1,564,764 $7,815,765
8 9 Revenue Offsets
10 Other Operating Revenue $34,150 $0 $34,150
11 Investment Income $25,358 $0 $25,358
12 Water Capital Revenues $0 $0 $0
13 Total Revenue Offsets $59,508 $0 $59,508
14 15 Adjustments
16 Adjustment for Cash Balance $0 ($1,499,239) ($1,499,239) 17 Adjustment for Mid-Year Increase $0 $0 $0
18 Total - Adjustments $0 ($1,499,239) ($1,499,239)
19 20 Total Revenue Requirement $6,191,494 $3,064,002 $9,255,497

4.3.3. Water System Peaking Factors
A significant portion of the costs of any water system are based on the peaking characteristics of customers plus fireflow capacity. A water system is designed to meet different requirements, including average demands extra-capacity (“peak demands”) demands, and capacity for firefighting. Peaking costs are divided into maximum day (Max Day) and maximum hour (Max Hour). The Max Day demand is the maximum volume of water used in a single day over a full year. The Max Hour demand is the maximum use in an hour on the Max Day. For example, storage and treatment components of the water system are designed to handle Max Day requirements while the distribution system is designed for Max Hour demands.

Table 4-22 shows system-wide peaking factors for the City’s water system, which are used to derive the cost component allocation bases for Base Delivery, Max Day, and Max Hour costs. Base Delivery use is considered average daily demand over one year, which has been normalized to a factor of 1.00 (Column C, Line 1). The Max Day peaking factor (Column C, Line 2) indicates that the Max Day demand is 1.82 times greater than the average daily demand. Similarly, the Max Hour peaking factor (Column C, Line 3) shows that the Max Hour demand is 2.91 times greater than average demand. The allocation bases (Columns D-F) are calculated using the equations outlined below. Columns are represented in these equations as letters, and lines are represented as numbers. For example, Column D, Line 2 is shown as D2.

Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 55 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 55 The Max Day allocations are calculated as follows:
» Base Delivery: C1 / C2 x 100% = D2
» Max Day: (C2 - C1) / C2 x 100% = E2
The Max Hour allocations are calculated as follows:
» Base Delivery: C1 / C3 x 100% = D3
» Max Day: (C2 - C1) / C3 x 100% = E3
» Max Hour: (C3 - C2) / C3 x 100% = F3
Table 4-22: Water System Peaking Factor Allocations

A B C D E F
Line Description
Peaking
Factors Base Max Day Max Hour Total
1 Base 1.00 100.0% 0.0% 0.0% 100.0%
2 Max Day 1.82 54.9% 45.1% 0.0% 100.0%
3 Max Hour 2.91 34.4% 28.2% 37.5% 100.0%

4.3.4. Functionalization and Allocation of Expenses
After determining the revenue requirement and systemwide peaking allocation basis, the next step of the water COS analysis is to allocate O&M expenses and capital assets to the following functional categories:
» Water Supply: costs related to producing and/or purchasing water supply » Pumping: costs related to the electrical cost of moving water through the system » Storage: costs related to water storage tanks and reservoirs » Treatment: costs associated with treating water to drinking water standards » Transmission: costs associated with transmitting through larger pipes from treatment facilities and interconnections to storage facilities
» Distribution: costs related to delivering water to customers from storage facilities to the meter » Conservation: costs associated with water conservation, outreach, and efficiency programs » Billing and Customer Service: costs of meter reading, billing, and other customer service functions » Meters: costs of meter maintenance and meter servicing » Fire Protection: costs directly attributable to private fire protection » General/Admin: costs associated with general administration of the Water Enterprise (i.e. indirect costs) » General and Conservation: costs within the City’s budget organization that are associated in part with water conservation, outreach, and efficiency programs and in part general in nature (and therefore allocated based on the overall allocation of general costs
» Revenue Offset: miscellaneous revenue that can be used to offset 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:
» Water Supply: directly associated with the Water Supply functional category » Base Delivery: costs associated with providing water during average water demand conditions Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 56 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 56 » Peaking (Max Day and Max Hour): extra-capacity costs associated with providing water during peak demand conditions
» Conservation: directly associated with the Conservation functional category » Customer: directly associated with the Customer functional category » Meters: directly associated with the Meters functional category » Fire Protection: costs associated with fire protection » General: directly associated with the General/Admin functional category » Revenue Offsets: miscellaneous revenues applied as offsets to the rate revenue requirement Table 4-23 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. Most functional categories are allocated entirely to the corresponding cost causation component. The allocation basis for functional categories not allocated entirely to a single cost causation component is as follows:
» Functional categories allocated based on Max Day demand: Storage, treatment, and transmission infrastructure is designed to accommodate maximum day water demands, plus fireflow. Therefore, all storage, treatment, and transmission costs are allocated to the Base Delivery and Max Day cost causation components based on the Max Day allocation from Table 4-22. » Functional categories allocated based on Max Hour demand: Distribution infrastructure is designed to accommodate maximum hour water demands, plus fireflow. Therefore, all distribution costs are allocated to the Base Delivery, Max Day, and Max Hour cost causation components based on the Max Hour allocation from Table 4-22.
» Conservation and General Operating: Conservation costs are co-mingled within specific operating budget line items. Raftelis worked with City staff to accurately allocate direct conservation costs and indirect general/administrative costs within these cost centers.

Water Supply: The City has three sources of water supply. All costs related to producing, pumping, and/or purchasing water from these sources is allocated to the supply cost component. Further in the COS these sources are differentiated and form the basis for the water use rates.

Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 57 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 57 Table 4-23: Allocation of Functional Categories to Water Cost Causation Components

A B C D E F G H I J K L
Line Functions Supply Base Max Day Max Hour Fire Meters Customer General Conser- vation Revenue Offset Total
1 Supply 100% 100%
2 Pumping 100% 100% 3 Storage 55% 45% 0% 100%
4 Treatment 55% 45% 0% 100% 5 Transmission 55% 45% 0% 100% 6 Distribution 34% 28% 37% 100% 7 Fire 100% 100% 8 Meter Service 100% 100% 9 Billing & CS 100% 100%
10 General & Admin 100% 100%
11 Conservation 100% 100% 12 Conservation/General 75% 25% 100% 13 Revenue Offset 100% 100% Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 58 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 58

4.3.5. Water 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 Water O&M expenses. Raftelis worked with City staff to allocate O&M expenses, by line item, to the most closely associated functional category. Table 4-24 shows a summary of FY 2024 O&M expenses by functional category. This intermediate step is necessary to allocate total O&M expenses to individual cost causation components.

