Upland City Council
June 8, 2026

NUMBER OF PARCELS: 3 IN THE CITY OF UPLAND, SAN BERNARDINO COUNTY, STATE OF CALIFORNIA SHEET 3 OF 3 SHEETS GROSS & NET AREA = 6.889 ACRES
PARCEL MAP NO . 20819
I BEING A SUBDIVISION OF PARCEL 1, PARCEL MAP NO. 3819, AS PER MAP FILED IN BOOK 37, PAGE 15 OF PARCEL MAPS, RECORDS OF SAN BERNARDINO COUNTY.

DRG, INC. DATE OF SURVEY: DECEMBER 2023
r PARCEL DATA AND EASEMENTS
N1J ha-
C/L SINCLAIR AVE. t Lnui C/L LINDA WAY -C/L 8TH STREET
SCALE: =50' SURVEYOR'S NOTES:
0 25 50 1. BASIS OF BEARINGS: CENTERLINE OF SINCLAIR AVENUE BETWEEN 7TH STREET N89°56'29"E 648.26' - AND 8TH STREET, BEING NOO°00'23"E PER PARCEL MAP NO. 3819, P.M.B. 37/15. - 348.02' - _ 50.26' - - 52.62' - _ 197.36' - 2. • INDICATES FOUND MONUMENT AS NOTED. 0 89°56'06" - -450.90'- - 0=90°04'28" 3. 0 INDICATES 1"X30" I.P.OR SPIKE&WASHER OR LEAD&TACK,ALL TAGGED"'LS R=15.00' R=15.00' 1 I 9735", TO BE SET.

L=23.54' 10' 10' L=23.58' 4. ( )INDICATES RECORD DATA PER PARCEL MAP NO. 3819, P.M.B.37/15 E2 - - 20' 5. [ ] INDICATES RECORD DATA PER TRACT NO.8380, M.B. 111/59-61

6.{ }INDICATES RECORD DATA PER TRACT NO. 7042, M.B. 89/69-70 Co 7. INDICATES RECORD DATA PER RECORD OF SURVEY 2018-0186, R.S.B. 165/64-80 o
--NI-301-0- 50' 8. C.R. CORNER RECORD

9. CITY CITY OF UPLAND
PARCEL 2 10. EST. ESTABLISHED
2'-..-] El 0 35,030 SQ. FT. Co
0 11. INT. INTERSECTION
o

12. L&T LEAD AND TACK
o
o z 13. P PRORATED
Ls)

14.SNF SEARCHED, NOTHING FOUND
w 15. INDICATES SUBDIVISION BOUNDARY ti 16. INDICATES CENTERLINE
rn o 17. INDICATES EXISTING PARCEL LINE in N o z 18. INDICATES NEW PARCEL LINE z w z I I in 19. INDICATES RIGHT OF WAY LINE inM b. _ID > 20.- INDICATES EASEMENT LINE > o - N90°00'00"W 212.33' z o Q
z N. I-
SIGNATURE OMISSIONS:

U Pmmco D PURSUANT TO THE PROVISIONS OF SECTION 66436(a)3(a)(i-iii)OF THE SUBDIVISION MAP Z o ACT,THE SIGNATURES OF THE FOLLOWING EASEMENT HOLDERS HAVE BEEN OMITTED, J o PARCEL 1 1� _1 AS THEIR INTEREST IS SUCH THAT IT CANNOT RIPEN INTO A FEE TITLE AND SAID 0 Z 5.332 AC. "1-.
0 SIGNATURES ARE NOT REQUIRED BY THE LOCAL AGENCY. w ti V
El SOUTHERN CALIFORNIA EDISON COMPANY, HOLDER OF AN EASEMENT FOR PUBLIC o w UTILITIES PER DOCUMENT RECORDED OCTOBER 03, 1951, IN BOOK 2832, PAGE 412, CVLri
CV
o N89°33'37"E ti OF OFFICIAL RECORDS. PLOTTED HEREON.

ZIP-- 50.00' 11
o E2 CITY OF UPLAND, HOLDER OF AN EASEMENT FOR WATERLINES PER PARCEL MAP N89°48'07"W 100.18' \ z NO. 3819 FILED IN BOOK 37, PAGE 15, OF PARCEL MAPS.

SAID EASEMENT WAS REALIGNED BY A CERTIFICATE OF CORRECTION RECORDED 1 DECEMBER 28, 1977, IN BOOK 9334, PAGE 1368, OF OFFICIAL RECORDS. PLOTTED E2 HEREON.
1 E4 �5'
o E3 LONGS DRUG STORES CALIFORNIA, L.C.C.,A CALIFORNIA LIMITED LIABILITY o y "'/I o COMPANY(AS SUCCESSOR IN INTEREST TO LONGS DRUG STORES CALIFORNIA, �30'� 0 1 I\�� 6' INC.)AND CAL-PERL UPLAND 5, L.P.,A DELAWARE PARTNERSHIP(AS SUCCESSOR IN w N89°59 37 W 30.00' w INTEREST TO DMP PROPERTIES,A SOLE PROPIERTORSHIP), HOLDERS OF E2�-►{ 20' "' RECIPROCAL EASEMENTS AND DECLARATION OF COVENANTS RUNNING WITH THE C/L MAXWELL STREET - - 10' 10' N o LAND PER DOCUMENT RECORDED DECEMBER 28, 1977, IN BOOK 9334, PAGE 1377, _ 10' 10� N00°00'23"E 15.53' o ® 20' o OF OFFICIAL RECORDS.

59.00' - z PARCEL 3 Z *- \/ N89°58'21"W 230.25' -�� o AND RE-RECORDED DECEMBER 28, 1977, IN BOOK 9334, PAGE 1464, OF OFFICIAL 32,784 SQ. FT. o RECORDS.
i ti v AND MODIFIED BY DOCUMENT RECORDED DECEMBER 28, 1977, IN BOOK 9334, PAGE - N89°58'31"E 129.71' -� w o co `" 1473, OF OFFICIAL RECORDS.
"' z AND MODIFIED BY DOCUMENT RECORDED OCTOBER 11, 1978, IN BOOK 9536, PAGE 0 1837, OF OFFICIAL RECORDS.
0 o AND MODIFIED BY DOCUMENT RECORDED JULY 25,2002,AS INSTRUMENT NO. 0 Z 1 2002-0385195, OF OFFICIAL RECORDS. 70)
AND MODIFIED BY DOCUMENT RECORDED MAY 17,2022,AS INSTRUMENT NO. 0 50' 2022-0183677, OF OFFICIAL RECORDS.

CDSAID EASEMENTS ARE BLANKET IN NATURE AND CANNOT BE PLOTTED. z E5
r E4 GENERAL TELEPHONE COMPANY OF CALIFORNIA,A CORPORATION, HOLDER OF AN I / 75.00' EASEMENT FOR PUBLIC UTILITIES PER DOCUMENT RECORDED NOVEMBER 28, 1978, �- 168.05' 149.89' / IN BOOK 9568, PAGE 1869,OF OFFICIAL RECORDS. PLOTTED HEREON.

N89°59'34" 17.95'
ca E5 CITY OF UPLAND, HOLDER OF AN EASEMENT FOR THE INSTALLATION,OPERATION,

MAINTENANCE, REPAIR,AND REPLACEMENT OF TRAFFIC CONTROL DEVICES PER DOCUMENT RECORDED MAY 09, 1988,
AS INSTRUMENT NO.88-144987, OF OFFICIAL RECORDS. PLOTTED HEREON.

o' OrA

CALIFORNIA LEVINE ACT DISCLOSURE STATEMENT
G+9t1q S
California Government Code Section 84308, commonly referred to as the "Levine Act," prohibits City Officers from participating in any action concerning a license, permit,other entitlement for use,franchise, or contract (collectively"license, permit,or contract") if they receive political contribution(s)from a party, or its agent(s), totaling more than $500 within the twelve (12) months before the proceeding, while a proceeding is pending, and for twelve (12) months following the date of a final decision in a proceeding.

The Levine Act also requires a member of the Upland City Council who has received such a contribution to disclose the contribution on the record of the proceeding and recuse themselves before the proceeding unless the violation has been properly cured.

Current Upland City Council Members are listed at:
https://www.uplandca.gov/city-council-treasurer
Parties and their Agents are responsible for accessing the link to review the names and disclosing their applicable contributions to City Officers on the record of a proceeding.

As a party to a proceeding,you are also required to provide information below about contributions made by you, your agents on behalf of you or your organization, your organization subject to the proceeding with the City, and any organization you direct or control pursuant to the aggregation rules at FPPC Reg. § 18438.5, except for uncompensated officers of a nonprofit organization. This form is to be submitted to the City of Upland and is a public record. If you have any questions about this form, please contact your City representative for assistance.

1. Have you or your company,or any agent/board member on behalf of you or your company/entity, made any political contributions of more than $500 to any Upland City Council Member in the 12 months preceding the date of the submission of your proposal or application,or the anticipated date of any Council action?
YES If yes, please identify the Council Member(s):

NO

2. Do you or your company/entity, or any agency on behalf of you or your company/entity, anticipate or plan to make any political contribution of more than $500 to any Upland City Council Member in the 12 months following any Council action related to your proposal or application? YES If yes, please identify the Council Member(s):
f&NO
Answering yes to either of the two questions above does not preclude the Upland City Council from awarding a contract or approving an application or any subsequent action. It does, however, preclude the identified Council Member(s) from participating in any actions related t your proposal or application. 121ZoZlo
Date Signature of authorized individual
t c ?Cop '-V-141
Company/Applicant Name
M cwrk A. Fey- , wM-ef-
0_s rnn•.nnracy.ar
(Levine Act definitions on reverse side)

����°� °p`q� CITY
�r. .__. ..` "The City of Gracious Living" ''' 5 oid.

DATE: June 8,2026
TO: MAYOR AND CITY COUNCIL
FROM: MICHAEL BLAY,CITY MANAGER
PREPARED BY:DAMIEN R.ARRULA,ASSISTANT CITY MANAGER
RICHARD GONZALES,DEPUTY PUBLIC WORKS DIRECTOR—UTILITIES ROSA GUTIERREZ,ENGINEERING MANAGER—UTILITIES

LIZ RODRIGUEZ,MANAGEMENT ANALYST
SUBJECT: EMERGENCY REPAIR WORK FOR 26 W. 15TH STREET TRANSFER STATION UPDATE RECOMMENDED ACTION:

It is recommended that the City Council receive and file the status update related to the KSM Electric,Inc. contract for emergency repair work at the 26 W. 15th Street Transfer Station.

GOAL STATEMENT
The proposed action supports the City's goal of maintaining critical public works and utilities support facilities in good operable conditions in order to provide safe and reliable water service to the community.

BACKGROUND
On February 9,2026,the City Council adopted Resolution No. 6866 declaring an emergency condition and approved the emergency repair work at the 26 W. 15th Street Transfer Station.This included approval to execute a contract with KSM Electric,Inc. The emergency action was necessary to address facility conditions requiring immediate repair to maintain safe and reliable operations. Per the City's Purchasing Policy, emergency purchases require a recurring update during City Council agendas until such time as the work is completed.

The work generally includes electrical system repairs, replacement of damaged or failing electrical components, troubleshooting and restoration of power and control systems,and associated work necessary to restore the facility to safe and operational condition.Following Council authorization,staff completed contract execution and advanced the project into implementation, including conducting a pre-construction meeting with KSM Electric, Inc. and its subcontractors and issuing the Notice to Proceed effective April 2,2026.

ISSUES AND ANALYSIS
KSM's permit submittals remain under review at this time, and KSM has remained in communication with the respective permitting authorities. In addition, City staff is reviewing the contractor's materials submittal and will be meeting to discuss the first change order for the project.

ENVIRONMENTAL DETERMINATION
This action is not a project subject to CEQA and is exempt under Section 15378(b)(5)of the CEQA Guidelines as an organizational or administrative activity of government that will not result in direct or indirect physical changes in the environment.

FISCAL IMPACTS
There is no fiscal impact associated with this action.

ALTERNATIVES
Provide alternative direction to staff.

CEQA:Not a Project

4c, °v °p`q� CITFUP LAND
�" - -
.�, �` "The City of Gracious Living"
c�lrFOR�i�
DATE: June 8,2026
TO: MAYOR AND CITY COUNCIL
FROM: MICHAEL BLAY,CITY MANAGER
PREPARED BY:MARCELO A.BLANCO,CHIEF OF POLICE

LON TEAGUE,CAPTAIN
SUBJECT: CONSIDER ACCEPTANCE OF HOMELAND SECURITY GRANT PROGRAM 2024 FUNDS RECOMMENDED ACTION:

It is recommended that the City Council: 1) accept the City's share of the 2024 Homeland Security Grant Program award in the amount of$28,832; 2) appropriate the grant funds to Fund 214; and 3) authorize the City Manager to execute any and all documents necessary to implement the grant.

GOAL STATEMENT
The proposed action supports the City's goal of providing safe and effective law enforcement for the Upland community.

BACKGROUND
The Homeland Security Grant Program(HSGP)is a state grant with funding allocated and controlled by the County of San Bernardino. The funds must be expended exclusively to provide "frontline"public safety services by police and fire.In addition,grant monies must be used to supplement existing services and not to supplant any existing funds for public safety.

ISSUES AND ANALYSIS
The Police Department is requesting authorization to purchase emergency medical and tactical response equipment, including C50 First Responder gas masks,Phillips HeartStart AEDs,AED pads,AED batteries,child bag valve masks (BVM),QuickClot hemostatic dressings,HyFin vented chest seals,medical cutting shears,a Rescue Randy 165-pound training mannequin,CP Prompt TPAK 200 training equipment,and a Simulaids Trauma Moulage Wound Kit.

The requested equipment will enhance officer safety, emergency medical response capabilities, and department training preparedness for critical incidents involving trauma care, hazardous environments, and life-saving medical interventions.

The Police Department continually evaluates equipment,and training needs to ensure personnel are properly equipped to respond to critical incidents and provide emergency medical aid to the public and fellow employees.The proposed purchase consists of medical response supplies,protective equipment, and training tools intended to support officer readiness and improve emergency response outcomes.

The C50 First Responder gas masks will provide respiratory protection for officers responding to hazardous materials incidents,crowd control situations,or environments containing airborne contaminants.The Phillips HeartStart AEDs, along with replacement pads and batteries,will ensure officers have reliable automated external defibrillators readily available to provide immediate cardiac intervention during medical emergencies.

Additional medical equipment,including child BVMs,QuickClot hemostatic dressings,HyFin vented chest seals,and medical cutting shears,will enhance the department's trauma care capabilities.These items are commonly utilized in law enforcement emergency medical response and are critical for treating severe bleeding, chest trauma, and respiratory emergencies prior to the arrival of fire or ambulance personnel.

The Rescue Randy training mannequin, CP Prompt TPAK 200, and Simulaids Trauma Moulage Wound Kit will support realistic scenario-based training for officers.These tools allow personnel to practice patient movement,trauma treatment, and emergency response techniques in a controlled training environment, improving overall preparedness and proficiency.

The purchase of this equipment aligns with the department's commitment to officer safety,public safety,and ongoing training standards. The equipment will be utilized department-wide and incorporated into both field operations and training programs.

ENVIRONMENTAL DETERMINATION
The proposed action is not subject to the California Environmental Quality Act(CEQA). Section 15378 of the CEQA Guidelines defines a project subject to CEQA.The proposed action is not included within the definition of a"project" and thus is exempt.

FISCAL IMPACTS
The Fiscal Year 2025-26 budget will be adjusted to increase revenue by$28,832 and appropriate expenditures in the same amount to the Homeland Security Grant Program Account No.2143201-5530-32619.

ALTERNATIVES
Provide alternative direction to staff.

CEQA:Not a Project.

1743 Miro Way, Rialto, CA 92376 I Phone: 909.356.3998 Fax:909.356.3965 c� www.SBCounty.gov
SAN BERNARDINO Office of Emergency Services Luther Snoke COUNTY � � Chief Executive Officer
Crisanta Gonzalez
Director
October 3, 2025
TO: GRANT PROGRAM MANAGER
RE: FY2024 HOMELAND SECURITY GRANT PROGRAM APPROVAL
The San Bernardino County Office of Emergency Services has approved your Fiscal Year 2024 Homeland Security Grant Program (FY24 HSGP)application. As of the date of this letter,you are authorized to make expenditures using FY24 HSGP funds. The performance period ends on March 31, 2027.

Be aware that your project allocation amount may have changed. Take note of the amount located on the attached project workbook.

Any activities requiring additional review and pre-approval (e.g., Environmental and Historic Preservation, Performance Bond Waivers, procurement of Aviation or Controlled Equipment, etc.) shall not incur costs until you receive written approval for those activities.

Please note the following:

1. Modifications: All project changes require pre-approval from Cal OES prior to incurring any costs. Modification requests are due quarterly. Refer to the FY24 Grant Deadlines for submission dates. The scope of work on projects identified as National Priority projects cannot be modified. Changes in quantities on National Priority projects must have FEMA approval.

2. Procurement: General procurement standards with open competition must be followed for all Federal grant expenditures, according to 2 C.F.R. § 200.318-200.323.Copies of three(3)quotes bids must be submitted with reimbursement requests.

3. Noncompetitive Procurement: Documentation of entity procurement policies must be submitted with reimbursement requests for all noncompetitive procurement. Purchases over$250,000 will require pre-approval from Cal OES prior to procurement, following up with your governing board or council, if applicable. A cost benefit analysis is required with noncompetitive procurement requests.

4. SAMS Verification: A print-out of the SAM.gov vendor verification report must be printed prior to procurement for all vendors/contractors and must be submitted with reimbursement requests. Note: Vendor registration in SAM.gov is not required. However, the vendor must not be debarred or restricted from receiving federal funds, which will appear in your vendor verification report if the vendor has restrictions. .ARI) 01 SI:Pi.:RVISURS
Col.. h4u1.coot;(Rm.) Ji:ssi:Alim1:xn REz 1)A„vx RowE (,um I-1Ac»: N Jor.BA :A,JIz 3 4 Piro I)i.tricI Sccond I)i,trict I'hair, Third I)IJtrlct fourth I)ian l Vac t:hau.Firth I)I tl'1;t Pag:, 1'enz tl,'.�crr

FY2024 HSGP Authorization to Spend
October 3, 2025
PAGE 2 of 2

5. Performance Bond: A performance bond is required for any equipment item over $250,000, or any vehicle, aviation, or watercraft,regardless of the cost.

6. Audit Requirements: This subaward is subject to all provisions of 2 C.F.R. Part 200, Subpart F—Audit Requirements. Any funds owed as a result of an audit, must be refunded to the State within 30 days upon receipt of an invoice.

Refer to the grant Assurances, Application Workbook, and grant guides for procedures and requirements.

If you have any questions, please feel free to contact Christopher McLaughlin at(909) 786-6660 or christopher.mclaughlin i7oes.sbcounty.gov.

Sincerely,

ANJILA LEBSOCK
Assistant Director of Emergency Management
AL/cm
Attachments

cd'AS RER?lARD[VO
cov Office of Emergency Services
Date:

SUBJECT: FY2024 HOMELAND SECURITY GRANT PROGRAM (HSGP) STATUS REPORT Please fill in the information requested by the dates listed below and check the applicable reporting period. The subrecipient performance period ends on March 31, 2027.

Check Reporting Period Report Due
Period Date
• 7/1/25— 12/31/25 1/2/26
❑ 1/1/26—6/30/26 7/3/26
❑ 7/1/26— 12/31/26 1/8/27
Project Completion 3/31/27
Jurisdiction (Enter City/Town and indicate Police or Fire agency): City of Upland Police Department Brief project description: Equipment/Kits-Multi-Casualty Incidents and Air-Purifying Full-face Tight Fitting Negative Pressure
Grant fund allocation: $28,832
Status of HSGP project: ❑ Complete Z In progress ❑ Canceled ❑ Pending (use comments section) Please list individual milestones below(example: Board Approval, request bids, issue purchase order, planning meetings, order equipment, receive equipment, schedule appointment for equipment tagging, submit reimbursement requests etc.) along with the expected completion date for each milestone. Check off milestones as they get completed, updating the completion date as needed:
❑ 1st milestone: Click here to enter text. Completion date: Click here to enter text. ❑ 2nd milestone: Click here to enter text. Completion date: Click here to enter text. ❑ 3rd milestone: Click here to enter text. Completion date: Click here to enter text. ❑ 4th milestone: Click here to enter text. Completion date: Click here to enter text. ❑ 5th milestone: Click here to enter text, Completion date: Click here to enter text. ❑ 6th milestone: Click here to enter text. Completion date: Click here to enter text.

Comments:

Kate Antossian Budget Specialist
Print Name of Authorized Agent Title of Authorized Agent 4 41. iik 12/15/2025
ignature of Authorized Agent Date
Please email to christopher.mclaughlinAoes.sbcountv.gov or mail to:

San Bernardino County Office of Emergency Services
Attn: Grants Administration
1743 Miro Way
Rialto, CA 92376-0425

�4 of riz.z

CITY OF UPLAND
' BUDGET AMENDMENT
P - c tiP
Date: 6/8/2026 Fiscal Year: FY25-26
Requested by: Charles Kwon Amount: $ -
Dept/Div: Finance Description: 6/8/2026 Council Meeting Homeland Security Grant Program 2024

EXPENDITURES
Proposed
Account Number Dept/Account Description Adopted Budget Current Budget Amendment Amended Budget 2143201-5530-32627 HSGP 2024/ Mach &Equip - - 28,832.00 28,832.00 Total - - 28,832.00 28,832.00

REVENUES
Proposed
Account Number Account Description Adopted Budget Current Budget Amendment Amended Budget 2140000-4342-32627 HSGP 2024/ Revenue - - (28,832.00) (28,832.00) Total - - (28,832.00) (28,832.00)
Fiscal Impact -
REASON/JUSTIFICATION (Please be specific)
❑ Reallocation of maintenance&operations to cover actual expense/encumbrances ❑ Estimated revenue adjustment for donations/other sources of revenue ❑ Appropriation line item adjustment to match funds received by grant, donations of other sources (deposit) ❑ Emergency purpose:

Description of Expense:

El Other- Explain:

HOMELAND SECURITY GRANT PROGRAM 2024
This request is directly related to:
❑ Purchase Requisition No. Vendor:

El Council Meeting action: 6/8/2026 (Attach copy of minutes) Increase Purchase Order# OR Requisition #

APPROVALS
Dept Head Approval: Date:

Finance Officer: Date:

Funds Available? ❑Yes ❑No
o Approved ❑ Denied
City Manager*: Date:
*Not required if approved by City Council
Comment:

Finance Division Only:

BA#: 12266071 Help Ticket#: N/A
Journal #: Initial/Date:

Revised:3/2024 Page 143/2/ 3o AM

4<�°v °p`qt CITFUP LAND
.�, �• o "The City of Gracious Living" - -
DATE: June 8,2026
TO: MAYOR AND CITY COUNCIL
FROM: MICHAEL BLAY,CITY MANAGER
PREPARED BY:DAMIEN R.ARRULA,ASSISTANT CITY MANAGER/PUBLIC WORKS DIRECTOR

RICHARD GONZALES,DEPUTY DIRECTOR OF PUBLIC WORKS -UTILITIES

NICOLE DEMOET,ENVIRONMENTAL COMPLIANCE PROGRAMS MANAGER LIZ RODRIGUEZ,MANAGEMENT ANALYST I—UTILITIES DIVISION

MICHELLE MADRIZ,MANAGEMENT ANALYST II-UTILITIES DIVISION SUBJECT: CONDUCT A PUBLIC HEARING AND CONSIDER ADOPTION OF WATER, RECYCLED

WATER,AND SEWER RATE ADJUSTMENTS AND RELATED FINDINGS
RECOMMENDED ACTION:

It is recommended that the City Council: 1)adopt a resolution making certain findings and determinations regarding legal objections to proposed water and sewer rates; 2) conduct a public hearing to consider proposed water and recycled water service rate adjustments to become effective July 1,2026,and sewer service rate adjustments to become effective July 1,2026;and 3)approve a resolution making certain findings under the California Environmental Quality Act and adopting the rate schedules and related adjustments as recommended by staff.

GOAL STATEMENT
The proposed action supports the City's goal of ensuring customer rates are cost-effective,equitable,and generate the necessary revenue to cover operational,debt service,capital investments,and reserves to meet program requirements.

BACKGROUND
In 2025,the City of Upland engaged Raftelis Financial Consultants,Inc.to prepare a comprehensive Water,Recycled Water,and Wastewater Rate Study. The Study was conducted to evaluate the long-term financial needs of the City's utility enterprise funds, perform cost-of-service analyses, and develop equitable and defensible five-year rate schedules in compliance with the requirements of Proposition 218.

The City provides potable water,recycled water,and wastewater collection services to residents and businesses within the City of Upland and portions of its sphere of influence.These enterprise funds are supported primarily through user rates and charges,which must be sufficient to fund ongoing operations and maintenance,address capital replacement and rehabilitation of aging infrastructure,meet debt service obligations,and maintain prudent reserve levels to support emergency preparedness,cash flow stability,and regulatory compliance.

Raftelis' analysis incorporated the City's recently completed Water,Recycled Water and Wastewater Master Plans.