Table 4-24: Summary of Water O&M Expenses by Functional Category A B C
Line Function
FY 2024 O&M
Expenses Percent of Total
1 Supply $1,820,121 29.1%
2 Pumping $158,055 2.5%
3 Storage $0 0.0%
4 Treatment $1,145,451 18.3%
5 Transmission $0 0.0%
6 Distribution $702,100 11.2%
7 Fire $0 0.0%
8 Meter Service $24,150 0.4%
9 Billing & CS $397,919 6.4%
10 General & Admin $1,591,517 25.5%
11 Conservation $31,500 0.5%
12 Conservation and General $380,188 6.1%
13 Revenue Offset $0 0.0%
14 Total $6,251,002 100.0%
Table 4-25 shows the allocation of FY 2024 O&M expenses by functional category to each cost causation component. The allocation of each functional category (Columns B-K) to the various cost causation components was determined in Table 4-23. Total O&M expenses associated with each functional category (Column L) was determined in Table 4-24. The total dollar amount allocated to each cost causation component (Line 14) is determined by multiplying the total expense associated with each functional category by the corresponding percentage allocation and summing across all functional categories.

For example, 100 percent (Column B, Line 1) of Water Supply costs (Column L, Line 1) are allocated to the Water Supply cost causation factor total (Column B, Line 14).

Table 4-25 shows the allocation of FY 2024 O&M expenses by functional category to each cost causation component. The allocation of each functional category (Columns B-K) to the various cost causation components was determined in Table 4-23. Total O&M expenses associated with each functional category (Column L) was determined in Table 4-24. The total dollar amount allocated to each cost causation component (Line 14) is determined by multiplying the total expense associated with each functional category by the corresponding percentage allocation and summing across all functional categories.

For example, 100 percent (Column B, Line 1) of Water Supply costs (Column L, Line 1) are allocated to the Water Supply cost causation factor total (Column B, Line 14). The same calculation is performed for the remaining functional categories. The subtotals in Lines 1-13 are summed to determine the total dollar amount Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 59 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 59 allocated to the Water Supply cost causation factor (Column B, Line 14). The same calculations are repeated for the remaining cost causation components (Columns C-K) to determine the allocation of O&M expenses to each cost causation component (Line 14). The total operating revenue requirement (Column L, Line 14) equals the operating revenue requirement from Table 4-21, Column B, Line 21. The O&M allocation percentages (Line 16) represent the proportion of total O&M expenses allocated to each cost causation component (Line 14).

Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 60 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 60 Table 4-25: Allocation of Water O&M Expenses to Cost Causation Components

A B C D E F G H I J K L
Line Function Supply Base Max Day Max Hour Fire Meters Customer General Conservation Revenue Offset Total
1 Supply $1,820,121 $0 $0 $0 $0 $0 $0 $0 $0 $0 $1,820,121 2 Pumping $158,055 $0 $0 $0 $0 $0 $0 $0 $0 $0 $158,055 3 Storage $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 4 Treatment $0 $629,369 $516,083 $0 $0 $0 $0 $0 $0 $0 $1,145,451 5 Transmission $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 6 Distribution $0 $241,271 $197,843 $262,986 $0 $0 $0 $0 $0 $0 $702,100 7 Fire $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 8 Meter Service $0 $0 $0 $0 $0 $24,150 $0 $0 $0 $0 $24,150 9 Billing & CS $0 $0 $0 $0 $0 $0 $397,919 $0 $0 $0 $397,919 10 General & Admin $0 $0 $0 $0 $0 $0 $0 $1,591,517 $0 $0 $1,591,517 11 Conservation $0 $0 $0 $0 $0 $0 $0 $0 $31,500 $0 $31,500 12 Conservation and General $0 $0 $0 $0 $0 $0 $0 $285,089 $95,099 $0 $380,188 13 Revenue Offset $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 14 Total $1,978,176 $870,640 $713,925 $262,986 $0 $24,150 $397,919 $1,876,606 $126,599 $0 $6,251,002 15 % Allocation 31.6% 13.9% 11.4% 4.2% 0.0% 0.4% 6.4% 30.0% 2.0% 0.0% 100.0% 16 % Allocation - G&A Proportionally Allocated 45.2% 19.9% 16.3% 6.0% 0.0% 0.6% 9.1% 0.0% 2.9% 0.0% 100.0% Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 61 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 61

4.3.6. Water 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 water asset base however is considerably stable in the long-term, and therefore is more representative of long-term capital investment in the City’s Water’s water 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 asset.

Raftelis calculated the replacement cost less depreciation (RCLD) of each asset based on net book value using the Engineering News-Record’s (ENR) 20-City Average Cost Construction Index (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 water asset value (RCLD) by functional category is shown in Table 4-26. Percentages are rounded to the nearest one-hundredth of one percent.

Table 4-26: Summary of Water Enterprise Capital Assets by Functional Category A B C
Line Function Asset Value (RCLD) Percent of Total
1 Supply $2,482,145 12.07%
2 Pumping $0 0.00%
3 Storage $11,136,052 54.16%
4 Treatment $4,412,655 21.46%
5 Transmission $0 0.00%
6 Distribution $2,482,890 12.08%
7 Fire $3,279 0.02%
8 Meter Service $1,834 0.01%
9 Billing & CS $0 0.00%
10 General & Admin $42,789 0.21%
11 Conservation and General $0 0.00%
12 Total $20,561,644 100.00%
Table 4-27 shows the allocation of capital assets by functional category to each cost causation component.

The percentage allocation of each functional category (Columns C-K) to the various cost causation components was determined in Table 4-23. Total asset value associated with each functional category (Column L) was determined in Table 4-26. The total dollar amount allocated to each cost causation component (Line 12) 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 4-25. The final capital allocation percentages (Line 14) represent the proportion of total capital assets allocated to each cost causation component (Line 12).

The capital allocation percentages (Line 14) are used to allocate the total capital revenue requirement. The total capital revenue requirement (Column L, Line 17) equals the capital revenue requirement from Table Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 62 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 62 4-21, Column D, Line 15. This total is allocated to each cost causation component (Columns C-K, Line 17) based on the final capital allocation percentages (Columns C-K, Line 14).

Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 63 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 63 Table 4-27: Allocation of Functionalized Water Capital Assets to Cost Causation Components

A B C D E F G H I J K L
Line Function Supply Base Max Day Max Hour Fire Meters Customer General Conservation Revenue Offset Total
1 Supply $2,482,145 $0 $0 $0 $0 $0 $0 $0 $0 $0 $2,482,145 2 Pumping $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 3 Storage $0 $6,118,710 $5,017,342 $0 $0 $0 $0 $0 $0 $0 $11,136,052
4 Treatment $0 $2,424,536 $1,988,119 $0 $0 $0 $0 $0 $0 $0 $4,412,655 5 Transmission $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 6 Distribution $0 $853,227 $699,646 $930,017 $0 $0 $0 $0 $0 $0 $2,482,890 7 Fire $0 $0 $0 $0 $3,279 $0 $0 $0 $0 $0 $3,279 8 Meter Service $0 $0 $0 $0 $0 $1,834 $0 $0 $0 $0 $1,834 9 Billing & CS $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 10 General & Admin $0 $0 $0 $0 $0 $0 $0 $42,789 $0 $0 $42,789 11 Conservation and General $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 12 Total $2,482,145 $9,396,472 $7,705,107 $930,017 $3,279 $1,834 $0 $42,789 $0 $0 $20,561,644
13 % Allocation 12.1% 45.7% 37.5% 4.5% 0.0% 0.0% 0.0% 0.2% 0.0% 0.0% 100.0% 14 % Allocation - G&A Proportionally Allocated 12.1% 45.8% 37.6% 4.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 64 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 64

4.3.7. Water Non-Rate Revenue (Revenue Offset) Allocation Table 4-28 shows the allocation of non-rate revenue to each cost causation component. Other operating revenue (Column L, Line 1) is allocated using the operating allocation proportions from Table 4-25, Line 16.

Investment Income and Water Capital Revenues (Column L, Lines 2-3) are allocated using the asset allocation proportions from Table 4-27, Line 14. The total dollar amount allocated to each cost causation component (Line 4) is determined by multiplying the total revenue offset by the corresponding percentage allocation and summing across all functional categories.

Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 65 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 65 Table 4-28: Allocation of Revenue Offsets to Cost Causation Components

A B C D E F G H I J K L
Line Revenue Offset Function Supply Base
Max Day
Max Hour Fire Meters Customer General Conservation Total 1 Other Operating Revenue Operating $15,443 $6,797 $5,573 $2,053 $0 $189 $3,106 $0 $988 $34,150 2 Investment Income Capital $3,067 $11,612 $9,522 $1,149 $4 $2 $0 $0 $0 $25,358 3 Water Capital Revenues Capital $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 4 Total $18,511 $18,409 $15,096 $3,202 $4 $191 $3,106 $0 $988 $59,508 Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 66 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 66

4.3.8. Preliminary Water Cost of Service Allocation
Table 4-29 shows the preliminary allocation of the total FY 2023-24 rate revenue requirement to the various cost causation components. The preliminary COS allocations (Column F) are subject to further adjustments based on additional reallocations developed in the following subsections. The results shown in Table 4-29 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 solely of the Water Enterprise’s O&M expenses. The allocation of the total operating revenue requirement to each cost causation component was previously determined in Table 4-25, Columns B-K, Line 16.

2. Capital Revenue Requirement (Column C): The total capital revenue requirement consists of debt service and reserve funding for future CIP. The allocation of the total capital revenue requirement to each cost causation component was previously determined in Table 4-27, Columns B-K, Line 14.

3. Revenue Offsets (Column D): The total revenue offset consists of non-rate revenue including other operating revenue, investment income, and water capital revenues. The allocation of the revenue offsets to each cost causation component was previously determined in Table 4-28, Columns B-K, Line 4.

4. Reallocation of General Costs (Column E): The total General cost allocation equals the operating revenue requirement (Column B, Line 8) and capital revenue requirement (Column C, Line 8) 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 basis3 (Column E, Lines 2-9) excluding the Water
Supply cost causation component since most of the Water Supply costs are simply purchased water costs. Note that the reallocation results in a shifting of costs between cost causation components but does not change the total rate revenue requirement.

5. Preliminary Cost of Service Allocation (Column F): The preliminary COS allocation to each cost causation component (Column F, Lines 1-9) equals the sum of Columns B-E. Note that the total COS allocation (Column F, Line 10) equals the total FY 2024 rate revenue requirement (from Table 4-21, Column D, Line 20).
3 The operating (Column C) and capital (Column D) revenue requirements are summed for each cost causation component shown in Lines 2-8. The percentage of the sum falling within each cost causation component (Lines 2-8) is multiplied by total reallocated General costs (Column F, Line 9) to determine the share of General costs reallocated to each cost causation component (Column F, Lines 2-8).

Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 67 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 67 Table 4-29: Preliminary Water Cost of Service Allocation (FY 2024)

A B C D E F
Line
Cost
Causation
Component
Operating
Revenue
Requirement
Capital
Revenue
Requirement
Revenue
Offsets
Reallocation
of General
Costs
Preliminary
COS
Allocation
1 Supply $1,978,176 $369,878 ($18,511) $0 $2,329,543
2 Base $870,640 $1,400,219 ($18,409) $841,037 $3,093,487 3 Max Day $713,925 $1,148,180 ($15,096) $689,650 $2,536,660 4 Max Hour $262,986 $138,587 ($3,202) $148,746 $547,117 5 Fire $0 $489 ($4) $181 $665
6 Meters $24,150 $273 ($191) $9,048 $33,281
7 Customer $397,919 $0 ($3,106) $147,418 $542,231
8 General $1,876,606 $6,376 $0 ($1,882,982) $0
9 Conservation $126,599 $0 ($988) $46,902 $172,513
10 Total $6,251,002 $3,064,002 ($59,508) $0 $9,255,497

1.2.9. Allocation of Fire Protection Costs
Water systems provide two types of fire protection: fire flows for fire protection from fire hydrants for firefighting; and fire flows from fire lines for private structures with fire suppression sprinkler systems. In 2020, Senate Bill No. 1386 was enacted into California law, and it added Section 53750.5 to the part of the California Government Code known as the Proposition 218 Omnibus Implementation Act, and it reads as follows:
(a) The Legislature finds and declares all of the following:
(1) Fire service is a different and distinct service from water service, which is one of several other propertyrelated services that aids in the provision of fire service provided to properties. (2) Hydrants are part of the system of public improvements described in subdivision (n) of Section 53750. (3) Hydrants are generally designed, installed, and used to provide an immediately available water service to aid in extinguishing fires that threaten property served by a water service provider, and are generally not designed or installed to provide water service to aid in extinguishing fires that threaten property not served by a water service provider or wildfires. Hydrants are also used by a water service provider for water system operations and maintenance.
(4) Hydrants are generally located in proximity to properties served by a water service provider to facilitate water service to those properties. Hydrants and the water distributed through them have a direct relationship to property ownership because hydrants are generally sized based upon property use and then are installed when parcels are developed or connected to a water system. (5) Hydrants and the water distributed through them are not available to the public at large in substantially the same manner as they are to property owners served by a water service provider because hydrants are designed, installed, and used to serve properties receiving water service, and the public at large does not generally have access to water through those hydrants. Incidental or other de minimis use of hydrants and the Agenda Item #10.2.