In addition,Raftelis'rate studies evaluated financial data,operational costs,capital improvement program needs,debt obligations, and customer usage information. The studies evaluated the adequacy of existing rates and assessed the long-term financial condition of each utility,under both current rate structures and proposed revenue scenarios,with the objective of ensuring long-term fiscal sustainability while maintaining service levels and compliance with regulatory requirements.

On March 23, 2026, the City Council established June 8, 2026, as the date for the Proposition 218 Public Hearing regarding proposed Water,Recycled Water,and Sewer Service Rate Adjustments. Following City Council direction, notices of the Public Hearing and proposed rate adjustments were mailed to all property owners within the service area in accordance with Proposition 218 requirements and applicable noticing procedures.

The notice included:
•The proposed fee increases;
•The basis upon which the proposed fees were calculated; •The reasons supporting the proposed increases;

•Instructions detailing how to submit a written protest; •The deadline to submit a written protest;
•Instructions detailing how to submit a valid legal objection pursuant to Government Code section 53759.1; •The deadline to submit a valid legal objection;and
•The date,time,and location of the Public Hearing.

Pursuant to Proposition 218 (California Constitution, Article XIII D, Section 6), the City is conducting a Public Hearing and considering all written protests against the proposed changes and increases to Water,Sewer,and Recycled Water rates.If at the conclusion of the Public Hearing written protests against the proposed changes do not constitute a majority protest of affected parcels, the City Council may consider adoption of a Resolution amending Water, Recycled Water,and Sewer Service Charges and Fees.

The current and proposed rates are set forth within the Resolution relating to Water, Recycled Water, and Sewer Services and associated fees and charges.

Proposition 218 Procedure:

1. Parcels upon which the increased fee or charge is proposed to be imposed have been identified and Proposition 218 Notice"Notice"was mailed to (a) the record owner(as defined in California Government Code Section 53750(j) (the "Owner") of each identified parcel (as defined in California Government Code Section 53750(g),and(b)any customer of record who,at the time the notice was mailed,had a billing account with the City and is directly liable to pay the fee("Customer")for an identified parcel.

2. The Notice will contain (a) the amount of the fee or charge; (b) the basis on which it was calculated; (c) reason for the increase,and(d)the date,time,and location the City Council will conduct a public hearing on the proposed increase.

3. A public hearing was scheduled at least 45 days following mailing of the Notice to consider all written protests against the proposed increased fees.If,at the conclusion of the hearing,written protests against the proposed increased fee are presented by a majority of Owners/Customers of parcels to be charged,the City may not increase the fee.

AB 2257
AB 2257 was codified into Government Code Section 53759.1 and 53759.2 and provides an administrative remedy for ratepayers that wish to address a legal issue with the proposed rate increase.AB 2257 provides the ratepayers with a procedure for alleging noncompliance with the provisions of Article XIII D of the California Constitution for any new, increased, or extended water or sewer fee or assessment via a timely submitted written objection to that fee or assessment that specifies the grounds for alleging noncompliance.

By implementing this procedure, the City is able to address any potential legal issues prior to adoption of the rates.

Failure of a ratepayer to submit a timely valid legal objection prohibits them from any future judicial action or proceeding to review,invalidate,challenge,set aside,rescind,void,or annul the fee or assessment for failure to comply with Proposition 218.This procedure also provides a framework for the administrative record that will be used in such a proceeding.

The City complied with the requirements of AB 2257 to establish an administrative remedy for ratepayers. The Proposition 218 Notice included all necessary information regarding this procedure including instructions on how to submit a formal written and legal objection.Ratepayers were provided an opportunity to submit an objection regarding a proposed property-related water and sewer fees, to the City prior to the deadline established as part of the rate consideration process, which was 4:00 PM on May 18,2026. The written basis for the proposed rates was posted at least 45 days prior to the deadline for submittal of written objections. A copy of the prepared Proposition 218 Notice is included as an attachment to this staff report,as well as all objections and responses.

The current and proposed rates will be set forth in a resolution or resolutions relating to services and fees for water, recycled water,and sewer.

ISSUES AND ANALYSIS
The City Council is considering a Resolution making certain findings and determinations relating to legal objections, conducting the public hearing regarding proposed Water,Recycled Water, and Sewer Service Rate Adjustments and considering adoption of a Resolution revising utility service charges consistent with the findings and recommendations contained within the Raftelis Water,Recycled Water,and Wastewater Rate Studies.

Proposed Rates
Utility services for water,sewer,and recycled water are operated as separate Enterprise Funds and are not commingled with the City's General Fund.Utility services are funded by user fees and charges(rates),and the budgets are set bi- annually with mid-year and annual check-ins. Rates and services are reviewed periodically to ensure that the established service rates are:
• Adequate to recover costs reasonably borne in providing the services; • Equitable to all customer classes;
• In compliance with all State and Federal regulations;and • Easily explained to customers.

The basis and reasons for the proposed changes and rate increases are to enable the City to recover operating expenses, and to maintain the operational and financial stability of the City's utilities, while maintaining our commitment to provide the highest quality services at the lowest possible rates for our customers. If the Resolution is approved adopting revisions adjusting the schedule of Water,Recycled Water,and Sewer Service Rates effective July 1,2026, costs associated with provision of Water and Sewer services would be appropriately recovered, supporting program expenses while maintaining long-term utility financial sustainability. The proposed rates are based upon multi-year financial plans. The multi-year financial plans assess the City's revenue requirements for both operations and capital facilities for water,recycled water,and sewer,including information from the most recent master plans.The proposed water and recycled water rate adjustments would be implemented on July 1,2026,and on each January 1 thereafter, through and including January 1,2030.The City's proposed sewer rate adjustments would be implemented on July 1, 2026, and each January 1 thereafter,through and including January 1,2030. Additionally,the Resolution authorizes pass-through implementation of wholesale rate increases adopted by Inland Empire Utilities Agency(IEUA)for local implementation(typically July 1 of each fiscal year)through the end of 2030.

The Rate Studies prepared by Raftelis recommend five-year schedules of rate adjustments for water,recycled water, and wastewater services designed to ensure revenues align with the cost of providing service,maintain required reserve levels,and fund needed capital investments.The proposed adjustments are phased to moderate customer impacts while addressing long-term fiscal sustainability.

Importantly, the proposed rates do not exceed the cost of service attributable to each parcel and comply with all substantive and procedural requirements of Proposition 218.

The tables below summarize the recommended percentage-based revenue adjustments relative to current City of Upland rates. These adjustments are applied uniformly within each utility enterprise and translated into specific rate schedules through the cost-of-service analysis prepared by Raftelis.

Water and Recycled Water
Raftelis evaluated the Water Fund under a"status quo" scenario in which no rate increases are implemented. Under that scenario,the Water Fund is projected to fall below minimum reserve targets beginning in Fiscal Year 2028 and would be unable to meet debt service coverage requirements by Fiscal Year 2029. Key cost drivers include rising purchased water costs, inflationary pressures on operations and maintenance, and the need to fund regular capital replacement and refurbishment projects as well as those associated with new Federal and State regulations.

To address these projected shortfalls,Raftelis recommends an industry-wide best practice five-year schedule of water and recycled water revenue adjustments beginning in Fiscal Year 2026.The proposed adjustments are summarized in the tables below.

Summary of Proposed Five-Year Rate Adjustments
The tables below summarize the recommended percentage-based revenue adjustments relative to current City of Upland rates. These adjustments are applied uniformly within each utility enterprise and translated into specific rate schedules through the cost-of-service analysis prepared by Raftelis.

During the comprehensive rate study review process, the City evaluated the proportional cost of service for each customer classification, including the application of peaking factors used to allocate system capacity and demand- related costs. The analysis determined that based upon current user characteristics, certain user categories need rate adjustments to reflect updated costs of service.

With respect to the government customer classification, the City has elected to maintain this category at a comparatively higher rate level. The City is the only customer in this class, and this policy is intended to offset cost increases for other customers.

CITY WATER COMMODITY RATES(BI-MONTHLY)
Table 1: Proposed Schedule Rate Adjustments of Bi-Monthly Water Volumetric Rates Sin•le Famil Residential Rates
Current Proposed Rate Proposed Rate Proposed Rate Proposed Rate Proposed Rate Usage Tiers Unit Rate Effective Effective Effective Effective Effective 7/1/26 1/1/27 1/1/28 1/1/29 1/1/30
0-20 per hcf* $2.33 $2.40 $2.52 $2.65 $2.79 $2.93 21-50 per hcf* $3.08 $3.21 $3.38 $3.55 $3.73 $3.92 51+ per hcf* $3.68 $3.73 $3.92 $4.12 $4.33 $4.55 V Multi-Family Residential Rat
Customer Current Proposed Rate Proposed Rate Proposed Rate Proposed Rate Proposed Rate Class Unit Rate Effective Effective Effective Effective Effective 7/1/26 1/1/27 1 1/1/28 1/1/29 1/1/30 Multi-Family per hcf* $2.87 $3.17 $3.33 $3.50 $3.68 $3.87 f
Rates for Other Classes
Customer Current Proposed Rate Proposed Rate Proposed Rate Proposed Rate Proposed Rate Class Unit Rate Effective Effective Effective Effective Effective 7/1/26 1/1/27 1/1/28 1/1/29 1/1/30
Landscape 4) per hcf* $3.17 $3.34 $3.51 $3.69 $3.88 $4.08 Commercial per hcf* $2.76 $3.16 $3.32 $3.49 $3.67 $3.86 School per hcf* $3.38 $3.29 $3.46 $3.64 $3.83 $4.03 Government per hcf* $3.47 $3.47 $3.65 $3.84 $4.04 $4.25 Nh.11Ei o___ •d Water W W
Customer Current Proposed Rate Proposed Rate Proposed Rate Proposed Rate Proposed Rate Class Unit Rate Effective Effective Effective Effective Effective 7/1/26 1/1/27 1/1/28 1/1/29 1/1/30
Recycled per hcf* $2.54 $2.64 $2.78 $2.92 $3.07 $3.23 (1) Fire Hydrant Meter Rate
*hcf=hundred cubic feet=1 billing unit=748 gallons
Table 2: Proposed 5-Year Schedule of Bi-Monthly Fixed Meter Rate Pro 1 osed 5-Year Schedule of Bi-Monthl Fixed Meter Rate

SERVICE
CHARGES Proposed Proposed Proposed Proposed Proposed CURRENT 7/1/2026 1/1/2027** 1/1/2028** 1/1/2029** 1/1/2030** (Bi-Monthly)
5/8" $65.26 $67.36 $70.73 $74.27 $77.99 $81.89 3/4" $82.68 I
$84.92 $89.17 $93.63 $98.32 $103.24
1" $117.52 $120.03 $126.04 $132.35 $138.97 $145.92 11/2" $204.72 $207.82 $218.22 $229.14 $240.60 $252.63

$309.35 $313.16 $328.82 $345.27 $362.54 $380.67 3" * $588.33 $646.74 $679.08 $713.04 $748.70 $786.14 4" $902.15 $1,138.32 $1,195.24 $1,255.01 $1,317.77 $1,383.66 6" I $1,773.93 $2,314.63 $2,430.37 $2,551.89 $2,679.49 $2,813.47 8" $2,820.12 $4,948.14 $5,195.55 $5,455.33 $5,728.10 $6,014.51 Drought Rates
In times of drought or emergency water shortage, the City Council may declare mandatory water use restrictions.

During times of mandatory water use restrictions, an additional charge will be added to the volumetric rates based upon the amount of restriction required. For example,when a 10%water use reduction is required,volumetric rates will increase by 3%. See all proposed drought rates as detailed in Table 3 below:

Table 3: Proposed Drought Rates Per Drought Stage
Pro I osed Drou•ht Rates Per Drou.ht Sta.e
Drought Surcharge Up to 10%Water Up to 20%Water Up to 30%Water Up to 40%Water Up to 50%Water Use Reduction Use Reduction Use Reduction Use Reduction Use Reduction Volumetric Rate 3% 10% 22% 36% 54%
Surcharge Increase
In the event of a declared mandatory water use restriction that triggers imposition of drought rates,the actual drought rate shall be imposed in addition to the volumetric rate,and shall be equal to the lesser of the volumetric rate imposed at that time multiplied by the percentages in the table above,or the rates set forth in the table below.

Table 4: Proposed Drought Rates Surcharge
ustomer Class Proposed Proposed Proposed Proposed Proposed 6/1/2026 1/1/2027 1/1/2028 1/1/2029 1/1/2030 Maximum Drought Surcharge(40-50%Reduction)$/hcf
Single Family
Tier 1 $1.31 $1.38 $1.44 $1.52 $1.59
Tier2 $1.75 $1.84 $1.93 $2.03 $2.13 Tier 3 $2.04 $2.14 $2.25 $2.36 $2.48 Multi Family $1.73 $1.82 $1.91 $2.00 $2.10
Landscape $1.82 $1.91 $2.01 $2.11 $2.21
Commercial $1.73 $1.82 $1.91 $2.00 $2.10
Schools a $1.80 $1.89 $1.98 $2.08 $2.19
Government $1.89 $1.98 $2.08 $2.19 $2.30
Revenue Adjustments 5% 5% 5% 5%
*These maximum amounts do not include the IEUA pass-through,which may be implemented by the City should IEUA increase its imported water rates in an amount greater than what was proposed within the Rate Study;however,only within the pass-through authorization approved by the City Council.

These adjustments are designed to:
• Fully fund annual operations and maintenance costs; • Fund the City's water and recycled water capital improvement program using a combination of rate revenue and reserves;
• Maintain minimum and target reserve levels throughout the rate-setting period; • Avoid larger,more abrupt rate increases in the future;

• Sustain long-term water and recycled water system operations;and • Preserve long-term fiscal sustainability of the Water Fund.

The proposed rate design maintains the City's existing structure,consisting of a fixed bi- monthly service charge and volumetric usage charges. Single-family residential customers continue to be charged tiered volumetric rates to promote efficient water use, while non- residential and recycled water customers are charged uniform volumetric rates based upon cost of service.

Comparative Analysis of Water Rates
The phased in nature of the proposed adjustments are intended to balance affordability with the City's obligation to maintain safe,reliable,and financially sustainable utility services.

At the request of management staff and as a part of the rate study, Raftelis evaluated customer bill impacts and compared the City's proposed rates to neighboring jurisdictions.After factoring in the proposed adjustments,Upland's water rates remain in most cases, lower than those of surrounding agencies when evaluated on an equivalent usage basis. As seen in Table 5 below,the City of Upland has the second lowest water rates compared to our neighboring communities within the Inland Empire demonstrating significant value to ratepayers.

Table 5: Single Family Residential Water Comparison
Single Family Residential Water Comparison, 5/8"
Meter, 36 hcf
$300
$252.65 $259:53—
$250
1-1 $184.88 $203.75
$200 $152.51 $161.14 $166.72 $168.32 $168.92 $150
$100
$50
$0
x b a o o m
G yam o`'a fi°cs' t+ 4 any 2 �G\ Gyy y°Q Qo G o� a •
b Q v x.
a� 4b off'
s5q tiay�
O
■Fixed •Variable
Wastewater(Sewer)
Raftelis also conducted a status quo analysis for the Wastewater Fund.Without rate adjustments,the Wastewater Fund is projected to fall below minimum reserve targets in Fiscal Year 2033 and deplete reserves by Fiscal Year 2034.This condition would limit the City's ability to maintain the collection system and respond to emergencies, regulatory requirements and plan for and fund future system-wide capital improvements.

To stabilize the Wastewater Fund,Raftelis recommends an industry-wide best practice of incorporating a phased five- year schedule of revenue adjustments to the City's local Sewer Service Charge, which funds the City's wastewater collection system.The recommended City wastewater revenue adjustments are summarized in the table below:

Table 6: City and IEUA Wastewater Rate Schedules
Current FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Effective Date July 1,2026 Jan. 1,2027 Jan.1,2028 Jan. 1,2029 Jan.1,2030 City Local Sewer Services Charges $11.29 $11.98 $12.46 $12.96 $13.48 $14.02 • July 1,2026: 4%increase to City of Upland sewer collection rates • January 1,2027:4%increase in total wastewater revenues • January 1,2028:4%increase in total wastewater revenues • January 1,2029:4%increase in total wastewater revenues • January 1,2030:4%increase in total wastewater revenues These percentage adjustments represent total revenue increases and are implemented through updates to fixed service charges and volumetric rates in accordance with Proposition 218 and cost-of-service principles. These City rate adjustments would generate sufficient revenue to:
• Fund ongoing wastewater collection system operations and maintenance; • Support the City's wastewater capital improvement program; • Maintain reserve levels consistent with City financial policies; • Avoid larger,more abrupt rate increases in the future; • Sustain long-term wastewater system operations;and • Preserve long-term fiscal sustainability of the Wastewater Fund.

In addition to the City's local water and sewer service charges, water and wastewater customers within the City are also billed for potable water and regional wastewater treatment services provided by IEUA.The City provides potable water distribution and wastewater collection services, while IEUA is responsible for regional wastewater treatment and disposal.

Separate from the City's proposed wastewater rate adjustments, IEUA has adopted increases to its wastewater treatment charge per Equivalent Dwelling Unit (EDU) over a two-year period. The increase consists of a 9% adjustment effective July 1,2025,followed by an additional 9%adjustment effective July 1,2026.These IEUA rate increases are passed through to City of Upland wastewater customers as a separate line item and are not included in the City's proposed local sewer collection rate adjustments.

Table 7: IEUA Pass-Through Wastewater Rate Schedule
FY 2026 Y 2028 FY 2029 FY 2030
Effective Date Current July 1,2026 July 1,2027 July 1,2028 July 1,2029 July 1,2030 IEUA Sewer Treatment
Component $27.02* $29.45 TBD TBD TBD TBD (Pass-Through Rate)
*The City currently charges only$25.78 for IEUA although IEUA's current rate is$27.02 per EDU The aforementioned IEUA charges are passed through by the City of Upland to affected customers in accordance with the City's regional sewer service agreement with IEUA. The City does not retain any portion of the IEUA treatment charge and acts solely as a billing and collection agent on IEUA's behalf The pass-through rate reflects the actual cost charged by IEUA for regional treatment services.

IEUA also imposes an extra-territorial monthly sewer service charge on sewer customers whose properties are located outside IEUA's service area boundary,but who receive wastewater treatment services through IEUA facilities.These charges are intended to recover IEUA's costs to provide regional wastewater treatment services to non-member or extra-territorial customers.Effective July 1,2025,IEUA increased the extra-territorial monthly sewer service charge to$23.53 per month per EDU,which is applied in addition to the FY 2025/26 adopted IEUA monthly EDU treatment

rate of$27.02.This only applies to approximately six(6)customers.The City currently charges only$22.10 for IEUA although IEUA's current rate is$23.53 per EDU.

IEUA Water and Wastewater Pass-Through Increases
The City pays certain fees to IEUA for wholesale water and wastewater treatment costs. These include fees for purchased water,meter equivalency unit charges for water connections,recycled water fees,and wastewater treatment fees.IEUA's adopted and projected rates are factored into the respective fees and charges described above.

The City cannot control whether IEUA increases its rates above those that are projected and factored into the City's water, recycled water, and wastewater service charges. As such, the City proposes to pass-through directly to customers any IEUA adopted rate increases in excess of the IEUA rates projected and factored into the City's fees. If adopted,the City's authority to pass-through IEUA rate increases will expire after 5 years,and in no event will it cause the impacted rate to increase by more than 15% in any calendar year. Additionally, the City will provide 30 days' written notice to all impacted customers of any IEUA pass-through fee increases.

IEUA pass-through fee increases typically occur on July 1 of each year. Currently,IEUA has not provided rates for fiscal years 2028 through 2030.The specific details of the IEUA pass-through fees will be described in the Proposition 218 notice mailed to customers.

ENVIRONMENTAL DETERMINATION
The proposed action is exempt from the California Environmental Quality Act(CEQA)pursuant to Public Resources Code Section 21080(b)(8) and CEQA Guidelines Section 15273 (a). The action involves the establishment of rates for the purpose of meeting operating expenses, funding capital improvements necessary to maintain service, and meeting reserve requirements within existing service areas.

FISCAL IMPACTS
If approved by the City Council,the proposed rate adjustments would generate revenues sufficient to:
• Fund water,recycled water,and wastewater operations and maintenance; • Support the City's necessary utility capital improvement program; • Maintain recommended reserve levels;
• Ensure long-term fiscal sustainability of the utility enterprise funds;and • Avoid larger,more abrupt rate increases in the future.

Based upon the financial projections contained within the Raftelis Water, Recycled Water, and Wastewater Rate Study,the proposed utility rate adjustments are anticipated to generate sufficient revenues to support the City's utility operations,capital improvement programs,reserve targets,debt obligations,and regulatory compliance requirements throughout the five-year planning period. Total utility revenues are anticipated to increase incrementally as the proposed rate adjustments become effective on July 1,2026,and each January 1 thereafter through January 1,2030.

For the Water and Recycled Water Enterprise Funds, annual rate revenues are anticipated to increase from approximately$32.0 million in Fiscal Year 2026/27 to$34.3 million in Fiscal Year 2027/28, $36.0 million in Fiscal Year 2028/29,$37.8 million in Fiscal Year 2029/30, and$39.7 million in Fiscal Year 2030/31.Relative to revenues projected under existing rates, the proposed Water and Recycled Water rate adjustments are anticipated to generate approximately $133,000 in additional revenues during Fiscal Year 2026/27, $2.43 million in Fiscal Year 2027/28, $4.14 million in Fiscal Year 2028/29,$5.94 million in Fiscal Year 2029/30,and$7.83 million in Fiscal Year 2030/31.

For the Wastewater Enterprise Fund, annual wastewater service charge revenues are anticipated to increase from approximately $4.22 million in Fiscal Year 2026/27, $4.65 million in Fiscal Year 2027/28, $4.83 million in Fiscal Year 2028/29, $5.02 million in Fiscal Year 2029/30,and$5.23 million in Fiscal Year 2030/31. Relative to revenues projected under existing rates, the proposed Wastewater rate adjustments are anticipated to generate approximately $162,000 in additional revenues during Fiscal Year 2026/27, $266,000 in Fiscal Year 2027/28, $452,000 in Fiscal Year 2028/29,$645,000 in Fiscal Year 2029/30,and$846,000 in Fiscal Year 2030/31.

Collectively, the proposed utility rate adjustments are anticipated to generate approximately$295,000 in additional revenues during Fiscal Year 2026/27, $2.69 million in Fiscal Year 2027/28, $4.59 million in Fiscal Year 2028/29,

$6.58 million in Fiscal Year 2029/30,and$8.67 million in Fiscal Year 2030/31.Over the five-year rate implementation period, the proposed adjustments are anticipated to generate approximately $23 million in cumulative additional revenues across the City's Water,Recycled Water,and Wastewater Enterprise Funds.

These anticipated revenues are necessary to address increasing purchased water costs,inflationary operating expenses, wastewater treatment and collection system costs,capital replacement and rehabilitation needs,regulatory compliance requirements, debt service obligations, and reserve funding targets identified through the City's Water, Recycled Water,and Wastewater Master Plans and Utility Rate Study.The proposed rate adjustments will help ensure that each enterprise fund remains financially self-supporting while maintaining reliable utility services and funding critical infrastructure improvements necessary to serve the community.

To maintain long-term fiscal sustainability, it is essential that the City's utility enterprise funds generate sufficient revenue to support ongoing operations and maintenance, fund planned capital improvement and infrastructure replacement projects,and maintain prudent reserve levels to address emergencies and economic uncertainty. In prior years,the City Council elected to defer certain rate adjustments and IEUA pass-through increases in an effort to keep customer rates lower or flat.While these actions intended to provide short-term relief to ratepayers,such deferrals can have significant cumulative financial impacts on the enterprise funds and ultimately,rate payers in the long-term. In such scenarios, single-digit percentage increases may turn into larger double-digit increases. Additionally, not approving or deferring rates may constrain the City's ability to adequately fund infrastructure needs and maintain appropriate reserve balances over time.

Historical Rate Adjustment Deferrals—Water and Recycled Water Consideration of the proposed rate adjustments is of particular importance given the City's history of prior rate deferrals and the cumulative financial impacts to the enterprise funds, and ultimately to ratepayers. On December 9, 2019, implementation of the January 1, 2020, water and recycled water rate adjustment was deferred pending an additional rate study check-in and to follow the rate study that had been completed the prior year. On March 9,2020, the City Council further deferred the adjustment by electing to maintain 2018 water and recycled water rates,and on October 26, 2020, the City Council reaffirmed that deferral. Although new rates were ultimately implemented on August 9,2021,the approved rates corresponded to those originally scheduled for January 2020—effectively delaying revenue realization by more than a year and a half. Similarly, on February 27, 2023,the City Council implemented rates that had been scheduled to take effect January 1,2022.These repeated deferrals resulted in substantial foregone revenue that was not received when originally planned, directly reducing enterprise fund cash flow and reserve balances. The delayed receipt of this revenue also diminished the compounding financial benefit that would have accrued over time, limiting the City's ability to build prudent reserves,fund capital reinvestment,and maintain long- term fiscal sustainability. As a result, enterprise fund shortfalls were ultimately offset, in part, by support from reserves,underscoring the importance of timely,consistent and sustainable rate implementation to protect both utility operations and broader City and ratepayer financial health.