City of St. Helena / Water and Wastewater / Cost of Service and Rate Study Report 68 WATER AND WASTEWATER COST OF SERVICE AND RATE DESIGN STUDY 68 water distributed through them for other purposes does not change their essential character as a propertyrelated service. (6) Hydrants and the water distributed through them are part of the property-related water service provided to all property owners served by a water service provider. Through hydrants, water is immediately available to those properties to aid in extinguishing a fire that directly threatens them. The cost associated with this aspect of water service is proportionately allocable among properties that may receive a reasonably similar level of service from the immediate availability of water to aid in extinguishing fires that directly or indirectly threaten those properties.
(7) Property-related water service costs may include, but are not limited to, any costs associated with constructing, maintaining, repairing, upgrading, and replacing hydrants, and costs associated with obtaining, treating, and distributing adequate volumes of water to meet the water demands of properties served by the water service provider, including water supplied for firefighting purposes. The fees or charges related to those costs are imposed upon a parcel or person as an incident of property ownership. (b) The fees or charges for property-related water service imposed or increased pursuant to Section 6 of Article XIII D of the California Constitution may include the costs to construct, maintain, repair, or replace hydrants as needed or consistent with applicable fire codes and industry standards, and may include the cost of water distributed through hydrants. In addition to any other method consistent with Section 6 of Article XIII D of the California Constitution, fees or charges for the aspects of water service related to hydrants and the water distributed through them may be fixed and collected as a separate fee or charge, or included in the other water rates and charges fixed and collected by a public agency, as provided for in Section 53069.9 of the Government Code.
(c) For the purpose of this section, “hydrants” means all hydrants and other infrastructure used to distribute water that aids in the protection of property from fire, and all related or appurtenant infrastructure and facilities owned by a water service provider necessary or convenient for distributing water that aids in the protection of property from fire, including adequately sized and pressurized lines, pumps, and all appurtenances, but does not include privately owned hydrants or other private fire response related infrastructure.
(d) This section is declaratory of existing law.

This provision is declarative of existing law, and clarifies that the costs of water service chargeable to property owners include the cost of infrastructure, such as fire hydrants, that provide fire protection for nearby properties.

Raftelis confirmed with City staff that this provision is consistent with the City’s operations and use of fire hydrants.

Raftelis performed a fire demand analysis to determine the share of Fire Protection costs allocated to fire hydrants (hydrant fire flow) and private fire lines (private fire). The City provided Raftelis with a count of fire hydrants connected to its water system. The projected number of private fire lines in FY 2024 was previously shown in Table 4-5.

Agenda Item #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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% 6" 13 $7,182.95 $3,963.26 $3,219.69 81.2% Agenda Item #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

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 #10.2.

CITY OF ST. HELENA
RESOLUTION NO. 2023-
ACCEPTING THE CITY OF ST. HELENA 2023 WATER

AND WASTEWATER COST OF SERVICE AND RATE
STUDY.

RECITALS
A. Current Water and Wastewater rates were last reviews in 2016 and the final rate increase was implemented November 8, 2021; and
B. The current Water and Wastewater Rates do not provide adequate funding for the water and wastewater systems; and
C. On March 25, 2022, the City Council approved a resolution authorizing the City Manager to execute a Professional Services Agreement with Raftelis Financial Consultants to provide services associated with a Water and Wastewater Rate Study; and
D. On May 9, 2023 City Council accepted the City of St. Helena 2023 Water and Wastewater Cost of Service and Rate Study.

RESOLUTION
NOW, THEREFORE, the City Council of the City of St. Helena resolves as follows:

The City Council accepts the City of St. Helena 2023 Water and Wastewater Cost of Service and Rate Study as a final document and will utilize this study as the guiding document for setting water and wastewater rates.

Approved at a Regular Meeting of the St. Helena City Council on June 27, 2023 by the following vote:

Mayor Paul Dohring:

Vice Mayor Eric Hall:

Council Member Anna Chouteau:

Council Member Lester Hardy:

Council Member Billy Summers:

Agenda Item #10.2.

APPROVED: ATTEST:
________________________ ________________________
Paul Jamison Dohring, Mayor Cindy Tzafopoulos, City Clerk Agenda Item #10.2.

CITY OF ST. HELENA
RESOLUTION NO. 2023-
APPROVING THE CITY OF ST.

HELENA REVISED SCHEDULE

FOR WATER RATES,

WASTEWATER RATES, AND
DROUGHT SURCHARGES.

RECITALS
A. The City of St. Helena provides water services
throughout the City, including to certain customers
outside the boundaries of the City; and
B. The City of St. Helena’s water system is operated as a self-supporting utility enterprise; and
C. The City operates and maintains both water and
wastewater utilities including treatment and collection and distribution systems; and
D. Current Water and Wastewater rates were last reviews in 2016 and the final rate increase was implemented
November 8, 2021; and
E. The City has determined that the current rate structure will not support the current and future costs of the
system, including critical capital infrastructure
improvements; and
F. On March 25, 2022, the City Council approved a
resolution authorizing the City Manager to execute a
Professional Services Agreement with Raftelis Financial Consultants to provide services associated with a Water and Wastewater Rate Study; and
G. The purpose of the study was to evaluate the rate
structure to ensure rates adequately provide the
necessary revenue to support maintenance, operations,
and replacement/rehabilitation of the City’s water and
wastewater systems, and determine the level of funding
required to provide residents and businesses with a safe Agenda Item #10.2.

and reliable water and wastewater system that meets
State and Federal requirements; and
H. On May 9, 2023, the City Council accepted the City of St.

Helena 2023 Water and Wastewater Cost of Service and
Rate Study and directed staff to proceed with Proposition 218 noticing; and
I. Pursuant to the provision of Article 13D, Section 6, of the California Constitution (e.g., Proposition 218), prior to an increase in water and wastewater rates, property owners shall be mailed a notice at least 45 days prior to the
public hearing to consider an increase in any such water and wastewater rates with an explanation of: (1) the
amount of the proposed rate increase, (2) the basis of
which the rate increase is calculated, (3) the reason for the rate increase, and (4) the date, time, and place of the public hearing to consider the rate increase, together with an explanation of the rights of property owners to submit written protests od the proposed rate increase; and
J. The proposed rate increase may not be imposed if
written protests are submitted by the majority of the
property owners subject to the increased rates; and
K. On May 12, 2023, the City mailed copies the Notice of Proposed Increase in Water and Wastewater Rates and
Public Hearing in English and Spanish regarding such
increases to all property owners and utility customers; and
L. On June 27, 2023 prior to the adoption of this Resolution, the City Council conducted and concluded a duly notice
public hearing concerning the proposed water and
wastewater rate increase and considered all written and oral comments presented; and at its own conclusion the
City Clerk tabulated the number of protests received, and reported that there was not a majority protest of the
proposed water or wastewater rates by owners or tenants of identified parcel receiving such services; and
M. In accordance with the requirements of California
Environmental Quality Act (“CEQA”), the California
Public Resources Code section 21000 et seq., the State
Agenda Item #10.2.

CEQA Guidelines, California Code of Regulations, Title
14, Chapter 3, sections 15000 et seq., and the
Environmental Impact Report Guidelines of the City of St.

Helena, City staff has reviewed the proposed rate
increases and recommends that the approval of the rate
increase is Statutorily Exempt pursuant to CEQA
Guidelines Section 15273 as it applies only to rates to obtain funds necessary to operate and maintain service
for the water and wastewater system; and
N. All legal prerequisites have occurred prior to the adoption of the Resolution.

RESOLUTION
NOW, THEREFORE, the City Council of the City of St.

Helena resolves as follows:

1. The procedures followed and the rate schedules
proposed herein are in compliance with the California
Constitution Article XIII D; and

2. The City Council hereby finds that the above
recitations are true and correct and, accordingly, are
incorporated as a material part of this resolution; and

3. The City Council hereby finds that the rate increase is Statutorily Exempt pursuant to CEQA Guidelines
section 15273 as it applies only to rates to obtain
funds necessary to operate and maintain service for
the water and wastewater system; and

4. Water Rate Schedule
a. The City Council adopts the water rate
schedule in “Exhibit A” attached hereto and
incorporated herein by this reference; and

5. Wastewater Rate Schedule
a. The City Council adopts the wastewater rate
schedule in “Exhibit B” attached hereto and
incorporated herein by this reference; and

6. Drought Surcharge Schedule
a. The City Council adopts the wastewater rate
schedule in “Exhibit B” attached hereto and
incorporated herein by this reference; and

7. Time of Effectiveness
a. This Resolution shall take effect immediately.

The charges for water, wastewater, and
drought surcharge rates will become effective
on September 1, 2023, and a rate increase will
Agenda Item #10.2.

occur every subsequent year on July 1st for the
next (5) years as follows:
i. September 1, 2023
ii. July 1, 2024
iii. July 1, 2025
iv. July 1, 2026
v. July 1, 2027
Approved at a Regular Meeting of the St. Helena City
Council on June 27, 2023 by the following vote:

Mayor Paul Dohring:

Vice Mayor Eric Hall:

Council Member Anna Chouteau:

Council Member Lester Hardy:

Council Member Billy Summers:

APPROVED: ATTEST:
________________ _____________________________
Paul Jamison Dohring, Mayor Cindy Tzafopoulos, City
Clerk
Agenda Item #10.2.

EXHIBIT A
Agenda Item #10.2.

EXHIBIT B
Agenda Item #10.2.

EXHIBIT C
Agenda Item #10.2.

Rate Study & Recommendation Summary | June 27, 2023
City of St. Helena Proposed Water and Wastewater Rates
Agenda Item #10.2.

2 Aligning with Community Values:

Proposed rate structure achieves these goals
Deliver equity, so all customers,
whether residential or commercial,
will pay their fair share for service
Ensure the utilities’ financial
stability, so costs will be fully
covered, and allow for $55.5 million
in critical capital reinvestment in the
aging system
Promote conservation and water
efficiency, so that customers who
use the most water will have an
economic incentive to conserve
Agenda Item #10.2.

Community
Engagement
3 11 Rate Study Advisory Committee Meetings
2 Open Houses
6 Social Media Posts
4 Videos
1 Bill Stuffer
1 Press Release
4 City Council Meetings
Agenda Item #10.2.

4 Financial Plan Results & Recommendation
Necessary Gross Revenue Increases by Utility:
50% for wastewater in year one
28% for water in year one
Primary financial driver is the long-term CIP
Primary financial drivers are the operating cost environment, and the current cash position
Agenda Item #10.2.

Proposed Water Rate Structure
A single 3-Tier structure for all users
5 Tier 1
Tier Width: 0 - 11
Tier Definition: Avg. Supply
Available from Bell Canyon
(Surface Water)
Tier 2
Tier Width: 12 - 15
Tier Definition: Avg. Supply
Available from Stonebridge
Wells (Groundwater)
Tier 3
Tier Width: >16
Tier Definition: Normal
supply from City of Napa
(Purchased Water)
Agenda Item #10.2.

Single-Family Residential (SFR) Bill
Impacts
6 Agenda Item #10.2. Page 413 of 470
SFR Bill Impacts – Wastewater
7 Agenda Item #10.2. Page 414 of 470
Notice of Public Hearing
May 9, 2023
City Council directed staff to notice
customers per the Proposition 218
Noticing Requirements of the June 27,
2023 Public Hearing
8 Agenda Item #10.2. Page 415 of 470
Suggested Motion
9 1. By resolution, accept the 2023 Water and Wastewater Rate Study Final Report; and

2. Adopt a resolution approving

1. Changes to the water base rates, water use rates, fire line rates, and rate structure effective September 1, 2023; and

2. Changes to the wastewater base rates, wastewater use rates, and rate structure effective September 1, 2023; and

3. Approving Drought Surcharges and rate structure effective September 1, 2023: and

4. The charges for water, wastewater, and drought surcharge rates will become effective on September 1, 2023, and a rate increase will occur every subsequent year on July 1st for the next (5) years as follows:
a. September 1, 2023
b. July 1, 2024
c. July 1, 2025
d. July 1, 2026
e. July 1, 2027
Agenda Item #10.2.

Thank you
Contacts:

Kevin Kostiuk – 213.262.9309 / [email protected]
Jim Armstrong – [email protected]
10 Agenda Item #10.2. Page 417 of 470
Multi-Family Residential (MFR) Bill
Impacts
11 Agenda Item #10.2. Page 418 of 470
Mobile Home Bill Impacts
12 Agenda Item #10.2. Page 419 of 470
Commercial Bill Impacts
13 Agenda Item #10.2. Page 420 of 470
Industrial Bill Impacts
14 Agenda Item #10.2. Page 421 of 470
Drought Rate Impacts:

Single Family Residential, 15 HCF
15 15 HCF is the approximate annual average level of use of the class Agenda Item #10.2.

Report to the City Council
Regular City Council - 27 Jun 2023
Agenda Section: NEW BUSINESS
Subject: Consideration and proposed approval of a resolution appointing applicants to the Active Transportation &
Sustainability Committee, Parks and Recreation Commission and Library Board of Trustees and consider leaving the
recruitment open for the unfilled terms of office until filled.

CEQA
Determination:

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

BACKGROUND
In May, the City Clerk advertised a recruitment seeking applicants from the community to fill expiring Board, Committee and Commission terms of office. The Board, Committee and Commissions that have expiring terms include the Active Transportation & Sustainability Committee, Parks and Recreation Commission and Library Board of Trustees.

DISCUSSION
The recruitment seeking applicants from the community to fill expiring and/or vacant Board, Committee and Commission terms of office concluded on June 19, 2023. The City received a total of eight applications.

Per City Council Rules of Procedure appointments shall be made by interview and the Mayor shall nominate applicants with the appointments subject to approval by the majority of Council. The City Council convened an applicant interview meeting on June 27, 2023 at 4:30 pm.

Agenda Item #12.1.

The following lists the names of the individuals with expiring terms and applications received.

Active Transportation & Sustainability Committee
Active Transportation & Sustainability Committee members John Zimmerman and Jeff Farmer's term of office expire June 30, 2023.

Three applications were received from Anthony Micheli, Jeff Farmer and John Zimmerman for two available terms.

Library Board of Trustees
Library Board of Trustee members Lin Weber, Janet Myers and David Slaby's term of office will expire June 30, 2023.

Four applications were received from David Slaby, Jan Darter, Gillian Casey and Janet Myers for three available terms.

Parks and Recreation Commission
Parks and Recreation Commission members Matthew Demchuk and Rebekah Stoltz Weeman's term of office will expire June 30, 2023.