Historical Rate Adjustment Deferrals-Wastewater
Similar financial impacts have occurred as a result of prior deferrals of IEUA pass-through wastewater treatment charge adjustments.In certain years,although IEUA adopted increases to its regional treatment rates,the City elected to keep customer sewer bills flat and did not fully implement the corresponding pass-through adjustments.While the City remained obligated to pay IEUA the full adopted treatment rates,the City absorbed those increases by reducing or holding down its local sewer service collection charges. This practice effectively shifted the burden of regional treatment cost increases onto the City's sewer enterprise fund,reducing the following:net revenues available for local system maintenance,capital replacement and rehabilitation,and reserve funding.Over time,absorbing outside agency cost increases in this manner contributed to structural pressure within the sewer enterprise fund, weakened reserve levels, and limited the City's financial flexibility to address infrastructure needs. Timely and consistent implementation of adopted pass-through charges is therefore critical to ensuring that the sewer enterprise remains financially self-supporting and that regional treatment costs are equitably allocated to ratepayers as intended.

ALTERNATIVES
Provide alternative direction to staff.

CEQA:Not a Project.

RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

UPLAND, CALIFORNIA ADOPTING FINDINGS AND

DETERMINATIONS RELATED TO THE PRESENTMENT OF

OBJECTIONS TO THE PROPOSED WATER (INCLUDING

RECYCLED WATER) AND SEWER SERVICE RATES
WHEREAS, section 6 of Article XIII D of the California Constitution ("Proposition 218") and the Proposition 218 Omnibus Implementation Act (Government Code § 53750, et seq.) require that, prior to imposing any increase to the water and sewer rates, the City of Upland ("City") shall provide written notice by mail of: (1) the proposed increases to such rates and charges to the record owner of each parcel upon which the rates and charges are proposed for imposition (record owners); (2) the amount of the rates and charges proposed to be imposed on each parcel; (3) the basis upon which the rates and charges were calculated; (4) the reason for the rates and charges; and (5) the date, time, and location of a public hearing ("Hearing") on the proposed rates and charges; and WHEREAS, pursuant to Proposition 218, such written notice is required to be provided to the record owners not less than forty-five days (45) prior to the Hearing on the proposed rates and charges; and
WHEREAS, the City provided written notice ("Notice") to record owners and to customers of record who are not the property owner (e.g., a tenant) in compliance and consistent with Proposition 218; and
WHEREAS, the Notice included a prominently displayed statement that contained the information that all written objections to a proposed fee or assessment must be submitted within the written objection period and that a failure to timely object in writing bars any right to challenge the proposed fees or charges through a legal proceeding and that contained all substantive and procedural requirements for submitting an objection to the proposed fee or assessment; and
WHEREAS, the City established a written objection period with a deadline of 4:00 P.M. on May 18, 2026, to submit an objection; and
WHEREAS, the City made available to the public the proposed fees no less than 45 days prior to the deadline to submit an objection; and WHEREAS, the City posted on its internet website a written basis for the proposed fees and charges and included a link to the internet website in the Notice; and WHEREAS, the City mailed the written basis to a property owner upon request or, if not such request were made, would have mailed the written basis to a property owner upon request; and
46708.00204\45054149.1

WHEREAS, the City provided at least 45 days for a property owner or customer of record (e.g., a tenant), to review the proposed fees and to timely submit a written objection to the proposed fees or charges that specifies the grounds for alleging noncompliance; and
WHEREAS, the City considered and responded in writing, including the grounds for which a challenge is not resulting in amendments to the proposed fee or charge, to any timely submitted written objections prior to the close of the Hearing; and WHEREAS, timely submitted written objections and agency responses were presented to the City Council for consideration prior to or during the Hearing; and WHEREAS, the City Council now desires to make findings and determinations related to the proposed water and sewer rates.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY

OF UPLAND AS FOLLOWS
SECTION 1. Recitals. The foregoing recitals are true and correct and incorporated herein by reference.

SECTION 2. Findings. The City Council has found and has determined that that the written objections and the City's responses do not warrant clarification to any proposed fee or charge; no reduction in any proposed fee or charge is warranted; no further review is needed before making a determination on whether clarification or reduction of the proposed rates and charges is needed; and to proceed with the Hearing.

SECTION 3. Certification. The City Clerk shall certify to the adoption of this Resolution.

SECTION 4. Effective Date. This Resolution shall become effective immediately upon adoption unless otherwise specifically stated herein.

PASSED, APPROVED and ADOPTED this 8th day of June, 2026.

Bill Velto, Mayor
I, Keri Johnson, City Clerk of the City of Upland, do hereby certify that the foregoing Resolution was adopted at a regular meeting of the City Council held on the 8th day of June, 2026, by the following vote
AYES:

NOES:

ABSENT:

ABSTAINED:

ATTEST:

Keri Johnson, CMC, City Clerk
46708.00204\45054149.1

c.

FORMAL OBJECTION — PROPOSED WATER RATE INCREASES (PROPOSITION P r'3
City Clerk I ATTN: Utility Rates Protest or Objection 1 City of Upland 6 ;=
460 N. Euclid Avenue ,dF
Upland, CA 91786
This letter constitutes a formal o•'- '• . • . - nrn ed water rate increases. t----- 'Ai Mr.John Carnacho
Property Owner Name: �__, , '` uptana,-
Service Address:

I object based on the following Proposition 218 violations:
• Rates exceed cost of service and are not adequately justified. • Automatic increases through 2030 are based on projections, not actual costs. • Rising fixed charges are not proportional to usage or parcel cost. • Combined surcharges and pass-through costs may exceed lawful cost recovery. • The notice fails to define a clear maximum charge.

I request that this objection be counted.

Signatur(M _.__
Date: ` . - 'y - 7 L. 2

70 Xi c7.1
FORMAL OBJECTION - PROPOSED WATER RATE INCREASES (PROPOSITION 216, NI 6
CO
City Clerk I ATTN: Utility Rates Protest or Objection
City of Upland 'l rn
460 N. Euclid Avenue
Upland, CA 91786
This letter constitutes a frr^ : i nhlection ttoo the proposed water rate increases. -I. cho
' 4 - iiiii..'
Upland,CA 91 784-4031.

Property Owner Name:

Service Address:

I object based on the following Proposition 218 violations:
• Rates exceed cost of service and are not adequately justified. • Automatic increases through 2030 are based on projections, not actual costs. • Rising fixed charges are not proportional to usage or parcel cost. • Combined surcharges and pass-through costs may exceed lawful cost recovery. • The notice fails to define a clear maximum charge.

I request that this objection be counted.

Signature' Date: ` '2 2 -- 2 0? 4,

M
C�
C.

FORMAL. OBJECTION — PROPOSED WATER RATE INCREASES (PROPOS1TIrJ 1B)
olo
Za 0
City Clerk I ATTN: Utility Rates Protest or Objection I-, ul P
City of Upland Inc,rrt
70 460 N, Euclid Avenue
Upland, CA 91786
This letter constitutes a formal objection to the proposed water rate increases. - , 6...L.,'I, - A42...t.k.ex Cpir,,,t_4--,s
Property Owner Name:- i\o" c) 0
Service Address:
'd`,ty&"c/ efi g/ Aaf
I object based on the following Proposition 218 violations:
• Rates exceed cost of service and are not adequately justified. • Automatic increases through 2030 are based on projections, not actual costs. • Rising fixed charges are not proportional to usage or parcel cost. • Combined surcharges and pass-through costs may exceed lawful cost recovery. • The notice fails to define a clear maximum charge.
1 request that this objection be counted.

Signature: Date: 04/ / "`z
(.___y

FORMAL OBJECTION — PROPOSED WATER RATE INCREASES (PROPOSITION 8) co
ra
City Clerk I ATTN: Utility Rates Protest or Objection -c City of Upland p
460 N. Euclid Avenue
Upland, CA 91786
This letter constitutes a formal objection to the proposed water rate increases.

Property Owner Name: 1-vli 4 L v 5
Service Address: a c/f
I object based on the following Proposition 218 violations:
• Rates exceed cost of service and are not adequately justified. • Automatic increases through 2030 are based on projections, not actual costs. • Rising fixed charges are not proportional to usage or parcel cost. • Combined surcharges and pass-through costs may exceed lawful cost recovery. • The notice fails to define a clear maximum charge.

I request that this objection be counted.

Signatur Date: „4/,2G

70 t.]�
FORMAL OBJECTION - PROPOSED WATER RATE INCREASES (PROPOSITION 218) 6 City Clerk 1 ATTN: Utility Rates Protest or Objection
City of Upland
460 N. Euclid Avenue
Upland, CA 91786
This letter constitutes a formal objection to the proposed water rate increases.

Property Owner Name: l—IS r- \DO j2S e
Service Address:

I object based on the following Proposition 218 violations:
• Rates exceed cost of service and are not adequately justified. • Automatic increases through 2030 are based on projections, not actual costs.
• Rising fixed charges are not proportional to usage or parcel cost. • Combined surcharges and pass-through costs may exceed lawful cost recovery.
• The notice fails to define a clear maximum charge.

I request that this objection be counted.

Signature: Date: ' . 2-2- .2-14

C
FORMAL OBJECTION- PROPOSED WATER RATE INCREASES (PROPOSITION 218) , City Clerk I ATTN: Utility Rates Protest or Objection
City of Upland
460 N. Euclid Avenue
Upland, CA 91786
This letter constitutes a formal objection to the proposed water rate increases.

Property Owner Nara
Service Address: tk .ti� , �tl l�1
I object based on the following Proposition 218 violations:
- Rates exceed cost of service and are not adequately justified. • Automatic increases through 2030 are based on projections, not actual costs. • Rising fixed charges are not proportional to usage or parcel cost.
- Combined surcharges and pass-through costs may exceed lawful cost recovery.
• The notice fails to define a clear maximum charge.

I request that this objection be counted.

IMMIlli
Signature: Date-. 'l `�?((�-- y--)_:f
,7 L--'')

70 n
FORMAL OBJECTION PROPOSED WATER RATE INCREASES(PROPOSITION 218) City Clerk f ATTN: Utility Rates Protest or Objection
City of Upland
460 N. Euclid Avenue
Upland, CA 91786 •
This letter constitutes a formal objection to the proposed water rate increases:, Property Owner Name: ,\,\. cti
.---.3..) 't\if 0 C3,.- 1-.07.Z-•-•
Service Address:

I object based on the following Proposition 218 violations:
• Rates exceed cost of service and are not adequately justified. • Automatic increases through 2030 are based on projections, not actual costs. ▪ Rising fixed charges are not proportional to usage or parcel cost. • Combined surcharges and pass-through costs may exceed lawful cost recovery. - • The notice fails to define a clear maximum charge. ' •
I request that this objection be counted.

Signature Date: L-V`�

Cli

7. P7,1 .-
i 0 1;;; -
FORMAL OBJECTION —PROPOSED WATER RATE INCREASES (PROPOSITION 218) Wiz' NJ 7rN
City Clerk [ ATTN: Utility Rates Protest or Objection ' ' !:n = City of Upland
460 N. Euclid Avenue
Upland, CA 91786
This letter constitutes a formal objection to the proposed water rate increases.
, )Property Owner Name: . ,sa- E.ut_ 4AW4 I� i 1, Service Address: IMIMPu liat.App (•1 9. 1, 7
I object based on the following Proposition 218 violations:
• Rates exceed cost of service and are not adequately justified. • Automatic increases through 2030 are based on projections, not actual costs.
• Rising fixed charges are not proportional to usage or parcel cost. • Combined surcharges and pass-through costs may exceed lawful cost recovery.
• The notice fails to define a clear maximum charge.

I request that this objection be counted.

Signature: Date: Ai 2
I
I

FORMAL OBJECTION- PROPOSED WATER RATE INCREASES(PROPOSITION 218) Fej!ii
City Clerk k ATTN: Utility Rates Protest or Objection rh `" City of Upland , E
430 N. Euclid Avenue
Upland, CA91786
rat
71,1
This Letter constitutes a formal objection to the proposed water rate increases, 1 Property Owner Name: ._la 1��.� 1�+ �� $ tr�� wi-C Service Address:- Uflaiitot, C 91/V I
I object based on the following Proposition 218 violations:
• Rates exceed cost of service and are not adequately justified. • Automatic increases through 2030 are based on projections, not actual costs. • Rising fixed charges are not proportional to usage or parcel cost. • Combined surcharges and pass-through costs may exceed lawful cost recovery. • The notice fails to define a clear maximum charge.

I request that this objection be counted.
) fi
Signature: Date: 1/2-1Pl
1111.420
Ci

FORMAL OBJECTION - PROPOSED WATER RATE INCREASES (PROPOSITION 218) City Clerk I ATTN: Utility Rates Protest or Objection
City of Upland
460 N. Euclid Avenue
Upland, CA 91786
This letter constitutes a formal objection to the proposers water rate increases.

Property Owner Name: Jose J. Munoz
Service Address: Upland, CA, 91784
I object based on the following Proposition 218 violations:
• Rates exceed cost of service and are not adequately justified. • Automatic increases through 2030 are based on projections, not actual costs. • Rising fixed charges are not proportional to usage or parcel cost. • Combined surcharges and pass-through costs may exceed lawful cost recovery. • The notice fails to define a clear maximum charge, I request that this objection be counted.

Signature
Date: 7//z246)"2.4

4 FORMAL OBJECTION - PROPOSED WATER RATE INCREASES (PROPOSITION 21 i tj
City Clerk I ATTN: Utility Rates Protest or Objection '' City of Upland -M
460 N. Euclid Avenue ;
rn
Upland, CA 91786
This letter constitutes a formal objection to the proposed water rate increases.

Property Owner Name: Silvia Munoz
Service Address: Upland, CA, 91784
i object based on the following Proposition 218 violations:
• Rates exceed cost of service and are not adequately justified. • Automatic increases through 2030 are based on projections, not actual costs. • Rising fixed charges are not proportional to usage or parcel cost. • Combined surcharges and pass-through costs may exceed lawful cost recovery. • The notice fails to define a clear maximum charge.

I request that this objection be counted.

Signature:

Date: 412.
,� -

FORMAL OBJECTION - P.ROPOSED WATER RATE INCREASES (PROPOSITION 21it:, f',„I 6 .
{,F•,{ ,,,�
City Clerk I ATTN: Utility Rates Protest or Objection :1:: :

City of Upland r".,.;f J..•
.
ill
460 N. Euclid Avenue
Upland, CA 91786
.

This letter.constitutes a formal objection to the proposed water rate increases. .

Property Owner Name: + c- -Giky ti 0 ,\ 0,6 c r.e Ali V) ii 6 Service Address: J \(AVV C.1-` )(1 r 1
I object based on the following Proposition 21 B violations:
• Rates exceed cost of service and are not adequately justified. • Automatic increases through 2030 are based on projections, not actual costs. • Rising fixed charges are not proportional to usage or parcel cost. • Combined surcharges and pass-through costs may exceed lawful cost recovery. • The notice fails to define a clear maximum charge.

I request that this objection be counted,
.

Signature: Date: .k /:?. t.. -e...G

1. 1:

FORMAL OBJECTION - PROPOSED WATER RATE INCREASES (PROPOs1T1,9 2 218) tni
City Clerk I ATTN: Utility Rates Protest or Objection =c City of Upland
460 N. Euclid Avenue
Upland, CA 91786
This letter constitutes a formal objection to the proposed water rate increases.

Property Owner Name:

Service Address U ) ,nc 9 1
I object based on the following Proposition 218 violations:
• Rates exceed cost of service and are not adequately justified. • Automatic increases through 2030 are based on projections, not actual costs. • Rising fixed charges are not proportional to usage or parcel cost. • Combined surcharges and pass-through costs may exceed lawful cost recovery. • The notice fails to define a clear maximum charge.
1 request that this objection be counted.

Signature: Date: .71

ram.

FORMAL OBJECTION - PROPOSED WATER RATE INCREASES (PROPOSITION 21 CO 7)
MI
S: 0.

City Clerk I ATTN. Utility Rates Protest or Objection ° City of Upland co c
460 N. Euclid Avenuexi
7,1
Upland, CA 91786
This letter constitutes a formal objection to the proposed water rate increases.

Property Owner Name. k._‘1'..--\ \ J _.

Service Address: BAN()j CA .q i
---my
I object based on the following Proposition 218 violations:
• Rates exceed cost of service and are not adequately justified. • Automatic increases through 2030 are based on projections, not actual costs. • Rising fixed charges are not proportional to usage or parcel cost. • Combined surcharges and pass-through costs may exceed lawful cost recovery_ • The notice fails to define a clear maximum charge.

I request that this objection be countedliliii
Signa Date: 1-1 —23"20

F I .

Property Owner Reference: Timer, Stephanie Y. and Matthew E. r City Clerk���
Attn: Utility Rates Protest or Objection
City of Upland
460 N Euclid Ave. : ;?
Upland, CA 91786 *
4 May 2D26 r7 r .

WIZ
Record Property Owner&Property Address:

Ste hanie Y Zilruer and Matthew F. Zilmer
Upland, CA 91784
Subject:Proposed Water and Sewer Rate Adjustment
Reference: Proposed Adjustments to Water and Sewer Rates, a pamphlet, mailed to Upland residents on or about 1 April 2026.

We(undersigned) object to the proposed water rate adjustment for water and sewer service charges. Due to the terms of Proposition 218, a vote is not required for repair of water, sewer, or refuse collection facilities.

However, the Proposition does not state that a vote is prohibited. There is no statement in the Reference that a vote was or was not considered by the Upland City Council. Citizens have not been offered the vote on this measure,probably due the the City Council's fear of rejection due to the democratic process, The Proposition's 5-year plan outline shows a typical SFD cost increase from $30 per year for the first year upwards to about$180 for the fifth year [all estimated]. This increase does not account for any increases to wholesale water rates or drought surcharges,both of which would be real but also buried under the proposed rate increases.

With regard to project(s) planning,there is no mention in the Reference of the following:
a)A reversion of the increased water and sewer rates to "normal"upon completion of the 5-year interval described. This needs to be explicitly stated, not implied or neglected. Suggestion:Refunds or rebates if costs are contained below the project's proposed incremental revenue increase over the period; b)Any scale, scope,plan, location(s) or other details of the planned repairs,upgrades, improvements,or new construction needed. From that perspective,you are asking us to buy a pig in a poke; c)No mention of anticipated contingencies, and no mention of tie-ins or interface fees with other utilities. I mention this in part, because no detailed plan or location(s) are shown. It looks like a blank check to us, with an upper limit,but without any actual engineering process or plan documented or even outlined; d)In civil engineering(the actual practice,not its financing), cost nnis-estimates are common occurrences, There is no statement regarding the mandating of cost containment/mitigation measures in the Reference specifically with regards to cost overruns.
e) En the pamphlet shown as Reference, there is no statement of projected lifetime of repairs or new construction.

This should be stated as part of the project's objectives. It's hard to understand such a project without any assurance for the maximum lifetime of the materials and workmanship, and with no statement to that effect. We could be going through the same revenue issue in 15 or 20 years if inferior materials or workmanship are employed. What assurances do we have, as Upland residents, that this will not happen?

Property Owner Reference: Zilmer, Stephanie Y. and Matthew E.

Upland is asking its residents to pay additional fees into an open-ended plan, at least to all appearances. That by itself, presents a fairly severe ethical issue,if not a legal one (no,I'm not an attorney) and represents a liability to the city in which we are all residents. If residents are forced to pay higher rates for construction and repair costs that were previously unanticipated,they have the right to understand the detailed planning related to the costs.

In reading the original text of Proposition 218, my take is that municipalities with excess funds from special fees or assessments would typically revert them to the General Fund. This approach to revenue enhancement is both dishonest and unethical, if that is what is intended. We realize that Prop 218 exposes(maybe even encourages) • this type of loophole for enhancing revenue,but not stating all purposes of Upland's use of the Proposition is a pretty severe ethics issue which the voting populace is unlikely to forgive or forget.

Upland City Council should reconsider this measure, and look into other financial solutions for operations, maintenance,repair,and new construction of our water and sewer systems. The interval should be much longer than 5 years, perhaps 20 years. Most modern city water and sewer systems have usable lifetimes of about 80 years with periodic maintenance intervals and some minor but unpredictable repair/replace issues. Upland, as a city, is about 70 years old, with little new building construction occurring until the early 1970s. I make that about 55 years, giving a 15 to 20-year margin before major work is needed on water and sewer hrfrastructure.

Any tinreframe short of that should require full and detailed disclosure to the residents of Upland. We don't see fI that in the Reference material, so additional disclosure is mandatory at sufficient detail that residents can make an informed decision by voting and not, as proposed,by proxy.

Sincerely,
Stephanie Y. Zilrner
a ew , ;i er
Pro ert Address:
p an , 447
end -

OF FJP,4 City of Upland
tj d C)flicc of the City Clerk
h-=
Yr
�ZIFU St*
May 28, 2026
John Camacho
Upland,CA 91786
Dear Mr.Camacho:

The City of Upland("City")received your letter dated April 27,2026.The City thanks you for your letter, and participation in this important process.Your letter will be included as a part of the administrative record for the proposed rate adjustments, and will be counted as a protest for determining whether a majority protest exists.

Upon review of your letter,the City has determined that while the letter contains general statements challenging the proposed rate adjustments, the letter tacks sufficient explanation for the City to determine whether a change to the proposed rates is necessary.As such,the letter does not meet the requirements for a valid legal objection pursuant to Government Code section 53759.1, which requires sufficient detail to allow the City to evaluate whether there is a legal infirmity with the proposed rates. Nevertheless,the City provides the following information in response to your letter:

First,the City is a public agency, and is prohibited from generating a profit from its utility services. In order to ensure cost-based rates that proportionally allocate costs of service,the City retained an independent consultant with vast experience conducting water and wastewater rate studies throughout California, to conduct a comprehensive and detailed analysis of the City's water and wastewater utilities and costs of service.The result is a detailed"Water and Wastewater Rate Study" ("Study") that provides the basis for the proposed rate adjustments. Chapter 4 and 8 explain the projected revenue requirements for the water and wastewater utilities, respectively (i.e. the amount of money necessary to provide ongoing water and wastewater service).

These analyses take into account current and projected operational and capital expenses, planned capital improvement projects, projected inflation,water and wastewater demand assumptions, and reserve targets.All information is sourced from the City's financial documents and records, budgets, historic consumption patterns, and other publicly available documents. This analysis provides an adequate justification for the proposed rate adjustments, and demonstrates that the rates do not exceed cost of service.

Second,automatic increases are capped at the lesser of actual adopted wholesale rates imposed on the City by the Inland Empire Utilities Agency("IEUA"), or 15%. The City will annually determine the actual amount to pass through to customers,to ensure that the City recovers its full wholesale costs and nothing more.

Third,many of the City's costs are inherentlyfixed,and are incurred by the City regardless of how much water a parcel actually takes or discharges. Chapters 5-6 and 9-10 allocate such costs to customers, and provide a detailed explanation demonstrating proportionality on a parcel basis.These chapters of the Study explain that the majority of the City's costs in providing utility service are fixed in nature and UplandCA.gov • (909) 931-4100 • City of Upland, 460 hi. Euclid Avenue. Upfbagb %74

G�4OF TIN City of Upland
7tvoffice of the.Cily Cle.rk
do not vary based on usage, and such costs are recovered from the fixed charge. For example, infrastructure costs,operational costs, and customer service costs do not fluctuate based on usage, and are appropriately allocated to the fixed charge.

Fourth, the Proposition 218 notice provided to you and all property owners and customers of record has all necessary information, including maximum charges,as required by law,and is fully compliant with Proposition 218 and Government Code section 53750 et seq..

The City encourages you to review additional information about the proposed rate adjustments at https://uplan.dca..g_oy/p.0 1i_c works_!water/water_servic.e.S.php. The City is confident that the information provided on this site fully address any questions you may have. However,for the reasons stated above,the City does not recommend any changes to the proposed rate adjustments.

Sincerely,
,z.t(._'F:--------075----
Keri Johnson, CMC, CPMC
City Clerk
2 UplandCA.gov • (909) 931-4100 • City of Upland, 460 N. Euclid Avenue, UphirtA if129 .AV;

,ct
°r City of Upland
Office el is Cie-Clerk
41:

May 28, 2026
Teresa Camacho
Upland,CA 91786
Dear Ms.Camacho:

The City of Upland("City")received your letter dated April 27, 2026.The City thanks you for your letter, and participation in this important process.Your letter will be included as a part of the administrative record for the proposed rate adjustments,and will be counted as a protest for determining whether a majority protest exists.

Upon review of your letter,the City has determined that while the letter contains general statements challenging the proposed rate adjustments, the letter lacks sufficient explanation for the City to determine whether a change to the proposed rates is necessary.As such,the letter does not meet the requirements for a valid legal objection pursuant to Government Code section 53759.1, which requires sufficient detail to allow the City to evaluate whether there is a legal infirmity with the proposed rates. Nevertheless,the City provides the following information in response to your letter:

First,the City is a public agency, and is prohibited from generating a profit from its utility services. In order to ensure cost-based rates that proportionally allocate costs of service,the City retained an independent consultant with vast experience conducting water and wastewater rate studies throughout California, to conduct a comprehensive and detailed analysis of the City's water and wastewater utilities and costs of service.The result is a detailed"Water and Wastewater Rate Study" ("Study") that provides the basis for the proposed rate adjustments. Chapter 4 and 8 explain the projected revenue requirements for the water and wastewater utilities, respectively (i.e. the amount of money necessary to provide ongoing water and wastewater service).