Three applications were received from Bryan Moorehead, Courtney Andrain and Jim Anderson for two available terms.

Should Council decide not to appoint someone from the current applicants, staff would re-advertise the recruitment.

FISCAL IMPACT
There is no fiscal impact.

RECOMMENDED ACTION
Staff recommends adopting a resolution appointing applicants to the following committees:

Active Transportation Sustainability Committee
Library Board of Trustees
Parks & Recreation Committee

ATTACHMENTS
Appointments Resolution
Parks and Recreation Commission Application - Bryan Moorehead Parks and Recreation Commission Application - Jim Anderson Agenda Item #12.1.

Active Transportation and Sustainability - Anthony Micheli Active Transportation and Sustainability - Jeff Farmer Redacted Active Transportation and Sustainability - John Zimmerman Library Board of Trustees Application - David Slaby
Library Board of Trustees Application - Gillian Casey
Library Board of Trustees Application - Jan Darter
Library Board of Trustees Application - Janet Myers
Parks and Recreation Commission Application - Courtney Andrain Agenda Item #12.1.

CITY OF ST. HELENA
RESOLUTION NO. 2023-
Appointing applicants to the Active Transportation & Sustainability Committee, Parks and Recreation Commission and Library Board of Trustee

RECITALS
A. There are expiring terms on the Active Transportation & Sustainability Committee, Parks and Recreation Commission and Library Board of Trustee; B. Applications have been received from community members for the openings. Per City Council Rules of Procedure appointments shall be made by interview and the Mayor shall nominate applicants with the appointments subject to approval by the majority of Council;
C. The recruitment concluded on June 19, 2023. An applicant interview meeting is scheduled to be held On June 27, 2022 at 5:00 p.m.

RESOLUTION
NOW, THEREFORE, the City Council of the City of St. Helena resolves as follows:

Active Transportation & Sustainability Committee

1. __________, and __________, is appointed to the St. Helena Active Transportation & Sustainability Committee filling a two year term expiring on June 30, 2025. __________; and
Library Board of Trustees

2. __________, __________ and __________ are appointed to the St. Helena Library Board of Trustees filling a two year term expiring on June 30, 2025; and Parks and Recreation Commission

3. __________ and __________ are appointed to the Parks and Recreation Commission filling a two year term expiring on June 30, 2025 and leaving the recruitment open until the vacant position is filled.

Approved at a Regular Meeting of the St. Helena City Council on June 27, 2023, by the following vote:

Mayor Dohring: __________
Vice Mayor Hall : __________
Council Member Chouteau: __________
Council Member Summers: __________
Council Member Hardy: __________
Agenda Item #12.1.

APPROVED: ATTEST:
________________________ ________________________
Paul Jamison Dohring, Mayor Cindy Tzafopoulos, City Clerk Agenda Item #12.1.
















 








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Agenda Item #12.1.

Report to the City Council
Regular City Council - 27 Jun 2023
Agenda Section: NEW BUSINESS
Subject: Provide direction to City Manager on Our Town St. Helena’s request to: 1) increase acquisition loan principal from $450,000 to $1 million for 963 Pope Street project; 2) authorize City Manager to extend said acquisition loan repayment date by up to 180 days, if necessary; and 3) convert said
acquisition loan to permanent loan when certain conditions are met, and document commitment
CEQA
Determination:

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

BACKGROUND
Project Overview
The Pope Street Workforce Housing Project is a 10-unit infill affordable housing development comprised of two phases. When completed, the two phases would look and function as one small community with shared parking and site amenities.

Phase one is 963 Pope Street (Assessor’s Parcel Number 009-090-069), a 0.29-acre lot containing a 966-square-foot two-bedroom, one-bathroom house, which is now rentrestricted and occupied. In November 2020, Our Town St Helena (OTSH) secured entitlements from the for four additional two-bedroom, one-bathroom units, designed as stacked flats in two duplexes, to be located behind the existing house. This five-unit phase will provide rental homes affordable to households earning low and moderate incomes.

Phase one is permitted and shovel ready. OTSH and Napa Valley Community Housing have agreed to partner on the development of this phase and have secured a federal Agenda Item #12.2.

HOME Loan and other construction and permanent financing commitments, as discussed below.

Phase two is 951 Pope Street adjacent to 963 Pope Street (Assessor’s Parcel Number 009-090-014), which OTSH purchased in October 2021 with a cash gift from a private donor. The 0.17-acre property currently contains a vacant and dilapidated two-story duplex, a large garage and separate storage structure which would all be removed. OTSH recently submitted a project entitlements application to the City for approval of a five-unit development consisting of one studio, a one-bedroom, and three two-bedroom units in two buildings. This second phase would provide rental homes for households earning moderate incomes. OTSH’s strategy is to privately finance phase two to allow more flexibility for project construction timing and the income levels the project would serve.

DISCUSSION
As Our Town St. Helena (OTSH) continues to move forward with their efforts to secure financing for phase one of the project (963 Pope Street), they have approached the City with additional requests as detailed in Attachment 1 and summarized below.

1. Increase acquisition loan principal from $450,000 to $1 million for 963 Pope Street project; and

2. Authorize City Manager to extend said acquisition loan repayment date by up to 180 days, if necessary; and

3. Convert said acquisition loan to permanent loan when certain conditions are met, and document commitment
To date, the City has made the following financial commitments to OTSH for phase one of the project, which is limited to 963 Pope Street:

Table 1 - City of St. Helena OTSH Financial Commitment for 963 Pope Street Resolution Date Notes Financial
Commitment
2019-106 8/27/19
Temporary Funding
Zero % interest
24-month term
$450,000
2021-103 8/24/21
Amendment #1
90-Day Loan Extension
Maturity Date: 12/9/21
2021-148 11/23/21
Amendment #2
1-Year Loan Extension
Maturity Date: 12/9/22
2022-10 2/8/22 Permanent Loan for the
development of 963 Pope Street $250,000
2021-152 12/14/21 Reimburse OTSH for interest only
payments to the Rural Community $21,000
Agenda Item #12.2.

Assistance Corp (RCAC) for the
loan for the 963 Pope Street Project.

Interest payment reimbursement
applies to payments from 12/1/22
until 10/31/22
2022-103 11/22/22
Amendment #3
1-Year Loan Extension
Maturity Date: 12/9/23
2022-104 11/22/22
Reimburse OTSH for RCAC interest
payments from 11/1/22 until
10/31/23
$14,400
Table 2 provides the adopted FY 2023/24 and FY 2024/25 budget estimates for the Affordable Housing Trust Fund Balances as follows:

Table 2 - Adopted FY 2023/24 & FY 2024/25 Estimated Fund Balances Fund 751 - Affordable
Housing Trust Fund Fund 752 - Measure E
Estimated Fund Balance
@ 6/30/23 1,695,852 1,081,069
Estimated Fund Balance
@ 6/30/24 1,736,147 1,368,787
Estimated Fund Balance
@ 6/30/25 1,778,054 1,670,871
Table 3 provides a summary of the funds committed in both affordable housing trust funds, which reduces the estimated available fund balances. Table 4 provides a summary of the estimated available fund balances at the end of FY 2022/23, FY 2023/24, and FY 2024/25.