These analyses take into account current and projected operational and capital expenses, planned capital improvement projects, projected inflation, water and wastewater demand assumptions, and reserve targets.All information is sourced from the City's financial documents and records, budgets, historic consumption patterns, and other publicly available documents. This analysis provides an adequate justification for the proposed rate adjustments, and demonstrates that the rates do not exceed cost of service.

Second, automatic increases are capped at the lesser of actual adopted wholesale rates imposed on the City by the Inland Empire Utilities Agency ("IEUA"), or 15%. The City will annually determine the actual amount to pass through to customers,to ensure that the City recovers its full wholesale costs and nothing more.

Third,many of the City's costs are inherently fixed,and are incurred by the City regardless of how much water a parcel actually takes or discharges. Chapters 5-6 and 9-10 allocate such costs to customers, and provide a detailed explanation demonstrating proportionality on a parcel basis.These chapters of the Study explain that the majority of the City's costs in providing utility service are fixed In nature and UplandCA.gov ■ (909) 931-4100 • City of Upland, 460 N. Euclid Avenue, UpFbegb. ftgp;g.

44pv Up\\14
� City of Upland
d
()flieriiliiu' (.n (_'kik
.,.._..,-..1
.1LrFU0
do not vary based on usage, and such costs are recovered from the fixed charge. For example, infrastructure costs,operational costs, and customer service costs do not fluctuate based on usage, and are appropriately allocated to the fixed charge.

Fourth,the Proposition 218 notice provided to you and all property owners and customers of record has all necessary information, including maximum charges, as required by law,and is fully compliant with Proposition 218 and Government Code section 53750 et seq..

The City encourages you to review additional information about the proposed rate adjustments at http.s.11u.pla.ndca..gvv/public woks/waterfwater_se_tvices..php. The City is confident that the information provided on this site fully address any questions you may have. However,for the reasons stated above,the City does not recommend any changes to the proposed rate adjustments.

Sincerely, f
r"
Keri Johnson,CMC, CPMC
City Clerk
2 UplandCA.gov • (909) 931-4100 • City of Upland, 460 N. Euclid Avenue, UrFb , 9J .4

4 or Miat'� City of Upland
V� 4� (dice al [Ia.t icy-(Auk
May 28, 2026
Annie Ring ChengCurtis
Upland,CA 91786
Dear Ms. Curtis:

The City of Upland("City")received your Letter dated April 28,2026.The City thanks you for your letter, and participation in this important process.Your letter will be included as a part of the administrative record for the proposed rate adjustments, and will be counted as a protest for determining whether a majority protest exists.

Upon review of your letter,the City has determined that while the letter contains general statements challenging the proposed rale adjustments, the letter lacks sufficient explanation for the City to determine whether a change to the proposed rates is necessary.As such,the letter does not meet the requirements for a valid legal objection pursuant to Government Code section 53759.1, which requires sufficient detail to allow the City to evaluate whether there is a legal infirmity with the proposed rates. Nevertheless,the City provides the following information in response to your letter:

First,the City is a public agency, and is prohibited from generating a profit from its utility services. In order to ensure cost-based rates that proportionally allocate costs of service, the City retained an independent consultant with vast experience conducting water and wastewater rate studies throughout California, to conduct a comprehensive and detailed analysis of the City's water and wastewater utilities and costs of service.The result is a detailed"Water and Wastewater Rate Study" ("Study") that provides the basis for the proposed rate adjustments. Chapter 4 and 8 explain the projected revenue requirements for the water and wastewater utilities, respectively (i.e.the amount of money necessary to provide ongoing water and wastewater service).

These analyses take into account current and projected operational and capital expenses, planned capital improvement projects, projected inflation, water and wastewater demand assumptions, and reserve targets.ALL information is sourced from the City's financial documents and records, budgets, historic consumption patterns, and other publicly available documents. This analysis provides an adequate justification for the proposed rate adjustments, and demonstrates that the rates do not exceed cost of service.

Second,automatic increases are capped at the lesser of actual adopted wholesale rates imposed on the City by the Inland Empire Utilities Agency ("IEIJA"), or 15%_The City will annually determine the actual amount to pass through to customers,to ensure that the City recovers its full wholesale casts and nothing more.

Third,many of the City's costs are inherently fixed, and are incurred by the City regardless of how much water a parcel actually takes or discharges. Chapters 5-6 and 9-10 allocate such costs to customers, and provide a detailed explanation demonstrating proportionality on a parcel basis.These chapters of the Study explain that the majority of the City's costs in providing utility service are fixed in nature and UplandCA.gov • (909) 931-4100 City of Upland, 460 N. Euclid Avenue, 1.4144 f75 3

y4.0F °404� City of Upland
l i ;�d „„,,,,of the City Clerk
.r•:. :r
;1LxFv-0
do not vary based on usage, and such costs are recovered from the fixed charge. For example, infrastructure costs,operational costs, and customer service costs do not fluctuate based on usage, and are appropriately allocated to the fixed charge.

Fourth, the Proposition 218 notice provided to you and all property owners and customers of record has all necessary information,including maximum charges, as required by law,and is fully compliant with Proposition 218 and Government Code section 53750 et seq..

The City encourages you to review additional information about the proposed rate adjustments at http_.s //...upiandca_gov/p.ublic wprkslwaterlwater services.php. The City is confident that the information provided on this site fully address any questions you may have. However,for the reasons stated above,the City does not recommend any changes to the proposed rate adjustments.

Sincerely,
Keri Johnson, CMC, CPMC
City Clerk
2 UplandCA.gov • (909) 931-4100 • City of Upland, 460 N. Euclid Avenue, Up ft6%34 3

of 11Pt City of Upland
• [Mite of rlic City Clc:k
r .r -..
4I 0'
May 28, 2026
John A Curtis
Upland,CA 91786
Dear Mr. Curtis:

The City of Upland("City")received your letter dated April 28, 2026.The City thanks you for your letter, and participation in this important process.Your Letter will be included as a part of the administrative record far the proposed rate adjustments,and wilt be counted as a protest for determining whether a majority protest exists.

Upon review of your letter, the City has determined that white the letter contains general statements challenging the proposed rate adjustments, the letter lacks sufficient explanation for the City to determine whether a change to the proposed rates is necessary.As such,the letter does not meet the requirements for a valid Legal objection pursuant to Government Code section 53759./, which requires sufficient detail to allow the City to evaluate whether there is a legal infirmity with the proposed rates. Nevertheless,the City provides the following information in response to your letter:

First,the City is a public agency, and is prohibited from generating a profit from its utility services_ In order to ensure cost-based rates that proportionally allocate costs of service,the City retained an independent consultant with vast experience conducting water and wastewater rate studies throughout California, to conduct a comprehensive and detailed analysis of the City's water and wastewater utilities and costs of service.The result is a detailed"Water and Wastewater Rate Study" (("Study") that provides the basis for the proposed rate adjustments. Chapter 4 and 8 explain the projected revenue requirements for the water and wastewater utilities, respectively (i.e.the amount of money necessary to provide ongoing water and wastewater service).

These analyses take into account current and projected operational and capital expenses, planned capital improvement projects, projected inflation, water and wastewater demand assumptions, and reserve targets.All information is sourced from the City's financial documents and records, budgets, historic consumption patterns, and other publicly available documents. This analysis provides an adequate justification for the proposed rate adjustments, and demonstrates that the rates do not • exceed cost of service.

Second,automatic increases are capped at the lesser of actual adopted wholesale rates imposed on the City by the Inland Empire Utilities Agency ("IEUA"), or 15%.The City will annually determine the actual amount to pass through to customers,to ensure that the City recovers its full wholesale costs and nothing more.

Third,many of the City's costs are inherentlyfixed,and are incurred by the City regardless of how much water a parcel actually takes or discharges.Chapters 5-6 and 9-10 allocate such costs to customers, and provide a detailed explanation demonstrating proportionality on a parcel basis.These chapters of the Study explain that the majority of the City's costs in providing utility service are fixed in nature and UplandCA.gov • 1909) 931-4100 • City of Upland. 460 N. Euclid Avenue, UplititS,cA,WM§

�~4 10 UPL�� City of Upland
I []ilia•��l[hc ( i« C'lcrk
%
do not vary based on usage, and such costs are recovered from the fixed charge. For example, infrastructure costs,operational costs,and customer service costs do not fluctuate based on usage, and are appropriately allocated to the fixed charge.

Fourth, the Proposition 218 notice provided to you and all property owners and customers of record has all necessary information,including maximum charges,as required by law,and is fully compliant with Proposition 218 and Government Code section 53750 et seq..

The City encourages you to review additional information about the proposed rate adjustments at https://uplandca.gov/public_works/waterlwater_services.php . The City is confident that the information provided on this site fully address any questions you may have. However,for the reasons stated above,the City does not recommend any changes to the proposed rate adjustments.

Sincerely, .

Keri Johnson,CMC, CPMC
City Clerk
2 UplandCA.gov • (909) 931-4100 • City of Upland, 460 N. Euclid Avenue, Upfitajg cfg 3

or ❑_p41 City of Upland
(y „ Office of hiss City Clerk
(?r
+a y -
May 28, 2026
Elysse Dorsey
Upland,CA 91786
Dear Ms. Dorsey:

The City of Upland("City")received your letter dated April22,2026.The City thanks you for your letter, and participation in this important process.Your Letter will be included as a part of the administrative record for the proposed rate adjustments, and will be counted as a protest for determining whether a majority protest exists.

Upon review of your letter,the City has determined that while the letter contains general statements challenging the proposed rate adjustments, the letter lacks sufficient explanation for the City to determine whether a change to the proposed rates is necessary.As such,the letter does not meet the requirements for a valid legal objection pursuant to Government Code section 53759.1, which requires sufficient detail to allow the City to evaluate whether there is a legal infirmity with the proposed rates. Nevertheless,the City provides the following information in response to your letter:

First,the City is a public agency, and is prohibited from generating a profit from its utility services. In order to ensure cost-based rates that proportionally allocate costs of service, the City retained an independent consultant with vast experience conducting water and wastewater rate studies throughout California, to conduct a comprehensive and detailed analysis of the City's water and wastewater utilities and costs of service.The result is a detailed"Water and Wastewater Rate Study" ("Study") that provides the basis for the proposed rate adjustments. Chapter 4 and 8 explain the projected revenue requirements for the water and wastewater utilities, respectively (i.e. the amount of money necessary to provide ongoing water and wastewater service).

These analyses take into account current and projected operational and capital expenses, planned capital improvement projects, projected inflation,water and wastewater demand assumptions,and reserve targets.All information is sourced from the City's financial documents and records, budgets, historic consumption patterns, and other publicly available documents. This analysis provides an adequate justification for the proposed rate adjustments, and demonstrates that the rates do not exceed cost of service.

Second, automatic increases are capped at the lesser of actual adopted wholesale rates imposed on the City by the Inland Empire Utilities Agency("IEUA"), or 15%-The City will annually determine the actual amount to pass through to customers,to ensure that the City recovers its full wholesale costs and nothing more.

Third,many of the City's costs are inherentlyfixed,and are incurred by the City regardless of how much water a parcel actually takes or discharges.Chapters 5-6 and 9-10 allocate such costs to customers, and provide a detailed explanation demonstrating proportionality on a parcel basis.These chapters of the Study explain that the majority of the City's costs in providing utility service are fixed in nature and UplandCA.gov • (909) 931-4100 • City of Upland, 460 N. Euclid Avenue, UgdtlS., 7��

40Y tY City of Upland
1 4C It
(1i.1.,,, tIE.• i'i[\ (ii i k
do not vary based on usage, and such costs are recovered from the fixed charge. For example, infrastructure costs,operational costs,and customer service costs do not fluctuate based on usage, and are appropriately allocated to the fixed charge.

Fourth, the Proposition 218 notice provided to you and all property owners and customers of record has all necessary information, including maximum charges,as required by law, and is fully compliant with Proposition 218 and Government Code section 53750 et seq..

The City encourages you to review additional information about the proposed rate adjustments at httpsJ/upland.ca.gov/pu.bliG works/waterlwater serv.i_.es...php. The City is confident that the information provided on this site fully address any questions you may have. However,for the reasons stated above,the City does not recommend any changes to the proposed rate adjustments.

Sincerely,
r
L
Keri Johnson,CMC,CPMC
City Clerk
2 UplandCA.gov • (909) 931-4100 • City of Upland, 460 N. Euclid Avenue, Ui$j $

,�4 OF upz City of Upland
0 , d (mac or the City Clerk
‘4
14IFuB
May 28, 2026
Jane Goetz
Upland,CA 91786
Dear Ms. Goetz:

The City of Upland("City")received your letter dated May 4,2026. The City thanks you for your letter, and participation in this important process.Your letter will be included as a part of the administrative record for the proposed rate adjustments,and will be counted as a protest for determining whether a majority protest exists.

Upon review of your letter,the City has determined that white the letter contains general statements challenging the proposed rate adjustments, the Letter lacks sufficient explanation for the City to determine whether a change to the proposed rates is necessary.As such,the letter does not meet the requirements for a valid legal objection pursuant to Government Code section 53759.1, which requires sufficient detail to allow the City to evaluate whether there is a legal infirmity with the proposed rates. Nevertheless,the City provides the following information in response to your letter:

First,the City is a public agency, and is prohibited from generating a profit from its utility services. In order to ensure cost-based rates that proportionally allocate costs of service, the City retained an independent consultant with vast experience conducting water and wastewater rate studies throughout California, to conduct a comprehensive and detailed analysis of the City's water and wastewater utilities and costs of service.The result is a detailed"Water and Wastewater Rate Study" ("Study") that provides the basis for the proposed rate adjustments. Chapter 4 and 8 explain the projected revenue requirements for the water and wastewater utilities, respectively (i.e. the amount of money necessary to provide ongoing water and wastewater service).

These analyses take into account current and projected operational and capital expenses, planned capital improvement projects, projected inflation,water and wastewater demand assumptions, and reserve targets.All information is sourced from the City's financial documents and records, budgets, historic consumption patterns, and other publicly available documents. This analysis provides an adequate justification for the proposed rate adjustments, and demonstrates that the rates do not exceed cost of service.

Second,automatic increases are capped at the lesser of actual adopted wholesale rates imposed on the City by the Inland Empire Utilities Agency ("IEUA"), or 15%. The City will annually determine the actual amount to pass through to customers,to ensure that the City recovers its full wholesale costs and nothing more.

Third,many of the City's costs are inherently fixed,and are incurred by the City regardless of how much water a parcel actually takes or discharges.Chapters 5-6 and 9-10 allocate such costs to customers, and provide a detailed explanation demonstrating proportionality on a parcel basis.These chapters of the Study explain that the majority of the City's costs in providing utility service are fixed in nature and 1 UplandCA.gov • (909) 931-4100 • City of Upland, 460 N. Euclid Avenue. UR R474

tcF Upi.1 City of Upland
Oni,,nr ow C* Clerk
do not vary based on usage, and such costs are recovered from the fixed charge. For example, infrastructure costs, operational costs, and customer service costs do not fluctuate based on usage, and are appropriately allocated to the fixed charge.

Fourth, the Proposition 218 notice provided to you and all property owners and customers of record has all necessary information, including maximum charges,as required by law,and is fully compliant with Proposition 218 and Government Code section 53750 et seq..

The City encourages you to review additional information about the proposed rate adjustments at haws://raplandca.gov/pu...blic_work.s/water/water_services.php. The City is confident that the information provided on this site fully address any questions you may have. However,for the reasons stated above,the City does not recommend any changes to the proposed rate adjustments.

Sincerely,
Keri Johnson, CMC,CPMC
City Clerk
2 UplandCA.gov • (909) 931-4100 • City of Upland, 460 N. Euclid Avenue, Up 7 8

�- �of Upt� City of Upland
fact,o the City C lcrk
0 II_, _ r.s i
May 28, 2026
William Glenn Goetz
Upland,CA 91786
Dear Mr.Goetz:

The City of Upland ("City")received your letter dated May 4,2026.The City thanks you for your letter, and participation in this important process.Your letter will be included as a part of the administrative record for the proposed rate adjustments, and will be counted as a protest for determining whether a majority protest exists.

Upon review of your letter,the City has determined that while the letter contains general statements challenging the proposed rate adjustments, the letter lacks sufficient explanation for the City to determine whether a change to the proposed rates is necessary.As such,the letter does not meet the requirements for a valid legal objection pursuant to Government Code section 53759.1, which requires sufficient detail to allow the City to evaluate whether there is a legal infirmity with the proposed rates. Nevertheless,the City provides the following information in response to your letter:

First,the City is a public agency, and is prohibited from generating a profit from its utility services. In order to ensure cost-based rates that proportionally allocate costs of service,the City retained an independent consultant with vast experience conducting water and wastewater rate studies throughout California, to conduct a comprehensive and detailed analysis of the City's water and wastewater utilities and costs of service_The result is a detailed"Water and Wastewater Rate Study" ("Study") that provides the basis for the proposed rate adjustments. Chapter 4 and 8 explain the projected revenue requirements for the water and wastewater utilities, respectively (i.e. the amount of money necessary to provide ongoing water and wastewater service).

These analyses take into account current and projected operational and capital expenses, planned capital improvement projects, projected inflation,water and wastewater demand assumptions,and reserve targets.All information is sourced from the City's financial documents and records, budgets, historic consumption patterns, and other publicly available documents. This analysis provides an adequate justification for the proposed rate adjustments, and demonstrates that the rates do not exceed cost of service.

Second.automatic increases are capped at the lesser of actual adopted wholesale rates imposed on the City by the Inland Empire Utilities Agency ("IEUA"), or 15%.The City wilt annually determine the actual amount to pass through to customers,to ensure that the City recovers its full wholesale costs and nothing more.

Third,many of the City's costs a re inherently fixed, and are incurred by the City regardless of how much water a parcel actually takes or discharges.Chapters 5-6 and 9-10 allocate such costs to customers, and provide a detailed explanation demonstrating proportionality on a parcel basis.These chapters of the Study explain that the majority of the City's costs in providing utility service are fixed in nature and UplandCA.gov • (909) 931-4100 • City of Upland, 460 N. Euclid Avenue, Up f RI

e��° UpL� City of Upland
�.T4 -'i � • Office°l the Cit. (.lil-k,..... . . .: 4,1k.,.
61-
4LIPolk-
do not vary based on usage, and such costs are recovered from the fixed charge. For example, infrastructure costs,operational costs, and customer service costs do not fluctuate based on usage, and are appropriately allocated to the fixed charge.

Fourth, the Proposition 218 notice provided to you and all property owners and customers of record has all necessary information, including maximum charges,as required by law,and is fully compliant with Proposition 218 and Government Code section 53750 et seq..

The City encourages you to review additional information about the proposed rate adjustments at https://uplandca.gov/public_works/water/water_services.php . The City is confident that the information provided on this site fully address any questions you may have. However,for the reasons stated above,the City does not recommend any changes to the proposed rate adjustments.

Sincerely,
Keri Johnson,CMC,CPMC
City Clerk
2 UplandCA.gov • (909) 931-4100 • City of Upland, 460 N. Euclid Avenue, USA, 917

pF �4 City of Upland
office.1 the Ciry Cirri.
n., ttv
May 28, 2626
Russell Hamelin
Upland, CA 91786
Dear Mr. Hamelin:

The City of Upland("City")received your letter dated April 22, 2026.The City thanks you for your letter, and participation in this important process.Your letter will be included as a part of the administrative record far the proposed rate adjustments,and will be counted as a protest for determining whether a majority protest exists.

Upon review of your letter,the City has determined that while the letter contains general statements challenging the proposed rate adjustments, the letter lacks sufficient explanation for the City to determine whether a change to the proposed rates is necessary.As such,the letter does not meet the requirements for a valid Legal objection pursuant to Government Code section 53759.1, which requires sufficient detail to allow the City to evaluate whether there is a legal infirmity with the proposed rates. Nevertheless,the City provides the following information in response to your letter:

First,the City is a public agency, and is prohibited from generating a profit from its utility services_ In order to ensure cost-based rates that proportionally allocate costs of service, the City retained an independent consultant with vast experience conducting water and wastewater rate studies throughout California, to conduct a comprehensive and detailed analysis of the City's water and wastewater utilities and costs of service.The result is a detailed"Water and Wastewater Rate Study" ("Study") that provides the basis for the proposed rate adjustments. Chapter 4 and 8 explain the projected revenue requirements for the water and wastewater utilities, respectively (i.e. the amount of money necessary to provide ongoing water and wastewater service).

These analyses take into account current and projected operational and capital expenses, planned capital improvement projects, projected inflation, water and wastewater demand assumptions, and reserve targets.All information is sourced from the City's financial documents and records, budgets, historic consumption patterns, and other publicly available documents. This analysis provides an adequate justification for the proposed rate adjustments, and demonstrates that the rates do not exceed cost of service.

Second,automatic increases are capped at the lesser of actual adopted wholesale rates imposed on the City by the Inland Empire Utilities Agency ("IEUA"), or 15%. The City wilt annually determine the actual amount to pass through to customers,to ensure that the City recovers its full wholesale costs and nothing more.

Third,many of the City's costs are inherently fixed, and are incurred by the City regardless of how much water a parcel actually takes or discharges. Chapters 5-6 and 9-10 allocate such costs to customers, and provide a detailed explanation demonstrating proportionality on a parcel basis.These chapters of the Study explain that the majority of the City's costs in providing utility service are fixed in nature and UplandCA.gov • (909) 931-4100 • City of Upland, 460 N. Euclid Avenue, Upititjb fif5q474ffi

��� °r IIpt� City of Upland
O� _ d 0Mice of the City Clerk
i M'1t►
do not vary based on usage, and such costs are recovered from the fixed charge. For example, infrastructure costs, operational costs, and customer service costs do not fluctuate based on usage, and are appropriately allocated to the fixed charge.

Fourth,the Proposition 218 notice provided to you and all property owners and customers of record has all necessary information, including maximum charges,as required by law, and is fully compliant with Proposition 218 and Government Code section 53750 et seq..

The City encourages you to review additional information about the proposed rate adjustments at https /fuplandca,govLpublic. works/water/water_services.php. The City is confident that the information provided on this site fully address any questions you may have. However,for the reasons stated above,the City does not recommend any changes to the proposed rate adjustments.

Sincerely,
Keri Johnson,CMC, CPMC
City Clerk
2 UplandCA.gov • (909) 931-4100 • City of Upland, 460 N. Euclid Avenue, Undwejg,fist 9 71,b§

��4OV Critt$ City of Upland
V , C. d Office of the City Clerk \[

0. IFgR40 gob
May 28, 2026
Steve and Melinda Hutchins
Upland, CA 91786
Dear Mr.and Ms.Hutchins:

The City of Upland("City")received your letter dated May 4, 2026.The City thanks you for your letter, and participation in this important process.Your letter will be included as a part of the administrative record for the proposed rate adjustments, and will be counted as a protest for determining whether a majority protest exists.

Upon review of your letter,the City has determined that while the letter contains general statements challenging the proposed rate adjustments, the letter lacks sufficient explanation for the City to determine whether a change to the proposed rates is necessary.As such,the letter does not meet the requirements for a valid legal objection pursuant to Government Code section 53759.1, which requires sufficient detail to allow the City to evaluate whether there is a legal infirmity with the proposed rates. Nevertheless,the City provides the following information in response to your letter:

First,the City is a public agency, and is prohibited from generating a profit from its utility services. In order to ensure cost-based rates that proportionally allocate costs of service, the City retained an independent consultant with vast experience conducting water and wastewater rate studies throughout California, to conduct a comprehensive and detailed analysis of the City's water and wastewater utilities and costs of service.The result is a detailed"Water and Wastewater Rate Study" ("Study") that provides the basis for the proposed rate adjustments. Chapter 4 and 8 explain the projected revenue requirements for the water and wastewater utilities, respectively (i.e.the amount of money necessary to provide ongoing water and wastewater service).

These analyses take into account current and projected operational and capital expenses, planned capital improvement projects, projected inflation, water and wastewater demand assumptions, and reserve targets.All information is sourced from the City's financial documents and records,budgets, historic consumption patterns, and other publicly available documents. This analysis provides an adequate justification for the proposed rate adjustments, and demonstrates that the rates do not exceed cost of service.

Second,automatic increases are capped at the lesser of actual adopted wholesale rates imposed on . the City by the Inland Empire Utilities Agency("IEUA"), or 15%, The City will annually determine the actual amount to pass through to customers,to ensure that the City recovers its full wholesale costs and nothing more.

Third,many of the City's costs are inherently fixed,and are incurred by the City regardless of how mu din water a parcel actually takes or discharges. Chapters 5-6 and 9-10 allocate such costs to customers, and provide a detailed explanation demonstrating proportionality on a parcel basis.These chapters of the Study explain that the majority of the City's costs in providing utility service are fixed in nature and 1 UplandCA.gov • (909) 931-4100 • City of Upland, 460 N. Euclid Avenue. Up 41.

T.uA4� City of Upland
r t]Nice oli the City Cie]
do not vary based on usage, and such costs are recovered from the fixed charge. For example, infrastructure costs,operational costs,and customer service costs do not fluctuate based on usage, and are appropriately allocated to the fixed charge.

Fourth, the Proposition 218 notice provided to you and all property owners and customers of record has all necessary information,including maximum charges,as required by law,and is fully compliant with Proposition 218 and Government Code section 53750 et seq..

The City encourages you to review additional information about the proposed rate adjustments at https;//uplandca.govtpublic_wcrft.s./waterlweter_services.php. The City is confident that the information provided on this site fully address any questions you may have. However,for the reasons stated above,the City does not recommend any changes to the proposed rate adjustments.

Sincerely,
Keri Johnson,CMC, CPMC
City Clerk
2 UplandCA.gov • (909) 931-4100 • City of Upland, 460 N. Euclid Avenue, Up ir$89J AtA

° City of Upland
0 for } Office of the City Clerk
i K.r
May 28, 2026
Jose Munoz
Upland,CA 91786
Dear Mr. Munoz:

The City of Upland("City")received your letter dated April 28, 2026.The City thanks you for your letter, • and participation in this important process.Your Letter will be included as a part of the administrative record for the proposed rate adjustments,and will be counted as a protest for determining whether a majority protest exists.

Upon review of your letter,the City has determined that white the letter contains general statements challenging the proposed rate adjustments, the letter lacks sufficient explanation for the City to determine whether a change to the proposed rates is necessary.As such,the letter does not meet the requirements for a valid legal objection pursuant to Government Code section 53759.1, which requires sufficient detail to allow the City to evaluate whether there is a legal infirmity with the proposed rates. Nevertheless,the City provides the following information in response to your letter:

First,the City is a public agency, and is prohibited from generating a profit from its utility services. In order to ensure cost-based rates that proportionally allocate costs of service, the City retained an independent consultant with vast experience conducting water and wastewater rate studies throughout California, to conduct a comprehensive and detailed analysis of the City's water and • wastewater utilities and costs of service.The result is a detailed"Water and Wastewater Rate Study" ("Study") that provides the basis for the proposed rate adjustments. Chapter 4 and 8 explain the projected revenue requirements for the water and wastewater utilities, respectively (i.e. the amount of money necessary to provide ongoing water and wastewater service).

These analyses take into account current and projected operational and capital expenses, planned capital improvement projects, projected inflation, water and wastewater demand assumptions, and reserve targets.All information is sourced from the City's financial documents and records, budgets, historic consumption patterns, and other publicly available documents. This analysis provides an adequate justification for the proposed rate adjustments, and demonstrates that the rates do not exceed cost of service.

Second,automatic increases are capped at the lesser of actual adopted wholesale rates imposed on the City by the Inland Empire Utilities Agency ("IEUA"), or 15%.The City will annually determine the actual amount to pass through to customers,to ensure that the City recovers its full wholesale costs and nothing more.

Third,many of the City's costs are inherently fixed,and are incurred by the City regardless of how much water a parcel actually takes or discharges. Chapters 5-6 and 9-10 allocate such costs to customers, and provide a detailed explanation demonstrating proportionality on a parcel basis.These chapters of the Study explain that the majority of the City's costs in providing utility service are fixed in nature and UplandCA.gov • (909) 931-4100 * City of Upland, 460 N. Euclid Avenue, Up 9W .:,,r

c.,��� °v Upz.�� City of Upland
ItrFQI�
do not vary based on usage, and such costs are recovered from the fixed charge. For example, infrastructure costs,operational costs, and customer service costs do not fluctuate based on usage, and are appropriately allocated to the fixed charge.

Fourth, the Proposition 218 notice provided to you and all property owners and customers of record has all necessary information, including maximum charges,as required by taw,and is fully compliant with Proposition 218 and Government Code section 53750 et seq..

The City encourages you to review additional information about the proposed rate adjustments at httpsll.up.tandca.govlpublic_works/waterfwater services_.php. The City is confident that the information provided on this site fully address any questions you may have. However,for the reasons stated above,the City does not recommend any changes to the proposed rate adjustments.

Sincerely,
Keri Johnson, CMC, CPMC
City Clerk
2 UplandCA.gov • (909) 931-4100 • City of Upland, 460 N. Euclid Avenue, UpIj cgoNzNA

.4,: °v °.t.4 City of Upland
V
id [)flue ohlic Ciry Clerk

4. .,t.
,...p..,,,..,4,
May 28, 2026
Silvia Munoz
Upland, CA 91786
Dear Ms. Munoz:

The City of Upland("City")received your letter dated April 28,2026.The City thanks you for your letter, and participation in this important process. Your letter will be included as a part of the administrative record for the proposed rate adjustments,and will be counted as a protest for determining whether a majority protest exists.

Upon review of your letter,the City has determined that while the letter contains general statements challenging the proposed rate adjustments, the letter Lacks sufficient explanation for the City to determine whether a change to the proposed rates is necessary.As such,the letter does not meet the requirements for a valid legal objection pursuant to Government Code section 53759.1, which requires sufficient detail to allow the City to evaluate whether there is a legal infirmity with the proposed rates. Nevertheless,the City provides the following information in response to your letter:

First,the City is a public agency, and is prohibited from generating a profit from its utility services. In order to ensure cost-based rates that proportionally allocate costs of service, the City retained an independent consultant with vast experience conducting water and wastewater rate studies throughout California, to conduct a comprehensive and detailed analysis of the City's water and wastewater utilities and costs of service.The result is a detailed"Water and Wastewater Rate Study" ("Study") that provides the basis for the proposed rate adjustments. Chapter 4 and 8 explain the projected revenue requirements for the water and wastewater utilities, respectively (i.e. the amount of money necessary to provide ongoing water and wastewater service).

These analyses take into account current and projected operational and capital expenses, planned capital improvement projects, projected inflation, water and wastewater demand assumptions, and reserve targets.All information is sourced from the City's financial documents and records, budgets, historic consumption patterns, and other publicly available documents. This analysis provides an adequate justification for the proposed rate adjustments, and demonstrates that the rates do not exceed cost of service.

Second,automatic increases are capped at the Lesser of actual adopted wholesale rates imposed on the City by the Inland Empire Utilities Agency("IEUA"), or 15%.The City will annually determine the actual amount to pass through to customers,to ensure that the City recovers its full wholesale costs and nothing more.

Third,many of the City's costs are inherently fixed,and are incurred by the City regardless of how much water a parcel actually takes or discharges. Chapters 5-6 and 9-10 allocate such costs to customers, and provide a detailed explanation demonstrating proportionality on a parcel basis.These chapters of the Study explain that the majority of the City's costs in providing utility service are fixed in nature and UplandCA.gov • (909) 931-4100 • City of Upland, 460 N. Euclid Avenue, Up 7.73.,

��4° Ui� City of Upland
V, d office of the City Clerk
At
do not vary based on usage, and such costs are recovered from the fixed charge. For example, infrastructure costs,operational costs, and customer service costs do not fluctuate based on usage, and are appropriately allocated to the fixed charge.

Fourth, the Proposition 218 notice provided to you and all property owners and customers of record has all necessary information,including maximum charges,as required by law, and is fully compliant with Proposition 218 and Government Code section 53750 et seq..

The City encourages you to review additional information about the proposed rate adjustments at https://uplandca.gov/p_ublivvorkslwater/water_service_s.php . The City is confident that the information provided on this site fully address any questions you may have. However,for the reasons stated above,the City does not recommend any changes to the proposed rate adjustments.

Sincerely,
,.:1" Aid— 6
Keri Johnson, CMC, CPMC
City Clerk
2 UplandCA.gov • (909) 931-4100 • City of Upland, 460 N. Euclid Avenue, Ups

�4oF IIiPt� City of Upland
d Office of the City Clerk
> f�
a y •- Ks
May 28,2026
Octavio Alatorre Nuno
Upland,CA 91786
Dear Mr. Nuno:

The City of Upland("City")received your letter dated April30, 2026.The Citythanks you for your Letter, and participation in this important process.Your letter will be included as a part of the administrative record for the proposed rate adjustments, and will be counted as a protest for determining whether a majority protest exists.

Upon review of your letter,the City has determined that while the letter contains general statements challenging the proposed rate adjustments, the letter lacks sufficient explanation for the City to determine whether a change to the proposed rates is necessary.As such,the letter does not meet the requirements for a valid legal objection pursuant to Government Code section 53759.1, which requires sufficient detail to allow the City to evaluate whether there is a legal infirmity with the proposed rates.Nevertheless,the City provides the following information in response to your letter:

First,the City is a public agency, and is prohibited from generating a profit from its utility services. In order to ensure cost-based rates that proportionally allocate costs of service, the City retained an independent consultant with vast experience conducting water and wastewater rate studies throughout California, to conduct a comprehensive and detailed analysis of the City's water and wastewater utilities and costs of service.The result is a detailed"Water and Wastewater Rate Study" ("Study") that provides the basis for the proposed rate adjustments. Chapter 4 and 8 explain the projected revenue requirements for the water and wastewater utilities, respectively (i.e.the amount of money necessary to provide ongoing water and wastewater service).

These analyses take into account current and projected operational and capital expenses, planned capital improvement projects, projected inflation,water and wastewater demand assumptions, and reserve targets.All information is sourced from the City's financial documents and records, budgets, historic consumption patterns, and other publicly available documents. This analysis provides an adequate justification for the proposed rate adjustments, and demonstrates that the rates do not exceed cost of service.

Second,automatic increases are capped at the lesser of actual adopted wholesale rates imposed on the City by the Inland Empire Utilities Agency ("IEUA"), or 15%. The City will annually determine the actual amount to pass through to customers,to ensure that the City recovers its full wholesale costs and nothing more.

Third,many of the City's costs are inherently fixed,and are incurred bythe City regardless of how much watera parcel actually takes or discharges.Chapters 5-6 and 9-10 allocate such costs to customers, and provide a detailed explanation demonstrating proportionality on a parcel basis.These chapters of the Study explain that the majority of the City's costs in providing utility service are fixed in nature and UlplandCA.gov • (909) 931-4100 ► City of Upland, 460 N. Euclid Avenue, Upiajob 1437

4c,,i
°r UPt$irCity of Upland
o d coil, r11i,Cit. �'l �k
do not vary based on usage, and such costs are recovered from the fixed charge. For example, infrastructure costs,operational costs, and customer service costs do not fluctuate based on usage, and are appropriately allocated to the fixed charge.

Fourth, the Proposition 218 notice provided to you and all property owners and customers of record has all necessary information, including maximum charges,as required by law,and is fully compliant with Proposition 218 and Government Code section 53750 et seq..

The City encourages you to review additional information about the proposed rate adjustments at https //u_.pllancica,govtpublic works_l_.water/water_services.php. The City is confident that the information provided on this site fully address any questions you may have. However,for the reasons stated above,the City does not recommend any changes to the proposed rate adjustments.

Sincerely,
Keri Johnson,CMC, CPMC
City Clerk
2 UplandCA.gov • (909) 931-4100 • City of Upland, 460 N. Euclid Avenue, UpftwO fajii.UVA

o ' uit.4 City of Upland
Trit,d Office ol'the City Clerk
May 28, 2026
Linda Welsh
Upland,CA 91786
Dear Ms. Welsh:

The City of Upland("City")received your letter dated April28,2026.The City thanks you for your Letter, and participation in this important process.Your letter will be included as a part of the administrative record for the proposed rate adjustments,and will be counted as a protest for determining whether a majority protest exists.

Upon review of your letter,the City has determined that while the letter contains general statements challenging the proposed rate adjustments, the letter lacks sufficient explanation for the City to determine whether a change to the proposed rates is necessary.As such,the letter does not meet the requirements for a valid legal objection pursuant to Government Code section 53759.1, which requires sufficient detail to allow the City to evaluate whether there is a legal infirmity with the proposed rates.Nevertheless,the City provides the following information in response to your letter:

First,the City is a public agency,and is prohibited from generating a profit from its utility services. In order to ensure cost-based rates that proportionally allocate costs of service,the City retained an independent consultant with vast experience conducting water and wastewater rate studies throughout California, to conduct a comprehensive and detailed analysis of the City's water and wastewater utilities and costs of service.The result is a detailed "Water and Wastewater Rate Study" ("Study") that provides the basis for the proposed rate adjustments. Chapter 4 and 8 explain the projected revenue requirements for the water and wastewater utilities, respectively (i.e.the amount of money necessary to provide ongoing water and wastewater service).

These analyses take into account current and projected operational and capital expenses, planned capital improvement projects, projected inflation,water and wastewater demand assumptions, and reserve targets.All information is sourced from the City's financial documents and records, budgets, historic consumption patterns, and other publicly available documents. This analysis provides an adequate justification for the proposed rate adjustments, and demonstrates that the rates do not exceed cost of service.

Second,automatic increases are capped at the lesser of actual adopted wholesale rates imposed on the City by the Inland Empire Utilities Agency ("IEUA"), or 15%.The City will annually determine the actual amount to pass through to customers,to ensure that the City recovers its full wholesale costs and nothing more.

Third,many of the City's costs are inherentlyfixed, and are incurred by the City regardless of how much water a parcel actually takes or discharges.Chapters 5-6 and 9-10 allocate such costs to customers, and provide a detailed explanation demonstrating proportionality on a parcel basis.These chapters of the Study explain that the majority of the City's costs in providing utility service are fixed in nature and UplandCA.gov • (909) 931-4100 • City of Upland, 4E0 N. Euclid Avenue, Upr4, 74%§

UiN e 4°V Qpt � City ❑f Upland c)[lir ter i[ic LR C i�o k
d �. .. • ham►
'4IFOR
do not vary based on usage, and such costs are recovered from the fixed charge. For exampte, infrastructure costs,operational costs, and customer service costs do not fluctuate based on usage, and are appropriately allocated to the fixed charge.

Fourth, the Proposition 218 notice provided to you and all property owners and customers of record has all necessary information,including maximum charges,as required by law,and is fully compliant with Proposition 218 and Government Code section 53750 et seq..

The City encourages you to review additional information about the proposed rate adjustments at hUias:11uplan_d_ca.gov/public_works/water/water_servi_de_s.php. The City is confident that the information provided on this site fully address any questions you may have. However,for the reasons stated above,the City does not recommend any changes to the proposed rate adjustments.

Sincerely,
r �
Keri Johnson,CMC, CPMC
City Clerk
2 UplandCA.gov • (909) 931-4100 • City of Upland, 460 N. Euclid Avenue, Urfili4, f'i9J 448

-$' ° ,1� City of Upland
0 :. -- d o flice ol'the City Clerk ......

C41.etaiii
_.4
May 28, 2026
Stephanie Y.Zilmer and Matthew E.Zilmer
Upland,CA 91786
Dear Mr. and Ms. Zilmer:

The City of Upland ("City') received your letter, dated May 7, 2026.The City thanks you for your letter, and participation in this important process.Your letter will be included as a part of the administrative record for the proposed rate adjustments,and will be counted as a protest for determining whether a majority protest exists.

Upon review of your letter,the City has determined that while the letter contains general statements challenging the proposed rate adjustments, the letter lacks sufficient explanation for the City to determine whether a change to the proposed rates is necessary.As such,the letter does not meet the requirements for a valid legal objection pursuant to Government Code section 53759.1, which requires sufficient detail to allow the City to evaluate whether there is a legal infirmity with the proposed rates. Nevertheless,the City provides the following information in response to your letter:

The City's Proposition 218 notice details the proposed rate adjustments,which are implemented over the next 5 years. In addition to the City's own internal cost increases, the City is subject to rate increases from its wholesaler, the Inland Empire Utilities Agency ("IEUA"). For water customers,the City has projected IEUA rate increases into its own rates based on assumptions of how IEUA intends to charge for service in the future.The City cannot predict whether IEUA, which is a separate entity, will increase its rates over what the City has projected. As such, the City reserves the right to pass through any such increases in future years, only to the extent IEUA increases rates over what the City has projected, and only to the extent that it does not cause your rates to increase by more than 15% as a result of IEUA's cost increases. As for sewer,the City projects its own cost increases, but does not have any information as to whether IEUA intends to increase its charge related to sewer service.

As such, the City similarly reserves the right to pass through any IEUA increases, provided it will not cause your sewer rate to increase by more than 15% in any given year.This ensures the City's utilities remain financially viable,while giving our customers predictability.

The proposed rate adjustments are estimated maximum rates necessary over the course of the next 5 years to meet the City's operational, capital, and reserve requirements. To determine how much money is required, the City retained an independent consultant with vast water and wastewater rate study experience to conduct a comprehensive cost of service analysis and rate study ("Study").

Chapters 4 and 8 provide great detail on how the City's overall revenue requirements are determined, with analyses sourcing publicly available financial documents and information.These proposed rates are maximums, however, and should the City determine in a future year that projections used to support the proposed rates are higher than actual costs,the City may reduce rates in a future year. •
The City understands the requirements of Proposition 218.As such,no water rate revenue will be used to fund anything other than water service,and no wastewater revenue will be used to fund anything 1 UplandCA.gov • (909 931-4100 • City of Upland, 460 N. Euclid Avenue, UpilajA, 40).174yA

4,.4t,
°f' °P41 City of Upland
Cj � 7: d Office oldie City-Clerk
II
Z/Foy
other than wastewater service. In the unlikely event that the City determines it is generating too much revenue from rates,the City wilt reduce rates and apply any excess revenues to reducing rates in the future.

The City encourages you to review additional information about the proposed rate adjustments at httpfLuplandca_govipub c_works/water/water_services.php. The City is confident that the information provided on this site fully address any questions you may have. However,for the reasons stated above, after careful review of your letter, the City does not recommend any changes to the proposed rate adjustments.

Sincerely,
•
Keri Johnson, CMC,CPMC
City Clerk
2 UplandCA.gov • (909) 931-4100 • City of Upland, 460 N. Euclid Avenue, Up 7,:d .

RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

UPLAND, CALIFORNIA ADOPTING WATER, RECYCLED

WATER, AND SEWER SERVICE RATE ADJUSTMENTS,

INCLUDING WHOLESALE PASS-THROUGH CHARGES,

AND MAKING RELATED FINDINGS
WHEREAS, the City of Upland ("City") owns, operates, and maintains municipal potable water distribution, recycled water distribution, and wastewater collection systems providing utility services to residential, commercial, industrial, institutional, governmental, and landscape customers within the City and portions of its sphere of influence; and WHEREAS, utility enterprise operations are funded primarily through rates and service charges which must be sufficient to recover operational costs, capital replacement and rehabilitation needs, regulatory compliance requirements, debt obligations, and prudent reserve levels; and
WHEREAS, pursuant to Article XIII D of the California Constitution ("Proposition 218"), property-related utility fees and charges shall not exceed the proportional cost of service attributable to each parcel and shall be established following applicable noticing and public hearing requirements; and
WHEREAS, the City retained Raftelis Financial Consultants, Inc. ("Raftelis") to prepare comprehensive Water, Recycled Water, and Wastewater Rate Studies evaluating utility financial plans, cost-of-service allocation methodologies, reserve requirements, capital infrastructure investment needs, and long-term fiscal sustainability; and WHEREAS, Raftelis prepared rate studies dated February 9, 2026 recommending five-year schedules of water, recycled water, and wastewater rate adjustments designed to ensure revenue sufficiency for utility operations, maintenance, capital reinvestment, debt obligations, and reserve funding while maintaining compliance with Proposition 218 requirements; and
WHEREAS, the City Council reviewed and considered the staff report dated June 8, 2026, the Raftelis Water, Recycled Water, and Wastewater Rate Study, the administrative record, public testimony, and all other relevant materials; and WHEREAS, the City provided notice and conducted a duly noticed public hearing pursuant to Article XIII D of the California Constitution and applicable law regarding the proposed utility rate adjustments; and
WHEREAS, following conclusion of the public hearing, the City Council considered all written protests and oral testimony and determined that no majority protest existed; and
46708.00204\45054152.1

Resolution No.

WHEREAS, Government Code Sections 53759.1 and 53759.2 establish administrative procedures regarding legal objections to utility rate adjustments and the City has complied with applicable procedural requirements; and WHEREAS, the City receives wholesale imported water, recycled water services, and wastewater treatment services through the Inland Empire Utilities Agency ("IEUA"), and IEUA periodically adopts rates, charges, and fees applicable to member agencies and contracting agencies; and
WHEREAS, certain wholesale costs imposed upon the City by IEUA are outside the City's control and may require pass-through implementation to maintain enterprise fund financial stability; and
WHEREAS, the City Council finds that the adopted utility rates:

A. Do not exceed the proportional cost of providing service; B. Are fair and equitable among customer classifications; C. Are necessary to maintain reliable utility operations; D. Support capital replacement and infrastructure rehabilitation; E. Maintain prudent reserve funding levels;
F. Promote long-term financial sustainability; and
G. Protect public health, safety, and welfare.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY

OF UPLAND AS FOLLOWS
SECTION 1. Recitals. The foregoing recitals are true and correct and incorporated herein by reference.

SECTION 2. Adoption of Water Rates. The City Council hereby adopts potable water rates and charges as set forth in Exhibit A attached hereto and incorporated herein by reference. Water rate adjustments shall become effective July 1 , 2026, with subsequent scheduled adjustments effective January 1, 2027, January 1, 2028, January 1, 2029, and January 1 , 2030.

SECTION 3. Adoption of Recycled Water Rates. The City Council hereby adopts recycled water rates and charges as set forth in Exhibit B attached hereto and incorporated herein by reference. Recycled water rate adjustments shall become effective July 1, 2026, with subsequent scheduled adjustments effective January 1, 2027, January 1, 2028, January 1, 2029, and January 1, 2030.

SECTION 4. Adoption of Sewer Service Rates. The City Council hereby adopts sewer service rates and charges as set forth in Exhibit C attached hereto and incorporated herein by reference. The sewer service fee structure shall consist of:

1. City Local Sewer Service Component.
46708.00204\45054152.1

Resolution No.

2. IEUA Regional Sewer Treatment Pass-Through Component.

Sewer service adjustments shall become effective July 1, 2026, with scheduled adjustments effective January 1, 2027, January 1, 2028, January 1, 2029, and January 1, 2030.

SECTION 5. Wholesale Pass-Through Authorization. The City Council authorizes automatic pass-through implementation of wholesale utility charges imposed upon the City by IEUA any time through and including December 31 , 2030. Pass-throughs shall include;
A. Imported water charges;
B. Meter equivalency fees;
C. Recycled water wholesale charges;
D. Wastewater treatment charges;
E. Regional wastewater disposal charges.

Pass-through implementation shall:

1. Reflect only actual costs imposed upon the City;

2. Require thirty (30) days prior written notice to impacted customers;

3. Not exceed fifteen percent (15%) annually for impacted charges; SECTION 6. Rate Study Incorporation. The Raftelis Water, Recycled Water, and Wastewater Rate Study dated February 9, 2026 is incorporated into the administrative record supporting this Resolution.

SECTION 7. Prior Resolutions. This Resolution supersedes, replaces, and controls over all prior City utility rate resolutions, motions, ordinances, and actions, inconsistent with this Resolution, including prior water, recycled water, sewer service fee, and wholesale pass-through rate schedules.

SECTION 8. Compliance with California Environmental Quality Act. The City Council finds adoption of this Resolution exempt from CEQA pursuant to Public Resources Code Section 21080(b)(8), CEQA Guidelines Section 15273(a), and CEQA Guidelines Sections 15060(c)(2), 15060(c)(3), and 15061(b)(3).

SECTION 9. Severability. If any section, subsection, subdivision, sentence, clause or phrase in this Resolution or any part thereof is for any reason held to be unconstitutional, invalid or ineffective by any court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this Resolution or any part thereof.

The City Council hereby declares that it would have adopted each section irrespective of the fact that any one or more subsections, subdivisions, sentences, clauses or phrases are declared unconstitutional, invalid, or ineffective. 46708.00204\45054152.1

Resolution No.

SECTION 10. Certification. The City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original resolutions.

SECTION 11. Effective Date. This Resolution shall become effective immediately upon adoption unless otherwise specifically stated herein.

PASSED, APPROVED and ADOPTED this 8th day of June, 2026.

Bill Velto, Mayor
I, Keri Johnson, City Clerk of the City of Upland, do hereby certify that the foregoing Resolution was adopted at a regular meeting of the City Council held on the 8th day of June, 2026, by the following vote
AYES:

NOES:

ABSENT:

ABSTAINED:

ATTEST:

Keri Johnson, CMC, City Clerk
46708.00204\45054152.1

3/7
401)74f'S
r
1 M = y
I
i 1
'4111141

CITY OF UPLAND
Water and Wastewater
Rate Study
REPORT / March 16, 2026
oc Up4. .4
I I' I '‘
`= � ' ,;i RAFTEL '

RAFTELIS
March 16, 2026
Mr. Richard Gonzales
Deputy Director of Utilities
City of Upland
460 N. Euclid Avenue
Upland, CA 91786
Subject: Water and Wastewater Financial Plan Study Report Dear Mr. Gonzales:

Raftelis is pleased to provide this Water and Wastewater Rate Study Report(Report) for the City of Upland (City)to develop a financial plan to help the City meet its annual expenses and provide fiscal stability, as well as to establish water and wastewater rates that are equitable and consistent with the cost of providing service.