Table 3 - Summary of Committed Funds
Fund 751 - Affordable
Housing Trust Fund
Fund 752 - Measure
E
Unavailable Long-Term
Receivables (1,249,684) (160,000)
OTSH Permanent Loan (250,000)
Remaining RCAC Interest
Payments (estimated) (23,400)
Encumbered through Purchase
Orders (17,082) (19,653)
Total Committed Funds (1,540,166) (179,653)
Agenda Item #12.2.

Table 4 - Summary of Estimated Available Fund Balances
Fund 751 - Affordable
Housing Trust Fund Fund 752 - Measure E
Estimated Available
Fund Balance @ 6/30/23 155,686 901,416
Estimated Available
Fund Balance @ 6/30/24 195,981 1,189,134
Estimated Available
Fund Balance @ 6/30/25 237,888 1,491,218

FISCAL IMPACT
Dependent on City Council Direction.

RECOMMENDED ACTION
Provide direction to City Manager on Our Town St Helena’s request

ATTACHMENTS
Attachment 1 - OTSH funding request_6.27.23
Agenda Item #12.2.

June 27, 2023
TO: Honorable Mayor and City Council Members, City of St Helena FROM: Jennifer La Liberte, Executive Director, Our Town St Helena SUBJECT: Request for Funding Support for Pope Street Workforce Housing Project, Phase One (963 Pope Street)
Thank you for the opportunity to present this funding request to advance the construction of the Pope Street Workforce Housing Project. I will be providing a Power Point overview during public comments for this item.

Project Overview
The Pope Street Workforce Housing Project is a 10-unit infill affordable housing development comprised of two phases, which will appear and function as one small community with shared parking and site amenities.
“Phase One” is 963 Pope Street (Assessor’s Parcel Number 009-090-069), a 0.29-acre lot containing a 966-square-foot two-bedroom, one-bathroom house, which is now rent-restricted and occupied. In November 2020, Our Town St Helena (OTSH) secured entitlements from the City of St. Helena (City) for four additional two-bedroom, one-bathroom units, designed as stacked flats in two duplexes, to be located behind the existing house. In September 2019, OTSH purchased the property for $850,000 through a charitable sale with two loans, one from the City’s Affordable Housing Trust Fund ($450,000) and one from Rural California Assistance Corporation ($543,889), further described later in this report.

This five-unit phase will provide rental homes affordable to households earning low and moderate incomes.

Since the project’s inception, the community expressed its strong support for the low-scale infill project and its design compatibility with the surrounding neighborhood. The City has supported Phase One through fee waivers, the acquisition loan, loan repayment extensions, and reimbursement for interest payments, as well as a commitment for a future $250,000 permanent loan.

Phase One is permitted and shovel ready. OTSH and Napa Valley Community Housing (NVCH) have agreed to partner on the development of this phase and have secured a federal HOME loan and other financing commitments, as discussed below.
“Phase Two” is 951 Pope Street adjacent to 963 Pope Street (Assessor’s Parcel Number 009-090-014), which OTSH purchased in October 2021 with a cash gift from a private donor. The 0.17-acre property currently contains a vacant and dilapidated two-story duplex, a large garage and separate storage structure which would all be removed. OTSH recently submitted a project entitlements application to the City for approval of a five-unit development consisting of one studio, a one-bedroom, and three two-bedroom units in two buildings. This second phase would provide rental homes for households earning moderate incomes.

Agenda Item #12.2.

Some of the downsides to a small project are the lack of funding competitiveness and reduced economies of scale. As a benchmark, the per-unit development costs for larger housing projects throughout the Bay Area are ranging from $650,000 to over $1 million. For the 10-unit Pope Street project, the per-unit total development cost is estimated at $607,000, excluding land or $694,000 including land. OTSH’s strategy is to build Phase Two with private funds entirely which will save significant time and money by eliminating the competitive public funding process and extensive timelines, associated subordination agreements and regulatory requirements, assembly of multiple funding sources, and legal costs. This will also help us construct the two phases in closer sequence and create greater economies for the whole project.

Because Phase Two is still in the entitlement phase, securing financing has not yet begun for this phase.

The discussion below pertains strictly to Phase One.

Phase One (963 Pope Street) Financing
Property Acquisition Loans: OTSH purchased the property for $850,000 through a charitable sale, with a $450,000 acquisition loan from the City’s Affordable Housing Trust Fund (“Trust Fund”), which included a rent regulation for low- or very low-income residents on four units and moderate-income resident(s) for one unit; and a $543,889 loan from Rural Community Assistance Corporation (RCAC), of which $400,000 was for acquisition and the balance for predevelopment funds which have been entirely expended.

The RCAC loan requires a monthly interest payment of $1,200. The RCAC loan maturity date was extended from October 1, 2021, to October 1, 2023. To help OTSH with the unanticipated ongoing interest costs, on December 14, 2021, the Council approved a quarterly reimbursement from the Trust Fund to OTSH for the interest payments, from December 2021 through October 2022, for a not-toexceed amount of $21,000; and on November 22, 2022, Council approved continued reimbursements through October 31, 2023, for a not-to-exceed amount of $14,400.

On August 24, 2021, the City Council extended the City loan maturity date by 90 days to December 9, 2021; on November 3, 2021, Council extended it for an additional year to December 9, 2022; and on November 22, 2022, granted an additional one-year extension to December 9, 2023. On February 8, 2022, the City Council adopted a resolution approving a separate loan in the amount of $250,000 toward the permanent financing of the project.

Permanent Financing: Since early 2021, OTSH and NVCH (the “Developer”) have been working on obtaining construction and permanent financing for Phase One. This process has been time consuming and challenging due to the small size of the project, rendering it less competitive for public dollars; the State of California’s unpredictable schedules for funding applications and awards; and increasing costs over time. After a previous rejection, in March 2022, the Developer submitted a second application for a HOME loan for the maximum-allowed amount of $854,872 and was notified in April 2023 of an award, contingent on completion of several items, including securing all financing for Phase One. A primary Agenda Item #12.2.

HOME loan criteria is local affordable housing funding sources must be included in the mix to officially secure the HOME loan.

The estimated cost for Phase One is $4.19 million including land acquisition, construction and soft costs.

To date Phase One has commitments for $2.44 million through HOME, Poppy Bank, and a City Councilapproved $250,000 permanent loan (Resolution No. 2022-10, February 8, 2022). The Developer has raised $380,000 through local grants and donations and is currently working on raising an additional $150,000 through a matching opportunity campaign. We are in early discussions with the County of Napa regarding a future loan request of $500,000 from the County’s Affordable Housing Trust Fund, though no hearing date has been scheduled. If the Developer can secure an additional $1.25 million from the City’s and County’s housing trust funds, the remaining gap would be $500,568 which we are pursuing through a combination of sources.