The major objectives of the study include the following:
• Develop financial plans for the water and wastewater enterprises to ensure financial sufficiency, meet operation and maintenance(O&M)costs, ensure sufficient funding for capital replacement and refurbishment(R&R)needs, and improve the financial health of the enterprises • Recommend sound and sufficient reserve funds
• Review current rate structures for the water and wastewater enterprises • Recommend a five-year schedule of water and wastewater rates consistent with regulatory The report summarizes the key findings and recommendations related to the development of the financial plans for water and wastewater utilities and the development of the updated water and wastewater rates.

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

Sincerely,
2L-4/
ljjj
Sudhir Pardiwala, PE(CA) Nicholas Kennedy
Senior Principal Consultant
611 Wilshire Boulevard,Suite 900,Los Angeles,CA 90017
www.raftelis.com Page 204 of 403

City of Upland/Water and Wastewater Rate Study Report
Contents
1_ Executive Summary 1

1.1. Background 1

1.2. Process 2

1.3. Proposed Water Financial Plan 2

1.4. Proposed Water Rates 4

1.4.1. Drought Rates 5

1.5. Proposed Wastewater Financial Plan 8

1.6. Proposed Wastewater Rates 10

2. Rate Setting Methodology 12
3 '`ey Inputs and Assumptions 14

3.1. Current Water Rates 14

3.2. Current Wastewater Rates 15

3.3. Projected Service Connections 15

3.3.1. Water Connections 15

3.3.2. Wastewater EDU's 15

3.4. Water Use Assumptions 16

3.5. Water and Wastewater Financial Plan Assumptions 16

4. Water Financial Plan 18

4.1. Current Revenue 18

4.1.1. Calculated Water Rate Revenues 18

4.1.2. Other Revenues 19

4.2. Annual Expenses 19

4.2.1. Total Operations and Maintenance Budget 19

4.2.2. Capital Improvement Plan 23

4.2.3. Existing Debt Service 23

4.3. Reserve Targets 23

4.4. Proposed Financial Plan and Revenue Adjustments 24

5. Water Cost-of-Service Analysis 2t3

5.1. Revenue Requirement Determination 28

5.2. Allocation of Functionalized Net Revenue Requirements to Cost Components 29

City of Upland/Water and Wastewater Rate Study Report

5.2.1. Peaking Factors 29

5.2.2. Operating and Capital Allocation 31

5.3. Derivation of Units of Service 32

5.3.1. Equivalent Meters 32

5.3.2. Unit Costs of Service 33
6 r _nosed Water Rates and Charges 35

6.1. Proposed Bi-Monthly Service Charge 35

6.2. Proposed Commodity Rates 35

6.2.1. Base-Delivery Unit Cost 36

6.2.2. Supply Unit Cost 36

6.2.3. Peaking Unit Cost 37

6.2.4. Conservation Component 37

6.2.5. Offset Component 37

6.2.6. Recycled Water Commodity Rates 37

6.2.7. Proposed FY 2026 Commodity Rates 38

6.3. Proposed 5-Year Water Rate Schedule 38

7. Drought Rate:. 40

8. WastPutfater Financial Plan 44

8.1. Current Rate Revenue 44

8.1.1. Calculated Wastewater Rate Revenues 44

8.1.2. Other Revenues 44

8.2. Annual Expenses — Wastewater 44

8.2.1. Total Operations and Maintenance Budget 45

8.2.2. Capital Improvement Plan 45

8.2.3. Existing and Proposed Debt Service 45

8.3. Reserve Targets 45

8.4. Proposed Financial Plan and Revenue Adjustments 46 J■ Virc■." rrcm wok.■ yr,'DZLVI-va.■ r■GG /411aIy�1� JV

9.1. Revenue Requirement Determination 50

9.2. Operating and Capital Cost Allocation 51

9.3. Derivation of Units of Service 51

9.3.1. Unit Costs of Service 51

City of Upland/Water and Wastewater Rate Study Report

10. Wastewater Rates 53

10.1.Wastewater Test Year Rate Derivation 53

10.2.Proposed Five-Year Wastewater Rate Schedule 53

11. Customer Impact Analysis & Neighboring Agency
Comparison 54

11.1.Customer Bill Impacts 54

11.1.1. Water 54

11.1.2. Wastewater 55

11.2.Neighboring Agency Comparison 56

11.2.1. Water 56

11.2.2. Wastewater 57

City of Upland/Water and Wastewater Rate Study Report
Tables
Table 1-1: Proposed Water Revenue Adjustments 3 Table 1-2: Proposed Five-Year Water Rate Schedule, Bi-Monthly Service Charge 5 Table 1-3: Proposed Five-Year Water Rate Schedule, Volumetric ($/hcf) 5 Table 1-4: Proposed Drought Surcharges 6 Table 1-5: Proposed Wastewater Revenue Adjustments 9 Table 1-6: Proposed Five-Year Wastewater Rate Schedule 11 Table 3-1: Current Water Rate Structure 14 Table 3-2: Current Wastewater Rate Structure 15 Table 3-3: Projected Number of Water Meters 15 Table 3-4: Projected Wastewater Dwelling Units 15 Table 3-5: Water Use Assumptions 16
Table 3-6: Expense Inflation Factors 16
Table 3-7: Water Purchase Inflation Factors 17 Table 4-1: Projected Fixed Charge Revenues Under Current Rates 18 Table 4-2: Projected Commodity Revenue Under Current Rates 19 Table 4-3: Projected Other Water Enterprise Revenues (Status Quo) 19 Table 4-4: Summary of Projected Potable Purchased Water Cost Expenses 21 Table 4-5: Summary of Projected Recycled Purchased Water Cost Expenses 22 Table 4-6: Water Operations and Maintenance Expenses Projection 22 Table 4-7: Projected Capital Improvement Projects 23 Table 4-8: Existing Water Debt Service 23
Table 4-9: Proposed Water Revenue Adjustments 24 Table 4-10: Water Financial Plan 25
Table 5-1: Revenue Requirement Determination, FY 2026 29 Table 5-2: Water System Peaking Factors 30 Table 5-3: Allocation of Net Operation & Maintenance to Cost Components 31 Table 5-4: Allocation of Asset Value to Cost Components 32 Table 5-5: Adjusted Cost of Service 32
Table 5-6: Equivalent Meters 32
Table 5-7: Calculation of Class Specific Peaking Factors 33 Table 5-8: Units of Service 34
Table 5-9: Reallocation of Peaking Costs 34 Table 5-10: Calculation of Unit Costs 34
Table 6-1: Bi-Monthly Service Charge Derivation 35

City of Upland/Water and Wastewater Rate Study Report
Table 6-2: Potable Water Supply Cost 36
Table 6-3: Supply Component Calculation 36 Table 6-4: Peaking Unit Cost Calculation 37 Table 6-5: Derivation of Recycled Water Commodity Rates 38 Table 6-6: Derivation of FY 2026 Commodity Rates ($/hcf) 38 Table 6-7: Proposed 5-year Service Charge Rate Schedule, ($/Bi-Monthly) 39 Table 6-8: Proposed 5-year Commodity Rate Schedule, ($/hcf) 39 Table 7-1: Projected Water Demand by Usage Reduction 40 Table 7-2: Percentage Reduction by Water Source 40 Table 7-3: Estimated Cost Savings by Usage Reduction 41 Table 7-4: Drought Rates by Usage Reduction 41 Table 7-5: Proposed Drought Surcharges 42 Table 8-1: Projected Rate Revenues Under Current Wastewater Rates 44 Table 8-2: Projected Other Wastewater Enterprise Revenues, Status Quo 44 Table 8-3: Summary of Projected Wastewater Operations and Maintenance Expenses 45 Table 8-4: Projected Wastewater Capital Improvement Projects 45 Table 8-5: Proposed Wastewater Revenue Adjustments 46 Table 8-6: Wastewater Cashflow 47
Table 9-1: Wastewater Revenue Requirement 50 Table 9-2: Wastewater Percentage Allocations 51 Table 9-3: Wastewater O&M Cost Allocation 51
Table 9-4: Wastewater Capital Asset Allocation 51 Table 9-5: Units of Service, FY 2027 52
Table 10-1: Sewer Services Charge ($/EDU) 53
Table 10-2: Proposed 5-Year Wastewater Rate Schedule 53 Figures
Figure 1-1: Proposed Water Financial Plan 3 Figure 1-2: Proposed Water Financial Plan — Projected Ending Balances 4 Figure 1-3: Water Capital Financing Plan 4 Figure 1-4: Single-Family Residential Bi-Monthly Bill Impacts, FY 2026 7 Figure 1-5: Multi-Family Residential Bi-Monthly Bill Impacts, FY 2026 8 Figure 1-6: Non-Residential Bi-Monthly Bill Impacts, FY 2026 8 Figure 1-7: Proposed Wastewater Financial Plan 9

City of Upland/Water and Wastewater Rate Study Report
Figure 1-8: Projected Wastewater Fund Ending Balance 10 Figure 1-9: Wastewater Capital Financing Plan 10 Figure 1-10: Wastewater EDU Bill Impact 11 Figure 4-1: Proposed Water Financial Plan 26 Figure 4-2: Projected Water Ending Fund Balance 26 Figure 4-3: Projected Water Capital Plan 27 Figure 8-1: Proposed Wastewater Financial Plan 48 Figure 8-2: Projected Wastewater Capital Plan and Funding Sources 48 Figure 8-3: Projected Wastewater Fund Ending Balance 49 Figure 11-1: Single-Family Residential Bi-Monthly Bill Impact 54 Figure 11-2: Multi-Family Residential Bi-Monthly Bill Impact 55 Figure 11-3: Non-Residential Bi-Monthly Bill Impact 55 Figure 11-4: Wastewater Monthly EDU Charge Bill Impact 56 Figure 11-5: Neighboring Water Comparison, Single-Family 56 Figure 11-6: Neighboring Wastewater Comparison, Single-Family 57

City of Upland/Water and Wastewater Rate Study Report

THIS PAGE INTENTIONALLY LEFT BLANK

City of Upland/Water and Wastewater Rate Study Report 7 1 . Executive Summary
1 .1 . Background
In 2024, the City of Upland(City)engaged Raftelis to conduct a Water and Wastewater Rate Study(Study) to develop ten-year financial plans, conduct cost-of-service analyses, and develop five-year schedules for the water and wastewater utilities that are equitable and in compliance with Proposition 218.

This executive summary describes the rate study process, methodology, and recommendations for the City's water and wastewater rates. The City wishes to establish fair and equitable rates that:
• Meet the City's water and wastewater enterprise fiscal needs for operation and maintenance costs, capital replacement and refurbishment (R&R) costs, reserve goals, and ensure the financial health of each enterprise, and
• Prepare a five-year schedule of water and wastewater rates consistent with the cost of providing service.

The City occupies approximately 15 square miles and is located in the western end of San Bernardino County. It is bordered by the cities of Montclair and Claremont on the west, Ontario to the south, Rancho Cucamonga to the east, and the unincorporated areas of San Antonio Heights to the north. As of 2024, the City had a population of approximately 79,600.

The City's water enterprise serves the City of Upland. The City has access to local and imported water supply resources. Locally, the City has adjudicated groundwater water rights in the Chino, Cucamonga, and Six Basins. These adjudicated groundwater basins are actively managed and overseen by a designated Watermaster in accordance with their respective court decrees. The City water interests are a result of either a direct water right or indirectly through its shareholder interest(entitlement)in two private mutual water companies. The City has a stake in West End Consolidated Water Company(WECWC). The water received from WECWC is local groundwater. The City has a shareholder interest in San Antonio Water Company (SAWCo). Both local groundwater and surface water from San Antonio Canyon is provided by SAWCo. San Antonio Canyon surface water supply is subject to availability and is closely tied to rain and snowpack. This local surface water is treated at the City's San Antonio Water Treatment Plant. In addition to the local surface and groundwater supplies, the City invested in and acquired an interest in an 81 million gallons per day(mgd) imported water treatment plant, the Water Facilities Authority(WFA-JPA). The WFA water treatment plant receives Northern California State Project imported water from Metropolitan Water District of Southern California(MWD)through Inland Empire Utilities Agency(IEUA), an MWD member agency.

In 2013, IEUA completed regional pipeline facilities and began delivering recycled water. Recycled water is predominantly available in the southeastern sector of the City and is mostly used for large landscape irrigation areas, such as the Upland Hill Country Club Golf Course, City parks, several school grounds, and the Euclid Avenue median.

The sewer system is a gravity flow system consisting of approximately 210 miles of pipe ranging from 3 inches to 21 inches in diameter. The City provides sewer service to most businesses and residents within the City, as well as the unincorporated areas(San Antonio Heights)within the City's sphere of influence. Collected sewage is conveyed to the IEUA regional wastewater reclamation facilities for treatment and disposal of the effluent, sludge, and residual solids.

City of Upland/Water and Wastewater Rate Study Report 2 Several areas in the southwest quadrant of the City cannot be served by gravity flow through the City's system to the regional trunk sewer. The sewer mains in these areas are connected to the sewer systems of Montclair and Claremont. The City is responsible for operations and maintenance(O&M)of the system within its boundaries. In addition, the City pays a fee to the adjoining City or agency for the conveyance of City flows from these areas to the regional plants owned and operated by IEUA(for flows through the Montclair system) or Los Angeles County Sanitation District(LACSD)21 (for flows through the Claremont system)for treatment.
1 .2. Process
Raftelis developed water and wastewater financial plans for the City. The financial plans consider the total revenue adjustments needed to meet capital investment, operational expenses, debt service, and reserve policies during the five-year rate setting period. After developing the financial plans, Raftelis performed cost- of-service analyses to determine the water and wastewater rates based on the financial plans.

The current water rate consists of a bi-monthly service charge, a tiered volumetric rate for single-family customers, and uniform rates for multi-family residential, landscape, commercial, school, government, and recycled water customer classes. The bi-monthly service charge is designed to primarily collect costs that are relatively fixed, including such things as billing and customer service costs, meter reading, and meter maintenance. The volumetric rate recovers the remaining costs. Raftelis is not recommending any changes to the current rate structure.

The current wastewater rate structure consists of a City local sewer services charge per equivalent dwelling unit(EDU), and an Inland Empire Utilities Agency(IEUA) Sewer Treatment charge per EDU. For this rate study, Raftelis is making rate recommendations only for the City charge. 1 .3. Proposed Water Financial Plan
This section of the report details the water enterprise's long-term financial plan,based on the projected revenues, expenses, debt service, and capital project costs. With assistance from City staff, Raftelis modeled the financial plan without revenue adjustments(status quo)and with proposed revenue adjustments to ensure the financial sustainability of the water utility. Raftelis projects that with no rate increases over the study period(FY 2026-FY 2034), the City will fall below the minimum reserve targets beginning in FY 2029. The City would also fail to meet its debt service requirements beginning in FY 2028. Raftelis worked with City staff to develop proposed revenue adjustments over the five-year-rate-setting period(Table 1-1). The proposed water revenue adjustments were selected to ensure the water operating fund has sufficient funds to cover annual expenses and to ensure reserve target levels are met. The first rate adjustment effective June 1, 2026, is the result of the cost of service with a 5%revenue adjustment,because these rates are calculated through the cost of service analysis, the bill impact will not equal 5%for all customers. All future year revenue adjustments and rates increase by the 5%shown below. Reserve targets are discussed in detail in Section 4.3.

The proposed revenue adjustments for five years are shown in Table 1-1.

City of Upland/Water and Wastewater Rate Study Report 3 Table 1-1: Proposed Water Revenue Adjustments
Effective Date Adjustment
June 1, 2026 5.0%
January 1, 2027 5.0%
January 1, 2028 5.0%
January 1, 2029 5.0%
January 1, 2030 5.0%
Figure 1-1 shows the proposed five-year water enterprise financial plan. Status quo revenue is shown by the solid line. Projected revenue is shown by the dashed line. Annual expenditures are shown by the columns.

The green bars above the X-axis show the net cash used to build up the reserves and the green bars below the X-axis show reserves being spent to fund costs. Revenue from current rates is not enough to cover annual operating and maintenance costs or capital expenditures. Therefore, revenue adjustments are required to generate sufficient revenue to cover these costs over the study period.

Figure 1-1: Proposed Water Financial Plan
N $50 Financial Plan
$30
Pi
$20
$10
$0
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 -$10
Water Purchases O&M Expenses Mi Debt Service
Capital Projects Reserve Funding Current Revenues ——— Proposed Revenues
Figure 1-2 shows projected ending fund balances over the study period relative to the City's reserve targets.

Maximum and minimum targets are shown. The minimum targets are met in all years of the rate-setting period.

City of Upland/Water and Wastewater Rate Study Report 4 Figure 1-2: Proposed Water Financial Plan — Projected Ending Balances Fund Balances
$80
0 $70
2 $60 $5 . $5r7
$50 $47.1
542.2
$37.7
$40
$30
$20
$10
$0
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Ending Balance Reserve Target-Min Reserve Target-Max Figure 1-3 shows the proposed capital financing plan over the rate-setting period. The proposed financial plan assumes that capital projects will be funded through a combination of water rate revenues, cash reserves, and existing bond proceeds.

Figure 1-3: Water Capital Financing Plan
Capital Financing Plan
$10 $9.5
0 $8 6 $ $9.0
$9 85
$8.0
$8
$7
$6
$5
$4
$3
$2
$1
$0
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 r Rate Funded •Debt Funded
1 .4. Proposed Water Rates
Table 1-2 shows the proposed five-year water rate schedule through FY 2030 for the bi-monthly service charge for potable and recycled water. Proposed FY 2026 rates are designed to collect about 5 percent more rate revenue than current FY 2025 rates. Proposed rates beginning in FY 2027 are calculated by increasing the prior year's proposed rates by the proposed annual revenue adjustments. All numbers are rounded up to the nearest cent to ensure adequate revenue recovery. Therefore, any manual bill calculations may not match the

City of Upland/Water and Wastewater Rate Study Report 5 precise results shown in the report. The service charges include the Meter Equivalent Unit(MEU) charge imposed by IEUA. Since those charges are not known for future years, any increases in those charges beyond the assumptions used in the rate study will be passed through to customers.

Table 1-2: Proposed Five-Year Water Rate Schedule, Bi-Monthly Service Charge Current FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Effective Date June 1,2026 January 1,2027 January 1,2028 January 1,2029 January 1,2030 Revenue Adjustment 5.0% 5.0% 5.0% 5.0% 5.0% Bi-Monthly Fixed Charge
Meter Size
5/8" $65.26 $67.36 $70.73 $74.27 $77.99 $81.89 3/4" $82.68 $84.92 $89.17 $93.63 $98.32 $103.24 1" $117.52 $120.03 $126.04 $132.35 $138.97 $145.92 11/2" $204.72 $207.82 $218.22 $229.14 $240.60 $252.63 2" $309.35 $313.16 $328.82 $345.27 $362.54 $380.67 3" $588.33 $646.74 $679.08 $713.04 $748.70 $786.14 4" $902.15 $1,138.32 $1,195.24 $1,255.01 $1,317.77 $1,383.66 6" $1,773.93 $2,314.63 $2,430.37 $2,551.89 $2,679.49 $2,813.47 8" $2,820.12 $4,948.14 $5,195.55 $5,455.33 $5,728.10 $6,014.51 Table 1-3 shows the proposed water volumetric rates. Single-family residential rates are tiered, and all other classes receive uniform rates. The cost of service analysis resulted in the Government customer class rate for FY 2026 decreasing based on their peaking factors. This rate only applies to City Government customers. The City is opting not to decrease it and retain its current rate for FY 2026. Future years increase by the 5% revenue adjustments.Any increases in potable and recycled water purchase costs from IEUA beyond the assumptions used in the study will be passed through to customers. fable 1-3: Proposed Five-Year Water Rate Schedule, Volumetric ($/hcf) Current FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Effective Date June 1, 2026 January 1, 2027 January 1, 2028 January 1, 2029 January 1,2030 Revenue Adjustment 5.0% 5.0% 5.0% 5.0% 5.0% Single Family
Tier 1 $2.33 $2.40 $2.52 $2.65 $2.79 $2.93 Tier 2 $3.08 $3.21 $3.38 $3.55 $3.73 $3.92 Tier 3 $3.68 $3.73 $3.92 $4.12 $4.33 $4.55 Multi Family $2.87 $3.17 $3.33 $3.50 $3.68 $3.87 Landscape $3.17 $3.34 $3.51 $3.69 $3.88 $4.08 Commercial $2.76 $3.16 $3.32 $3.49 $3.67 $3.86 Schools $3.38 $3.29 $3.46 $3.64 $3.83 $4.03 Government $3.47 $3.47 $3.65 $3.84 $4.04 $4.25 Recycled Water $2.54 $2.64 $2.78 $2.92 $3.07 $3.23

1.4.1. Drought Rates
In times of drought or emergency water shortage, the City Council may declare mandatory water use restrictions. During times of mandatory water use restrictions, surcharges for consumption over the prescribed allocation may be imposed, as shown below to cover costs from reduced sales:

City of Upland/Water and Wastewater Rate Study Report 6 Table 1-4: Proposed Drought Surcharges
Customer Class FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Revenue Adjustments 5% 5% 5% 5%
0-10%Reduction
Single Family
Tier 1 $0.08 $0.08 $0.09 $0.09 $0.10
Tier 2 $0.10 $0.11 $0.11 $0.12 $0.12
Tier 3 $0.11 $0.12 $0.12 $0.13 $0.13
Multi Family $0.10 $0.11 $0.11 $0.12 $0.12
Landscape $0.10 $0.11 $0.11 $0.12 $0.12
Commercial $0.10 $0.11 $0.11 $0.12 $0.12
Schools $0.10 $0.11 $0.11 $0.12 $0.12
Government $0.11 $0.12 $0.12 $0.13 $0.13
10-20%Reduction
Single Family
Tier 1 $0.24 $0.25 $0.26 $0.28 $0.29
Tier 2 $0.32 $0.34 $0.35 $0.37 $0.39
Tier 3 $0.37 $0.39 $0.41 $0.43 $0.45
Multi Family $0.31 $0.33 $0.34 $0.36 $0.38
Landscape $0.33 $0.35 $0.36 $0.38 $0.40
Commercial $0.31 $0.33 $0.34 $0.36 $0.38
Schools $0.33 $0.35 $0.36 $0.38 $0.40
Government $0.34 $0.36 $0.37 $0.39 $0.41
20-30%Reduction
Single Family
Tier 1 $0.53 $0.56 $0.58 $0.61 $0.64
Tier 2 $0.71 $0.75 $0.78 $0.82 $0.86
Tier 3 $0.82 $0.86 $0.90 $0.95 $1.00
Multi Family $0.70 $0.74 $0.77 $0.81 $0.85
Landscape $0.74 $0.78 $0.82 $0.86 $0.90
Commercial $0.70 $0.74 $0.77 $0.81 $0.85
Schools $0.73 $0.77 $0.80 $0.85 $0.89
Government $0.76 $0.80 $0.84 $0.88 $0.92
30-40%Reduction
Single Family
Tier 1 $0.86 $0.90 $0.95 $1.00 $1.05
Tier 2 $1.15 $1.21 $1.27 $1.33 $1.40
Tier 3 $1.33 $1.40 $1.47 $1.54 $1.62
Multi Family $1.13 $1.19 $1.25 $1.31 $1.37
Landscape $1.19 $1.25 $1.31 $1.38 $1.45
Commercial $1.13 $1.19 $1.25 $1.31 $1.37
Schools $1.18 $1.24 $1.30 $1.37 $1.43
Government $1.24 $1.30 $1.37 $1.44 $1.51

City of Upland/Water and Wastewater Rate Study Report 7 Customer Class FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 40-50%Reduction
Single Family
Tier 1 $1.31 $1.38 $1.44 $1.52 $1.59
Tier 2 $1.75 $1.84 $1.93 $2.03 $2.13
Tier 3 $2.04 $2.14 $2.25 $2.36 $2.48
Multi Family $1.73 $1.82 $1.91 $2.00 $2.10
Landscape $1.82 $1.91 $2.01 $2.11 $2.21
Commercial $1.73 $1.82 $1.91 $2.00 $2.10
Schools $1.80 $1.89 $1.98 $2.08 $2.19
Government $1.89 $1.98 $2.08 $2.19 $2.30
Figure 1-4 shows a comparison of a 5/8" meter single-family bill at different usage levels under the proposed FY 2026 rates and current FY 2026 rates.

Figure 1-4: Single-Family Residential Bi-Monthly Bill Impacts, FY 2026 Single Family Bi-Monthly Bill Impacts, 5/8" meter
$350
$300
$250
$200
$150
0 II II II
$ Very Low Use Low Use Median Use Average Use High Use Very High Use ■Current $83.90 $102.54 $111.86 $161.14 $195.02 $277.86 ■Proposed $86.56 $105.76 $115.36 $166.72 $202.03 $286.26 Usage(hcf) 8 16 20 36 47 70 Difference($) $2.66 $3.22 $3.50 $5.58 $7.01 $8.40 Difference(%) 3.2% 3.1% 3.1% 3.5% 3.6% 3.0% Figure 1-5 shows a comparison of a 5/8" meter with 3 dwelling units, multi-family bill at different usage levels under the proposed FY 2026 and current FY 2026 rates.