PHASE ONE PERMANENT FINANCING PLAN
Estimated total development cost (Phase One) $4,189,133 Funding Commitments to Date
Maximum conventional loan (Poppy Bank) $ 953,693
HOME loan (awarded April 2023) $ 854,872
City permanent loan commitment (February 2022) $ 250,000 Local donations/grants received or committed $ 380,000
Subtotal Committed to Date $2,438,565
Funding Requests Pending Approval
City of St Helena AHTF Request (pending) $ 750,000
County of Napa AHTF Request (pending) $ 500,000
Subtotal Pending Approval $1,250,000
Total Secured or Pending Approval $3,688,565
Gap (close with grants/donations/gap loans) $ 500,568
Funding Request for City Council Consideration
At this time, the City Manager is seeking Council direction on how it would like to proceed with the following request from OTSH. OTSH’s Executive Director will provide a presentation at the Council meeting about the Pope Street project and request
The request has three components for the City Council’s consideration:
1) Modify existing acquisition loan agreement to increase the principal from $450,000 to $1,000,000 for 963 Pope Street project.

Our Town St Helena is requesting an increase to the acquisition loan from the City’s Affordable Housing Trust Fund so it can pay off the loan with RCAC and eliminate the ongoing monthly interest payments. The primary change to the loan agreement would be to the principal amount of the loan, and all other terms of the agreement would remain intact, including the zero percent interest rate. If Agenda Item #12.2.

963 Pope Street (phase one) does not proceed to construction, or if OTSH sells the property, the funds would be due and payable to the Trust Fund.
2) Authorize City Manager to extend acquisition loan repayment date by up to 180 days, if necessary.

The current repayment date of the loan (whether the principal amount is modified or not) is December 9, 2023. While the Developer’s goal is to break ground before the due date, many tasks remain to get the financing fully assembled and agreements in place. This request to authorize the City Manager to extend the repayment date by six months would eliminate the need for OTSH to return to City Council for such an extension should such a need arise. 3) Provide a $1 million permanent loan when certain conditions are met and document the commitment for HOME loan purposes.

This request would essentially “convert” the $1 million temporary acquisition loan to a permanent loan at the time the Developer satisfactorily demonstrates all funding has been assembled and a construction start is approaching. As previously stated, the City has committed $250,000 toward permanent financing, however a formal loan agreement has not yet been prepared nor executed.

This request would supersede the City’s prior $250,000 commitment with a $1 million permanent loan. The 55-year affordability covenants from the acquisition loan would carry forward to the permanent loan and the clock would start over. If approved, the permanent loan borrower would be a limited liability corporation, with NVCH as the managing member and OTSH as the administrative member.

For HOME loan purposes, the Developer needs to show a documented commitment from the City.

An option for Council is to direct staff to prepare a proposed loan term sheet for consideration at a future meeting. If Council approves the term sheet, it could also grant authority to the City Manager to prepare and execute a loan agreement and related documents in accordance with the approved terms. A term sheet, approved by resolution, would provide the Developer the documentation it needs for HOME loan purposes.

Agenda Item #12.2.

Pope Street
Workforce Housing Project
St. Helena City Council 6/27/23
Agenda Item #12.2.

Project Overview
• 10 rental apartments to be built in two phases
• Mix of studio, 1BR and 2BR
• Includes outdoor picnic area; shared laundry; storage; surface parking • For households earning roughly $46K-$140K
• Homes for up to 45 people
• Close walk to downtown St. Helena, public transit, schools, services Agenda Item #12.2.

Phase One (963 Pope)
5 units
• 1 existing house
• 4 new units
• All 2 bedrooms, 1
bath
Approved / Permit
Ready
Phase Two (951 Pope)
5 units
• 1 studio
• 1 1-bedroom
• 3 2-bedrooms
• All 1 bath
Entitlement Review
Agenda Item #12.2.

Agenda Item #12.2.

Acquisition Loans for Phase One
City loan
• $450,000 principal
• No interest
• Repayment due 12/9/23
Rural California Assistance Corporation
• $543,889 ($400k for acquisition, $143,889 for predevelopment) • $1,200+ monthly interest payments (reimbursed by AHTF) • Repayment due 10/1/23
Agenda Item #12.2.

Proposed Financing Strategy
Phase One – public and private funding sources
• Development partner: Napa Valley Community Housing
• Costly and time consuming -- multiple applications and denials; loan and subordination agreements
• Rents restricted: very low to moderate income
Phase Two – private funding only
• Significantly reduces time and costs
• Allows for closer sequencing of construction
• Achieves greater economies of scale
• Provides more flexibility for rents, can serve “missing middle” Results in per-unit total development cost estimate $690K (rounded) Agenda Item #12.2.

Agenda Item #12.2.

PHASE ONE PERMANENT FINANCING PLAN
Estimated total development cost (Phase One) $4,189,133 Funding Commitments to Date
Maximum conventional loan (Poppy Bank) $ 953,693
HOME loan (awarded April 2023) $ 854,872
City permanent loan commitment (February 2022) $ 250,000 Local donations/grants received or committed $ 380,000
Subtotal Committed to Date $2,438,565
Funding Requests Pending Approval
City of St Helena AHTF Request (pending) $ 750,000
County of Napa AHTF Request (pending) $ 500,000
Subtotal Pending Approval $1,250,000
Total Secured or Pending Approval $3,688,565
Gap (close with grants/donations/gap loans) $ 500,568 Agenda Item #12.2. Page 466 of 470 Private Sources = 38%
• Private Conventional – 30%
• Local donations / grants – 8%
Government Funding = 36%
• Federal – 13%
• Local: City/County – 23%
Gap – 26% (mix of sources, tbd)
Both phases:

Agenda Item #12.2.

Community
Benefits
• Homes for up to 45 people
• Affordable for working families, people who
are vital to the local economy and
community vibrancy
• Walking distance to downtown, schools,
parks, services
• Compatible with neighborhood
• RHNA Credits
Agenda Item #12.2.

OTSH Requests for Consideration:

1. Modify current acquisition loan agreement to increase principal from $450K to $1M
• subject to repayment if project doesn’t proceed
• use new proceeds to repay RCAC acquisition loan; no more interest payments

2. Authorize the City Manager to extend acquisition loan repayment date by 180 days, if necessary

3. Authorize a new loan agreement for a permanent loan of $1M; the same $1M in #1 would convert to permanent loan and supersede the previous Council commitment of a $250K permanent loan
Agenda Item #12.2.

Estimated Available Fund Balances
Fund 751 – Affordable
Housing Trust Fund Fund 752 – Measure E Total Estimated Fund Balance Estimated Available Fund
Balance @ 6/30/23* 155,686 901,416 1,057,102
Estimated Available Fund
Balance @ 6/30/24* 195,981 1,189,134 1,385,115
Estimated Available Fund
Balance @ 6/30/25* 237,888 1,491,218 1,729,106
*FY 2023/24 and FY 2024/25 Adopted Budget Estimates
Agenda Item #12.2.