City of Upland/Water and Wastewater Rate Study Report 8 Figure 1-5: Multi-Family Residential Bi-Monthly Bill Impacts, FY 2026 Multi Family (3 Dwelling Units) Bi-Monthly Bill Impacts 5/8" Meter
$450
$400
$350
$300
$250
$200
$150
00 i II II II II II
$0 Very Low Use Low Use Median Use Average Use High Use Very High Use ■Current $119.52 $151.09 $208.49 $182.66 $277.37 $372.08 ■Proposed $127.02 $161.89 $225.29 $196.76 $301.37 $405.98 Usage(hcf) 18 29 49 40 73 106 Difference($) $7.50 $10.80 $16.80 $14.10 $24.00 $33.90 Difference(%) 6.3% 7.1% 8.1% 7.7% 8.7% 9.1% Figure 1-6 shows a comparison of average non-residential customer bills for each customer class under the proposed FY 2026 rates and current FY 2026 rates.

Figure 1-6: Non-Residential Bi-Monthly Bill Impacts, FY 2026 Average Bi-Monthly Bill Impacts by Customer Class
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
ssoo . I
I
I
$0 2'' 2'' 3" 2" 2"
Landscape Commercial Schools Government Recycled Water ■Current Bi-Monthly Bill $1,146 23 $607.43 $2,626.47 $857.61 $2,762.99 ■Proposed Bi-Monthly Bill $1,194 92 $654.44 $2,630.61 $861.42 $2,864.63 Usage(hcf) 264 108 603 158 966
Difference($) $48.69 $47.01 $4.14 $3.81 $101.64 Difference(%) 4.25% 7.74% 0.16% 0.44% 3.68% 1 .5. Proposed Wastewater Financial Plan
Raftelis modeled a status quo financial plan to evaluate whether current wastewater rates can adequately fund the City's collection system expenses over the study period(FY 2026-FY 2034). Using City-provided revenues, operating and maintenance expenses, debt service, and capital expenditures, Raftelis determined that, with no rate increases over the study period, the City will fail to meet its reserve targets in FY 2033 and

City of Upland/Water and Wastewater Rate Study Report 9 fully deplete its reserves by FY 2034. Under current rates, the City cannot fully fund its operating expenses, underscoring the need for revenue adjustments now to mitigate larger adjustments in the future and to ensure long-term sustainability for the wastewater enterprise.

Table 1-5 shows the proposed revenue adjustments for the wastewater enterprise.

Table 1-5: Proposed Wastewater Revenue Adjustments
Effective Date Adjustment
July 1, 2026 4.0%
January 1, 2027 4.0%
January 1, 2028 4.0%
January 1, 2029 4.0%
January 1, 2030 4.0%
Figure 1-7 shows the proposed five-year wastewater enterprise financial plan graphically. Status quo revenue is shown by the solid line. Projected revenue is shown by the dashed line. Annual expenditures are shown by the columns. The green bars below the X-axis show reserves are drawn down year to year to fund capital costs. Revenue from current rates is not enough to cover annual operating and maintenance costs and capital expenditures. Therefore, revenue adjustments are required to generate sufficient revenue to cover these costs over the study period.

Figure 1-7: Proposed Wastewater Financial Plan
Financial Plan
N $8
0 3 $6 -
$4
$2
$0
-$2
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 O&M Expenses Rate Funded Capital Projects
t Reserve Funding Current Revenues
——— Proposed Revenues
Figure 1-8 shows projected ending fund balances over the study period relative to the City's reserve targets.

Maximum and minimum targets are shown. The minimum targets are met in all years, and the maximum target is met in all years except for FY 2032—FY 2034, as reserves are drawn down to pay for necessary capital improvement projects. While the reserves exceed the maximum targets, it is still necessary to have small rate increases to ensure that the rate revenue will cover the operating expenses.

City of Upland/Water and Wastewater Rate Study Report 10 Figure 1-8: Projected Wastewater Fund Ending Balance
Fund Balances
, $16
Le
o $14 $13.4 $12.7
$12.0 $11.2
$12 $10.4
$10
$8
$6
$4
$2
$0 b_
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Ending Balance -Reserve Target-Min -Reserve Target-Max Figure 1-9 shows the proposed capital financing plan over the rate-setting period for the wastewater utility.

The proposed financial plan assumes that all capital projects will be funded through rate revenue, with no plans to issue debt.

Figure 1-9: Wastewater Capital Financing Plan
Capital Financing Plan
$0.9 - $0.9
a
0 $0.8

0.8 $0.8Pill
$0.8

50.8 $0.7
$0.6 _J
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 • Rate Funded
1 .6. Proposed Wastewater Rates
Table 1-6 shows the proposed five-year schedule of wastewater rates. Rates for FY 2026 reflect the cost-of- service analysis. Rates for all future years are equal to the prior year rates multiplied by the revenue adjustment. All numbers are rounded up to the nearest cent to ensure adequate revenue recovery. This rate study only proposes changes to the City Local Sewer Services Charge. San Antonio Heights customers are charged a rate 1.5 times the EDU rate based on an agreement between the City and San Antonio Heights.

IEUA also imposes a per-EDU wastewater charge on the City, which the City passes through directly to its customers. The table below shows the City's rate for FY 27 through FY 2030 and IEUA rates for the current

City of Upland/Water and Wastewater Rate Study Report 11 fiscal year and FY 27. Subsequent year IEUA rates will be passed through to customers when IEUA updates them. The IEUA FY 2027 charge is effective July 1, 2026. Any increases in IEUA treatment costs will be passed through to customers in July each year as shown below.

Table 1-6: Proposed Five-Year Wastewater Rate Schedule
$/EDU Wastewater Charge Current FY 2027 FY 2027 FY 2028 FY 2029 FY 2030 Effective Date July 1,2026 January 1,2027 January 1,2028 January 1,2029 January 1,2030 Revenue Adjustment 4.0% 4.0% 4.0% 4.0% 4.0% City Local Sewer Services Charges $11.29 $11.98 $12.46 $12.96 $13.48 $14.02 Effective Date July 1,2026 January 1,2027 July 1,2027 July 1,2028 July 1,2029 IEUA Sewer Treatment Component(Pass-Through Rate)* $25.78 $29.45 $29.45 Pass-through Pass-through Pass-through *The City currently collects$25.78 per EDU for IEUA wastewater treatment services,although IEUA's current rate is$27.02 per EDU.

It should be noted that the current EDU for multi-family customers is 0.7 per dwelling unit. Based on the actual housing density(number of people per household), the EDU for multi-family will be 0.89 EDU.

Figure 1-10 shows a bill comparison for current and FY 2027 proposed rates, effective July 1, 2026, for a wastewater EDU.

Figure 1-10: Wastewater EDU Bill Impact
Bill Impacts Wastewater
$12.20
$12.00 $11.98
$11.80
$11.60
$11.40 $11.29
$11.20
$11.00
$10.80
City Local Sewer Services Component($/EDU)
•Current •Jul-26

City of Upland/Water and Wastewater Rate Study Report 12

2. Rate Setting Methodology
This study was conducted using industry-standard principles outlined by the American Water Works Association (AWWA) in the publication, Manual of Water Supply Practice M1, Principles of Water Rates, Fees, and Charges and in the Water Environment Federation (WEF)publication, Manual of Practice No. 27, Financing and Charges for Wastewater Systems. The process and approach Raftelis utilized in the study to determine water and wastewater rates is informed of the legal requirements in California(namely, Proposition 218). Additionally, Raftelis considered City's policy objectives and the current water and wastewater systems and rates insofar as such considerations are consistent with Proposition 218. The resulting financial plans, cost of service analyses, and rate design process follow five key steps, outlined below, to determine proposed rates that fulfill the City's objectives, meet industry standards, and align with relevant regulations.

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

2. Financial Plan-Revenue Requirement Determination: After completing the financial plan, the rate- making process begins by determining the revenue requirement for the test year,also known as the rate- setting year. The test year for this study is FY 2026. The revenue requirement should sufficiently fund the City's operating costs, annual debt service(including coverage requirements), capital expenditures, and reserve funding as projected based on the annual budget estimates.

3. Cost-of-Service Analysis: The annual cost of providing water/wastewater service, or the revenue requirement, is then distributed to customer classes commensurate with their use of and burden on the water/wastewater system. A cost-of-service analysis involves the following steps:
a. Functionalize costs—The different components of the revenue requirement are categorized into functions such as supply, transmission/collection, storage, customer service for water, and collection and customer service for wastewater.
b. Allocate to cost causation components — the functionalized costs are then allocated to cost causation components such as supply,base delivery,peaking, etc. for water and collection, and customer service for wastewater.
c. Develop unit costs—unit costs for each cost causation component are determined using units of service, such as total use,peaking units, equivalent meters, number of customers, etc., for each component.
d. Distribute cost components —the cost components are allocated to each customer class using the unit costs in proportion to their units of service(demand and burden on the system).

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

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

City of Upland/Water and Wastewater Rate Study Report 13

4. Rate Design: After allocating the revenue requirement to each customer class, the project team designs and calculates rates. Rates do more than simply recover costs;within the legal framework and industry standards,properly designed rates should support the City's policy objectives.Rates also act as a public information tool in communicating these policy objectives to customers. This process also includes a rate impact analysis and sample customer bill impacts.

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

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

City of Upland/Water and Wastewater Rate Study Report 14

3. Key Inputs and Assumptions
The key assumptions outlined in this section of the report represent the global assumptions utilized in the Study to project the number of customer accounts, revenues, and expenses for future years. City staff provided data on customer accounts, usage, and actual revenues and expenses for FY 2024—FY 2025 and budgeted revenues and expenses for FY 2026. The remaining years of the study were projected based on this information and the key assumptions shown in this section.

3.1 . Current Water Rates
Table 3-1 shows the current water rate schedule. Water customers are currently charged a bi-monthly fixed charge and a commodity rate per hundred cubic feet(hcf) of water delivered. Fixed service charges vary based on meter size. Commodity rates vary by customer class. Single-family residential customers are charged based on a tiered rate structure, and all other classes have a uniform rate. Recycled water customers are charged the same fixed charge by meter size as potable water customers but have a class-specific uniform volumetric rate.

Table 3-1: Current Water Rate Structure
Bi-Monthly Fixed Charge
Meter Size $/bi-mo
5/8" $65.26
3/4" $82.68
1" $117.52
1 1/2" $204.72
2" $309.35
3" $588.33
4" $902.15
6" $1,773.93
8" $2,820.12
Commodity Charge($/hcf)
Customer Class
Single Family
Tier 1 $2.33
Tier 2 $3.08
Tier 3 $3.68
Multi Family $2.87
Landscape $3.17
Commercial $2.76
Schools $3.38
Government $3.47
Recycled Water $2.54

City of Upland/Water and Wastewater Rate Study Report 15

3.2. Current Wastewater Rates
Table 3-2 shows the current wastewater rate schedule implemented in November 2024. All customer accounts are charged a fixed charge per EDU.

Table 3-2: Current Wastewater Rate Structure
Service Charges (Monthly$/EDU)
City Local Sewer Services Charges $11.29
IEUA Sewer Treatment Component(Pass-Through Rate)* $25.78 *The City currently collects$25.78 per EDU for IEUA wastewater treatment services, although IEUA's adopted rate is$27.02 per EDU.

3.3. Projected Service Connections

3.3.1. Water Connections
Table 3-3 shows the actual number of potable water accounts by meter size for FY 2025 and the projected number of accounts through the study period. Raftelis is assuming zero growth in customer accounts over the study period, as shown in the table. The zero growth in customer accounts is based on recent trends in the City, and future expectations provided by City staff. The number of accounts shown is used to forecast the amount of fixed revenue the City will receive from the bi-monthly service charge.

Table 3-3: Projected Number of Water Meters
Meter Size FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 5/8" 15,197 15,197 15,197 15,197 15,197 15,197 3/4" 810 810 810 810 810 810
1" 2,475 2,475 2,475 2,475 2,475 2,475 1 1/2" 545 545 545 545 545 545
2" 792 792 792 792 792 792
3" 65 65 65 65 65 65
4" 44 44 44 44 44 44
6" 10 10 10 10 10 10
8" 2 2 2 2 2 2
Total 19,940 19,940 19,940 19,940 19,940 19,940

3.3.2. Wastewater EDU's
Table 3-4 shows the current and projected wastewater dwelling units. The City provided Raftelis with the number of dwelling units for FY 2025. Raftelis is assuming no growth throughout the study period as shown below. The zero growth is based on recent trends and future expectations provided by City staff. The increase in EDUs in FY 2027 results from redefining the multi-family(MFR)EDU based on the residential density per household, which causes the MFR EDU to increase from 0.7 to 0.89.

Table 3-4: Projected Wastewater Dwelling Units
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Number of EDUs 29,931 32,321 32,321 32,321 32,321

City of Upland/Water and Wastewater Rate Study Report 16

3.4. Water Use Assumptions
Water use has a significant impact on the water utility both in terms of costs and revenues. It is therefore important to use a normal year to project water use with the understanding that rate revenues will change depending on wet or dry years and the resulting revenue fluctuations will be accommodated by the rate stabilization reserve. The water use assumptions project actual FY 2025 water use, which was a normal year, and assume customer classes will continue to use water similarly. As shown in Table 3-5, there is no increased water demand in the study period.

Table 3-5: Water Use Assumptions
Customer Class FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Single Family 3,786,229 3,786,229 3,786,229 3,786,229 3,786,229 3,786,229 Tier 1 1,768,123 1,768,123 1,768,123 1,768,123 1,768,123 1,768,123 Tier 2 1,278,101 1,278,101 1,278,101 1,278,101 1,278,101 1,278,101 Tier 3 740,005 740,005 740,005 740,005 740,005 740,005 Multi Family 1,201,826 1,201,826 1,201,826 1,201,826 1,201,826 1,201,826 Landscape 1,101,882 1,101,882 1,101,882 1,101,882 1,101,882 1,101,882 Commercial 784,815 784,815 784,815 784,815 784,815 784,815 School 112,615 112,615 112,615 112,615 112,615 112,615 Government 120,755 120,755 120,755 120,755 120,755 120,755 Condominiums 102,339 102,339 102,339 102,339 102,339 102,339 Total Potable Usage(hcf) 7,210,461 7,210,461 7,210,461 7,210,461 7,210,461 7,210,461 Recycled Water Usage(hcf) 267,548 267,548 267,548 267,548 267,548 267,548

3.5. Water and Wastewater Financial Plan Assumptions Table 3-6 shows the expense inflation factors which are used to project future operating and capital project expenses for the study period. These factors were determined with input from City staff based on historical and projected cost increases, and reference industry standard escalations under current market conditions.

The inflation factors shown were applied in each year of the study period to project expenses in FY 2027 and beyond.

Table 3-6: Expense Inflation Factors
FY 2027 FY 2028 FY 2029 FY 2030
General 3.0% 3.0% 3.0% 3.0%
Personnel 3.5% 3.5% 3.5% 3.5%
Benefits 5.0% 5.0% 5.0% 5.0%
Capital 4.0% 4.0% 4.0% 4.0%
Power 7.0% 7.0% 7.0% 7.0%
Table 3-7 shows inflation factors for water purchase rates, which are used to project rates for wholesale water costs in Table 4-4 and Table 4-5, when future rates were not available. All inflation projections are based on historical rate increases from the different agencies where the data was available, with the exception of WFA rates. The inflation factors shown for WFA are based on projected rate increases for Metropolitan MWD.

WECWC, Six Basin, and Chino Basin are being inflated by a general inflation factor of 7%based on historical industry standard escalations.

City of Upland/Water and Wastewater Rate Study Report 17 Table 3-7: Water Purchase Inflation Factors
Inflation Factor FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 WFA($/AF) Inflation 7.9% 18.4% 11.9% 4.4% 6.1% WFA RTS Inflation 3.9% 4.8% 25.4% 12.6% 5.0% WFA Capacity Charge 11.5% 4.1% 32.5% 18.0% 14.0% SAWCo Water Availability Inflation Provided Provided Provided Provided Provided SAWCO ($/AF) Inflation Provided Provided Provided Provided Provided General Inflation for Water 7.0% 7.0% 7.0% 7.0% 7.0% IEUA Recycled Direct Use Provided Provided 9.0% 9.0% 9.0% IEUA Ground Water Recharge Provided Provided 5.0% 5.0% 5.0% IEUA MEU Provided Provided 3.0% 3.0% 3.0% IEUA Recycled Fixed Charge Provided 3.0% 3.0% 3.0% 3.0%

City of Upland/Water and Wastewater Rate Study Report 18

4. Water Financial Plan
This section of the report details the water enterprise's long-term financial plan, based on the projected revenues, operating and maintenance (O&M) expenses, debt service, and capital project costs. Raftelis modeled the financial plan without revenue adjustments(status quo) and with proposed revenue adjustments to ensure the financial sustainability and solvency of the water utility. The results of the water financial plan are the proposed rates for five years based on the proposed revenue adjustments.

4.1 . Current Revenue
The City's revenues consist of rate revenues, interest earnings, and other miscellaneous revenues. The rate revenue projections assume current rates are effective for each year of the study period. The rate revenue projections shown are assuming a June 1, 2026, effective date, with each year following being implemented on January 1.

4.1.1. Calculated Water Rate Revenues
Raftelis projected water rate revenues from fixed service charges and commodity charges for FY 2026—FY 2030 based on current FY 2026 water rates, the projected number of water meters, and projected annual water use.

The City collects fixed bi-monthly service charges from customers based on meter size. Table 4-1 shows projected fixed service charge revenues under current rates over the study period. These revenues are calculated by multiplying the current water rates in Table 3-1 by the corresponding number of water meters in Table 3-3. This is then multiplied by 6 (number of bills per year)to arrive at the total.

Table 4-1: Projected Fixed Charge Revenues Under Current Rates Meter Size FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 5/8" $5,950,537 $5,950,537 $5,950,537 $5,950,537 $5,950,537 3/4" $401,825 $401,825 $401,825 $401,825 $401,825 1" $1,745,172 $1,745,172 $1,745,172 $1,745,172 $1,745,172 11/2" $669,434 $669,434 $669,434 $669,434 $669,434 2" $1,470,031 $1,470,031 $1,470,031 $1,470,031 $1,470,031 3" $229,449 $229,449 $229,449 $229,449 $229,449 4" $238,168 $238,168 $238,168 $238,168 $238,168 6" $106,436 $106,436 $106,436 $106,436 $106,436 8" $33,841 $33,841 $33,841 $33,841 $33,841 Total $10,844,893 $10,844,893 $10,844,893 $10,844,893 $10,844,893 Table 4-2 shows projected volumetric revenues under current rates for the study period. Volumetric revenues are calculated by customer class based on current FY 26 water rates and projected water use (Table 3-5).

Annual Volume Charge Revenue =[FY2026 rate per hcf] x[Annual Water Use in hcf

City of Upland/Water and Wastewater Rate Study Report 19 Table 4-2: Projected Commodity Revenue Under Current Rates Customer Class FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Single Family $10,779,496 $10,779,496 $10,779,496 $10,779,496 $10,779,496 Multi Family $3,449,241 $3,449,241 $3,449,241 $3,449,241 $3,449,241 Landscape $3,492,966 $3,492,966 $3,492,966 $3,492,966 $3,492,966 Commercial $2,166,089 $2,166,089 $2,166,089 $2,166,089 $2,166,089 School $380,639 $380,639 $380,639 $380,639 $380,639 Government $419,020 $419,020 $419,020 $419,020 $419,020 Condominiums $293,713 $293,713 $293,713 $293,713 $293,713 Total Commodity Revenue $20,981,163 $20,981,163 $20,981,163 $20,981,163 $20,981,163 Recycled Water Commodity Revenue $679,572 $679,572 $679,572 $679,572 $679,572

4.1.2. Other Revenues
Table 4-3 shows all other revenues for the water enterprise. FY 2026 revenues are based on the City provided budget, except for interest income. Values for all other years shown were projected. Interest revenue reflects a status quo scenario where no revenue adjustments are being added. All other miscellaneous revenues are non- inflated.

Table 4-3: Projected Other Water Enterprise Revenues (Status Quo) Miscellaneous Revenues FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Other Operating Income $113,200 $113,200 $113,200 $113,200 $113,200 Other Non-Operating Income $489,600 $489,600 $489,600 $489,600 $489,600 Interest Income $1,526,465 $1,507,963 $1,320,477 $687,602 $452,405 Total $2,129,265 $2,110,763 $1,923,277 $1,290,402 $1,055,205

4.2, Annua expense.

The City's expenses include water supply purchases, operations and maintenance expenses, capital expenses, and debt service. These costs are discussed in more detail below.

4.2.1. Total Operations and Maintenance Budget

4.2.1.1. Water Purchase Cost
The City obtains water from multiple sources, including Imported Water through the Water Facilities Authority(WFA), which receives water through the Metropolitan Water District(MWD). Groundwater from West End Consolidated Water Company(WECWC), San Antonio Water Company(SAWCo), Six Basin Water Master, and Chino Basin Water Master. The City also purchases recycled water from the IEUA for direct use and to recharge in Chino Basin.

Table 4-4 shows the projected unit costs for the water supply in Lines 28-50. The purchased water costs are calculated for each water source as shown below. If future year water purchase rates were not available, the current rate is inflated by the respective inflation factors shown in Table 3-7. These inflation factors are based on historical rate increases for the different water sources. The exception to this is that WFA rates are being inflated by the projected rate increases from MWD. If historical rate increases by agency were not available, a 7% inflation factor based on historical industry rate increases was applied to the rates.

City of Upland/Water and Wastewater Rate Study Report
Six Basin—Line 29 is calculated by multiplying the Six Basin supply in AF shown in Line 1 by the cost per AF in Line 11.

Chino Basin—Line 32 is calculated by multiplying Line 2 by Line 13. Line 33 is calculated multiplying Line 8 by Line 13.

WFA—Line 36 is calculated by multiplying Line 3 by Line 16. Line 37 is equal to Line 17. This charge is already annualized, so there is no calculation. Line 38 is calculated by multiplying the Monthly Readiness to serve charge in Line 18 by 12 (months). Line 39 is a provided value from WFA through FY 2029; FY 2030 is the average of the previous 5 years.

SAWCo—Line 42 is calculated by multiplying Line 4 by Line 20. Line 43 is calculated by multiplying the Monthly Readiness to Serve charge in Line 21 by 12(months). Line 44 is calculated by multiplying the Monthly Water Available charge in Line 22 by 12(months).

WECWC—Line 47 is calculated by multiplying Line 5 by Line 24. Line 48 is calculated by multiplying Line 25 by the number of shares(3,308).

IEUA—Line 50 is equal to Line 26. This total value was provided for FY 2025. It was calculated by multiplying the total number of MEUs(35,686)by 12(months)by the rate($1.14). The rate per MEU was provided by City staff for FY 2026 ($1.17)and FY 2027($1.20). This same calculation was done for these years, assuming the same number of MEUs. For subsequent years, the costs were inflated by 3%,based on historical IEUA MEU charge increases.

City of Upland/Water and Wastewater Rate Study Report 21 Table 4-4: Summary of Projected Potable Purchased Water Cost Expenses Line Potable Water Purchases FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Six Basin 831 831 831 831 831 2 Chino Basin 1,641 1,641 1,641 1,641 1,641 3 WFA 3,858 3,858 3,858 3,858 3,858
4 SAWCo 8,815 8,815 8,815 8,815 8,815 5 WECWC 2,400 2,400 2,400 2,400 2,400 6 Total Supply(AF) 17,545 17,545 17,545 17,545 17,545 7 8 Groundwater Recharge(AF) 1,426 1,426 1,426 1,426 1,426 9 10 Supply Costs
11 Six Basin($/AF) $32 $34 $37 $39 $42 12 Chino Basin
13 Chino Basin($/AF) $125 $134 $143 $153 $164 14 Recycled Water AF Recharge Charge Total $715 $769 $829 $895 $966 15 WFA
16 MWD-Water Facilities Authority WFA ($/AF) $1,069 $1,266 $1,417 $1,479 $1,569 17 Capacity Charge Obligation(Annualized) $156,351 $162,821 $215,656 $254,474 $290,058 18 Readiness to Service Charges Monthly $42,922 $44,977 $56,393 $63,470 $66,667 19 SAWCo
20 SAWCO($/AF) $257 $270 $283 $296 $309 21 SAWCO RTS Monthly Charge $29,810 $31,226 $32,709 $34,263 $35,891 22 SAWCO Water Available Monthly $36,396 $38,090 $39,914 $41,825 $43,823 23 WECWC
24 WECWC($/AF) $52 $56 $60 $64 $69 25 Rate per Share $161 $172 $184 $197 $210 26 IEUA MEU Charge Total Charge $501,031 $513,878 $529,295 $545,174 $561,529 27 28 Calculated Water Purchase Costs
29 Six Basin AF Charge Total $26,671 $28,538 $30,536 $32,673 $34,960 30 31 Chino Basin
32 Chino Basin AF Charge Total $205,565 $219,955 $235,352 $251,827 $269,454 33 Recycled Water AF Recharge Charge Total $1,019,101 $1,095,999 $1,182,303 $1,275,758 $1,376,976 34 35 WFA
36 MWD-Water Facilities Authority(WFA)AF Charge Total $4,124,498 $4,883,171 $5,465,799 $5,704,718 $6,052,617 37 Capacity Charge Obligation(Annualized) $156,351 $162,821 $215,656 $254,474 $290,058 38 Readiness to Service Charge(Annualized) $515,069 $539,727 $676,713 $761,645 $800,001 39 Capital Charge $1,055,404 $212,400 $378,000 $378,000 $435,717 40 41 SAWCo
42 SAWCO AF Charge Total $2,265,475 $2,380,669 $2,495,862 $2,611,056 $2,726,250 43 SAWCO RTS Monthly Charge(Annualized) $357,722 $374,713 $392,512 $411,157 $430,687 44 SAWCO Water Available Charge(Annualized) $436,757 $457,084 $478,974 $501,906 $525,881 45 46 WECWC
47 WECWC AF Charge Total $125,823 $134,630 $144,054 $154,138 $164,928 48 WECWC Charge from Shares Total(3,308 shares) $530,934 $568,099 $607,866 $650,417 $695,946 49 50 IEUA MEU Charge Total Charge $501,031 $513,878 $529,295 $545,174 $561,529 51 52 Total Potable Production Costs $11,320,402 $11,571,684 $12,832,922 $13,532,942 $14,365,004

City of Upland/Water and Wastewater Rate Study Report 22 Table 4-5 shows the projected recycled purchased water costs. Line 6 is calculated by multiplying the amount of recycled water (Line 1) by the rate shown in Line 3. Line 7 is calculated by multiplying the monthly fixed charge in Line 4 by 12. The sum of Lines 6 and 7 results in the total recycled purchase costs shown in Line 8 of Table 4-5
Table 4-5: Summary of Projected Recycled Purchased Water Cost Expenses Line FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Recycled Water,AF 660 660 660 660 660 2 3 IEUA Recycled Water Direct Use($/AF) $507 $552 $602 $656 $715 4 Recycled Water Monthly Fixed Charge($) $26,626 $27,425 $28,247 $29,095 $29,968 5 6 IEUA Recycled Water Direct Use($/AF) $334,299 $364,388 $397,183 $432,930 $471,893 7 Recycled Water Monthly Fixed Charge($) $319,509 $329,094 $338,967 $349,136 $359,610 8 Total Recycled Purchase Costs $653,808 $693,482 $736,150 $782,066 $831,503

4.2.1.2. Operating and Maintenance Expenses
The City provided Raftelis with its actual expenses for FY 2025 and budget for FY 2026. Customer service costs from the Public Works and Finance department are shown separately to match the City's budget. The City also provided adjustments in future years to account for changes in staffing and reductions in anticipated operating and maintenance expenses. To project the City's O&M expenses, Raftelis used the escalation factors shown in Table 3-6. Table 4-6 shows a summary of the budgeted and projected O&M.

Table 4-6: Water Operations and Maintenance Expenses Projection Potable Water O&M Expenses FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Administration $4,755,502 $4,969,097 $5,126,325 $5,288,560 $5,455,962 Customer Service $251,620 $290,336 $300,099 $310,191 $320,623 Meter Services $1,304,653 $612,341 $662,896 $684,664 $707,150 Production and Storage $3,216,797 $3,576,291 $2,613,559 $2,276,423 $1,810,409 Power $1,804,100 $1,930,387 $2,065,514 $2,210,100 $2,364,807 Water Purchase Costs $11,320,402 $11,571,684 $12,832,922 $13,532,942 $14,365,004 Transmission and Distribution $3,855,524 $4,555,581 $4,709,450 $4,868,537 $5,033,020 WECWC Management Control $355,569 $367,134 $379,077 $391,411 $404,149 Water Conservation $379,130 $841,029 $792,074 $817,766 $892,360 Storm Water MGMT& Recharge $725,553 $1,063,673 $1,097,724 $1,132,872 $1,169,152 PVPA $4,275 $4,413 $4,555 $4,702 $4,853
Customer Service $936,843 $966,665 $997,441 $1,029,204 $1,061,983 Total Potable Water O&M $28,909,967 $30,748,629 $31,581,637 $32,547,371 $33,589,474 Recycled Water O&M Expenses FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Recycled Water Production $653,808 $693,482 $736,150 $782,066 $831,503 Cross Connection $52,860 $54,446 $56,079 $57,762 $59,494 Recycled Water Retrofit $0 $0 $0 $0 $0 Capital Outlay $0 $0 $0 $0 $0 Total Recycled Water Expenses $706,668 $747,928 $792,229 $839,827 $890,998

City of Upland/Water and Wastewater Rate Study Report 23

4.2.2. Capital Improvement Plan
Table 4-7 shows the City's water capital improvement plan for the rate-setting period. Previously issued bond funds are available to fund projects in the first couple of years. The average annual cost of CIP projects is roughly$8.7M.

Table 4-7: Projected Capital Improvement Projects
Funding Source FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Existing Bond Funded $8,637,740 $3,595,909 $0 $0 $0 Rate Funded $0 $4,404,091 $8,500,000 $9,000,000 $9,500,000 Total CIP $8,637,740 $8,000,000 $8,500,000 $9,000,000 $9,500,000

4.2.3. Existing Debt Service
Table 4-8 shows the existing debt service. The City currently has a water revenue refunding bond series 2021, water revenue refunding bond series 2022, and a State Water Resources Control Board(SWRCB)loan.

Table 4-8: Existing Water Debt Service
Existing Debt FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Water Revenue Refunding
Bond Series 2021
Principal $622,000 $633,000 $642,000 $651,000 $658,000 Interest $84,480 $75,068 $65,505 $55,808 $25,741 Water Revenue Refunding
Bond Series 2022
Principal $900,000 $915,000 $935,000 $955,000 $970,000 Interest $244,032 $226,608 $208,848 $190,704 $172,224 SWRCB Loan -Water
Principal $424,277 $432,338 $440,553 $448,923 $475,170 Interest $294,388 $286,327 $278,113 $269,742 $243,496 Total Existing Debt Service $2,569,177 $2,568,341 $2,570,019 $2,571,177 $2,544,631

4.3. Reserve Targets
The City maintains multiple water enterprise reserve funds.

Operating Reserve—The Operating Reserve is used primarily to meet ongoing cash flow requirements. The City's minimum reserve target is set at 20% of O&M expenses. The maximum target is set at 40% of O&M expenses.

Capital Reserve—The Capital Reserve is used to cover capital costs and any unexpected and unplanned infrastructure repairs and replacements not included in the budget, as well as to set aside money for future capital projects. The minimum target is set at 100% of the five-year average of capital projects. The maximum target is set at 200% of the five-year average of capital projects.

City of Upland/Water and Wastewater Rate Study Report 24 Debt Reserve—The Debt Reserve target is legally required for the City's SWRCB debt. The reserve level required is equal to the amount of the outstanding principal of the SWRCB debt.

Rate Stabilization Reserve—The Rate Stabilization Reserve is used to primarily to help reduce an annual revenue adjustment due to short-term spikes in costs or decreases in revenues from droughts. The City's minimum reserve target is set at 10% of rate revenue. The maximum target is set at 50% of the rate revenues.

4.4, roposed Financial Plan and Revenue Adjustments The proposed revenue adjustments shown in Table 4-9 are necessary to ensure adequate revenue to fund operating expenses, capital expenditures, and meet reserve targets. The first revenue adjustment is proposed to occur on June 1, 2026, with each following year being implemented on January 1. The proposed revenue adjustments would enable the City to meet operating costs, complete planned CIP projects, and meet all reserve targets throughout the study period.

Table 4-9: Proposed Water Revenue Adjustments
Effective Date Adjustment
June 1, 2026 5.0%
January 1, 2027 5.0%
January 1, 2028 5.0%
January 1, 2029 5.0%
January 1, 2030 5.0%
Table 4-10 shows the projected water financial plan with the proposed revenue adjustments from FY 2026 through FY 2030. Line 1 shows the projected rate-revenue under current rates. Line 9 shows the total projected rate revenue, including the proposed revenue adjustments. Lines 11 through 13 show other revenue sources. The sum of all revenues is shown in Line 14. Lines 19 through 32 show O&M expenses by department. All O&M expenses except for purchased water reflect a 5%reduction from budgeted expenses based on historical utilization of budgets. The sum of O&M expenses is shown in Line 33. Lines 35 and 37 show debt service and rate-funded capital projects, respectively. The net cashflow(Line 39) is negative for all years except FY 2026, as the City draws down cash reserves to fund capital project costs and minimize rate impacts to customers.

City of Upland/Water and Wastewater Rate Study Report 25 Table 4-10: Water Financial Plan
Line Water Financial Plan FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Revenue Under Existing Rates $31,882,156 $31,826,056 $31,826,056 $31,826,056 $31,826,056 2 Revenue Adjustments
3 Adjustment Mo. Effective
4 FY 2026 5.0% 1 $132,842 $1,591,303 $1,591,303 $1,591,303 $1,591,303 5 FY 2027 5.0% 6 $835,434 $1,670,868 $1,670,868 $1,670,868 6 FY 2028 5.0% 6 $877,206 $1,754,411 $1,754,411 7 FY 2029 5.0% 6 $921,066 $1,842,132 8 FY 2030 5.0% 6 $967,119
9 Total Rate Revenue $32,014,999 $34,252,793 $35,965,433 $37,763,705 $39,651,890 10 Other Revenue
11 Other Operating Income $113,200 $113,200 $113,200 $113,200 $113,200 12 Other Non-Operating Income $489,600 $489,600 $489,600 $489,600 $489,600 13 Interest Income $1,528,457 $1,548,409 $1,460,628 $884,610 $790,987 14 Total Other Revenue $2,131,257 $2,151,209 $2,063,428 $1,487,410 $1,393,787 15 16 Total Revenue $34,146,256 $36,404,002 $38,028,861 $39,251,114 $41,045,677 17 18 O&M Expenses
19 Administration $4,755,502 $4,969,097 $5,126,325 $5,288,560 $5,455,962 20 Customer Service $251,620 $290,336 $300,099 $310,191 $320,623 21 Meter Services $1,304,653 $612,341 $662,896 $684,664 $707,150 22 Damage to City Property $0 $0 $0 $0 $0 23 Production and Storage $3,216,797 $3,576,291 $2,613,559 $2,276,423 $1,810,409 24 Power $1,804,100 $1,930,387 $2,065,514 $2,210,100 $2,364,807 25 Water Purchase Costs $11,320,402 $11,571,684 $12,832,922 $13,532,942 $14,365,004 26 Transmission and Distribution $3,855,524 $4,555,581 $4,709,450 $4,868,537 $5,033,020 27 WECWC Management Control $355,569 $367,134 $379,077 $391,411 $404,149 28 Water Conservation $379,130 $841,029 $792,074 $817,766 $892,360 29 Debt Service $0 $0 $0 $0 $0 30 Storm Water MGMT&Recharge $725,553 $1,063,673 $1,097,724 $1,132,872 $1,169,152 31 PVPA $4,275 $4,413 $4,555 $4,702 $4,853 32 Customer Service $936,843 $966,665 $997,441 $1,029,204 $1,061,983 33 Total-O&M Expenses $28,909,967 $30,748,629 $31,581,637 $32,547,371 $33,589,474 34 35 Debt Service $2,569,177 $2,568,341 $2,570,019 $2,571,177 $2,544,631 36 37 Rate Funded CIP $0 $4,404,091 $8,500,000 $9,000,000 $9,500,000 38 39 Net Cashflow $2,667,112 -$1,317,059 -$4,622,795 -$4,867,434 -$4,588,428 Figure 4-1 shows the proposed five-year water enterprise financial plan in graphical form. Status quo revenue is shown by the solid line. Projected revenue is shown by the dashed line. Annual expenditures are shown by the columns. The green bar above the X-axis shows the net cash used to build up the reserves and the green bars below the X-axis show reserves being spent to fund costs. Revenue from current rates is not enough to cover annual operating and maintenance costs or capital expenditures. Therefore, revenue adjustments are required to generate sufficient revenue to cover these costs over the study period.

City of Upland/Water and Wastewater Rate Study Report 26 Figure 4-1: Proposed Water Financial Plan
$50 Financial Plan
0 $40
$30
$20
$10
$0
FY 2026 FY 2027 FY 2028 11111 FY 2030
-$10
Water Purchases O&M Expenses Debt Service
Capital Projects • Reserve Funding Current Revenues ——— Proposed Revenues
Figure 4-2 shows projected ending fund balances over the study period relative to the City's reserve targets.

Maximum and minimum targets are shown. The minimum targets are met in all years of the rate-setting period.

Figure 4-2: Projected Water Ending Fund Balance
Fund Balances
$so -
.0 $70
$60 $53.0 $51.7
$50 $47.1
$42.2
$40 $37.7
$30
$20
$10
$0
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Ending Balance Reserve Target-Min - Reserve Target-Max Figure 4-3 shows the proposed capital financing plan over the rate-setting period. The proposed financial plan assumes that capital projects will be funded through a combination of water rate revenues, cash reserves, and bond proceeds.

City of Upland/Water and Wastewater Rate Study Report 27 Figure 4-3: Projected Water Capital Plan
Capital Financing Plan
y sic) S9.5

58.6 $9.0
o $9 $8.5
$8.0
$8
$7
$6 —
$5
$4
$3
$2
$1
$0
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 •Rate Funded ■Debt Funded

City of Upland/Water and Wastewater Rate Study Report 28

5. Water Cost-of-Service Analysis
This section of the report details the cost-of-service analysis and rate calculation process to determine the proposed water rates. The goal of this process is to determine the cost of providing water service to each of the City's water customer classes and to ensure equity and fairness among the various classes.

After determining a utility's revenue requirement, the next step in a cost-of-service analysis is to functionalize its O&M costs to the following functions:
• Supply—cost of pumping groundwater
• Production-the cost of operation and maintenance of wells • Pumping—cost of pumping water through the system
• Distribution—cost associated with pipes,pumps, mains, etc. • Distribution Storage—cost associated with storing treated water • Meter Maintenance—costs associated with meter maintenance and replacement • Customer Service—costs associated with meter reading,billing, and customer service • General and Administration(G&A)—general and administrative costs incurred by the City The functionalization of costs allows us to better allocate the costs to the cost causation components and calculate the bi-monthly service charges and commodity rates.

5.1 . Revenue Requirement Determination
Table 5-1 shows the net revenue requirement from rates for FY 2026. The total revenue requirement shown in Line 18 is equal to operating expenses and capital-related expenses(cash-funded capital plus debt service).

Revenue offsets, totaled in Line 11, comprise miscellaneous revenues and interest income and reduce the total revenue required from rates. The adjustment transfers out of reserves and reduces the revenue requirement.

The mid-year increase on Line 15 reflects that the FY 2026 revenue adjustment occurs partway through the fiscal year and adds to the revenue requirement to annualize the rate revenue. The net revenue required from rates on Line 18 is equal to Line 5 minus Lines 11 and 16.

City of Upland/Water and Wastewater Rate Study Report
Table 5-1: Revenue Requirement Determination, FY 2026
Line Revenue Requirement- FY 2026 Operating Capital Total 1 Revenue Requirements
2 O&M Expenses $28,909,967 $0 $28,909,967 3 Debt Service $0 $2,569,177 $2,569,177 4 Rate Funded CIP $0 $0 $0
5 Total - Revenue Requirements $28,909,967 $2,569,177 $31,479,144 6 7 Revenue Offsets
8 Other Operating Income $113,200 $0 $113,200 9 Other Non-Operating Income $489,600 $0 $489,600 10 Interest Income $1,528,457 $0 $1,528,457 11 Total - Revenue Offsets $2,131,257 $0 $2,131,257 12 13 Less Adjustments
14 Transfer from (to) Reserves $0 -$2,667,112 -$2,667,112 15 Adjustment to Annualize Rate Increase -$1,461,266 $0 -$1,461,266 16 Total - Less Adjustments -$1,461,266 -$2,667,112 -$4,128,378 17 18 Total Revenue to be Recovered from Rates $28,239,975 $5,236,289 $33,476,264

5.2. Allocation of Functionalized Net Revenue
Requirements to Cost Components
After functionalizing the net revenue requirements, the next step is to allocate the functionalized net revenue requirements to the following cost components.
• Supply—variable costs associated with providing water supplies for all customers • Base—fixed costs associated with providing service under average demand conditions • Peaking(Max Day and Peak Hour)—costs associated with meeting demand in excess of average use • Customer Service—the costs associated with meter reading, billing, and customer service • Equivalent Meters—costs associated with meter capacity, maintenance, and replacement • Capital—capital-related costs

5.2.1. Peaking Factors
Water demand varies from parcel to parcel. Water systems have to be designed to meet the highest levels of demand placed on the system. Components of the water system are therefore oversized compared to the requirement for average demands. For example, reservoirs are designed to meet maximum day requirements, and distribution lines are designed to meet instantaneous peak demands or peak hour demands. Therefore, peaking plays a significant part in the costs of operating and constructing a water system. Demonstrating that rates are proportional to the demands and associated costs that customer classes place on the utility system is critical to ensure that rates align with the intent of Proposition 218.The capital and operating costs of the system must then be allocated to customer classes in proportion to the demands they place on the system. For costs recovered through a water utility's fixed meter charge, costs are allocated either over all accounts or by meter size, depending on the type of expense. Variable costs are allocated among customer classes based on the demands they place on the water system and the cost of water supplies.

City of Upland/Water and Wastewater Rate Study Report 30 Peaking costs are computed for a maximum day and peak hour. The maximum day(max day) demand is the maximum amount of water used in a single day in a year. The peak hour or max hour demand is the maximum amount of water used in a single hour on the maximum day. Different facilities, such as distribution and treatment facilities (and the O&M costs associated with those facilities), are designed to meet peak hour and max day demands, respectively. Therefore, extra capacity' costs include the O&M and capital costs associated with meeting peak customer demand. This method is consistent with AWWA Manual M1 and is widely used in the water industry for cost-of-service analyses. Importantly, it ensures that average and below-average users pay rates that reflect the level of capital investment necessary to serve them.

We know from experience that different classes have different peaking factors. Typically, the single family residential(SFR) class is different from the multi-family class, primarily because of irrigation requirements for the SFR class. Commercial and multi-family peaking factors are relatively close. Raftelis reviewed the usage by billing cycle to determine max day peaking factors for different classes by identifying the maximum usage in a billing period in a year to the average usage in a year. This represents the max day peak for each class. The max hour peak factor is determined here by multiplying the customer max day by the ratio of the system max hour to max day. The system max day and max hour factors are described below.

Table 5-2 shows the system-wide peaking factors used to derive the cost component allocation bases for base and peaking costs. These factors were derived from the production data provided by the City. Base costs represent average daily demand during the year and are represented by the factor 1.00. The max day and max hour factors are based on the City's production information. The allocation bases (Columns C, D, and E) are calculated using the equations outlined below the table.

Table 5-2: Water System Peaking Factors
(A) (B) (C) (D) (E) (F)
Line System-Wide Peaking Factors Peaking Factor Base Max Day Max Hour Total 1 Base 1.00 100% 0% 0% 100% 2 Max Day 1.47 68% 32% 0% 100% 3 Max Hour 2.06 49% 23% 29% 100% The max day allocations are calculated as follows:
• Base Delivery: B1 / B2 x 100% = C2
• Max Day: 100%- C2 =D2
The peak hour allocations are calculated as follows:
• Base Delivery: B1 / B3 x 100% = C3
• Max Day: (B2—B1) / B3 x 100% = D3
• Peak Hour: 100%- C3—D3 =E3
These factors indicate the additional capacity required to meet demand above average daily use. As demand and capacity increase, facilities and pipelines must also be sized to meet those demands. This increases costs 1 The terms extra capacity,peaking and capacity costs are used interchangeably.

City of Upland/Water and Wastewater Rate Study Report 31 to construct, maintain, and replace. These allocations are used to assign certain functionalized costs to the cost causation components including production and transmission&distribution.

5.2.2. Operating and Capital Allocation
The next step in the cost-of-service analysis is to determine the operating and capital cost allocations by cost component. The cost components for water include Base, Max Day, Max Hour, Supply, Conservation, Meters, Customer Service, Revenue Offsets, and General.

Table 5-3 shows the operating costs by functional component in Lines 14-25. These costs are allocated by the corresponding percentages shown in lines 1-12. Allocations for each function are based on the engineering design of each component, for example, wells(production)are designed for max day requirements and are allocated to max day, similarly reservoirs are designed for max day and are allocated to max day. The design of different system components is used for allocation purposes.

Table 5-3: Allocation of Net Operation & Maintenance to Cost Components Line O&M Allocation Allocation Basis Base Max Day Max Hour Supply Conservation Meters Customer General Total 1 Administration General 0% 0% 0% 0% 0% 0% 35% 65% 100% 2 Customer Service Customer Service 0% 0% 0% 0% 0% 0% 100% 0% 100% 3 Meter Services Meters 0% 0% 0% 0% 0% 100% 0% 0% 100% 4 Damage to City Property General 0% 0% 0% 0% 0% 0% 35% 65% 100% 5 Supply Supply 0% 0% 0% 96% 0% 4% 0% 0% 100% 6 Production and Storage Max Day 68% 32% 0% 0% 0% 0% 0% 0% 100% 7 Transmission and Distribution Max Hour 49% 23% 29% 0% 0% 0% 0% 0% 100% 8 WECWC Management Control Supply 0% 0% 0% 96% 0% 4% 0% 0% 100% 9 Water Conservation Conservation 0% 0% 0% 0% 100% 0% 0% 0% 100% 10 Storm Water MGMT&Recharge General 0% 0% 0% 0% 0% 0% 35% 65% 100% 11 PVPA General 0% 0% 0% 0% 0% 0% 35% 65% 100% 12 Customer Service Customer Service 0% 0% 0% 0% 0% 0% 100% 0% 100% 13 14 Administration General $0 $0 $0 $0 $0 $0 $1,664,426 $3,091,076 $4,755,502 15 Customer Service Customer Service $0 $0 $0 $0 $0 $0 $251,620 $0 $251,620 16 Meter Services Meters $0 $0 $0 $0 $0 $1,304,653 $0 $0 $1,304,653 17 Damage to City Property General $0 $0 $0 $0 $0 $0 $0 $0 $0 18 Supply Supply $0 $0 $0 $12,599,522 $0 $524,980 $0 $0 $13,124,502 19 Production and Storage Max Day $2,191,327 $1,025,469 $0 $0 $0 $0 $0 $0 $3,216,797 20 Transmission and Distribution Max Hour $1,876,027 $877,919 $1,101,578 $0 $0 $0 $0 $0 $3,855,524 21 WECWC Management Control Supply $0 $0 $0 $341,346 $0 $14,223 $0 $0 $355,569 22 Water Conservation Conservation $0 $0 $0 $0 $379,130 $0 $0 $0 $379,130 23 Storm Water MGMT&Recharge General $0 $0 $0 $0 $0 $0 $0 $725,553 $725,553 24 PVPA General $0 $0 $0 $0 $0 $0 $1,496 $2,779 $4,275 25 Customer Service Customer Service $0 $0 $0 $0 $0 $0 $936,843 $0 $936,843 26 Total O&M Expenses $4,067,354 $1,903,388 $1,101,578 $12,940,868 $379,130 $1,843,856 $2,854,384 $3,819,408 $28,909,967 27 O&M Allocation 14.1% 6.6% 3.8% 44.8% 1.3% 6.4% 9.9% 13.2% 100% Table 5-4 shows the allocation of asset value by function to the cost components using the allocations shown in Lines 1-5. The total value in each line is multiplied by the corresponding percentages to arrive at the costs shown in Lines 7-11. Line 13 is determined by taking the weighted proportion of the total capital asset costs by each cost component.

City of Upland/Water and Wastewater Rate Study Report 32 Table 5-4: Allocation of Asset Value to Cost Components Line Asset Allocation Allocation Basis Base Max Day Max Hour Supply Conservation Meters Customer General Total 1 Supply Supply 0% 0% 0% 96% 0% 4% 0% 0% 100% 2 Distribution Max Hour 49% 23% 29% 0% 0% 0% 0% 0% 100% 3 Distribution Storage Max Hour 49% 23% 29% 0% 0% 0% 0% 0% 100% 4 Meter Meters 0% 0% 0% 0% 0% 100% 0% 0% 100% 5 General/Admin General 0% 0% 0% 0% 0% 0% 35% 65% 100% 6 7 Supply Supply $0 $0 $0 $344,057 $0 $14,336 $0 $0 $358,392 8 Distribution Max Hour $50,207,308 $23,495,375 $29,481,073 $0 $0 $0 $0 $0 $103,183,756 9 Distribution Storage Max Hour $57,947,859 $27,117,700 $34,026,223 $0 $0 $0 $0 $0 $119,091,782 10 Meter Meters $0 $0 $0 $0 $0 $4,518,403 $0 $0 $4,518,403 11 General/Admin General $0 $0 $0 $0 $0 $0 $10,766,222 $19,994,411 $30,760,633 12 Total Assets $108,155,166 $50,613,075 $63,507,297 $344,057 $0 $4,532,739 $10,766,222 $19,994,411 $257,912,967 13 Asset Allocation 42% 20% 25% 0% 0% 2% 4% 8% 100% Table 5-5 shows the net revenue requirement allocated to the cost components. Operating costs are allocated by the same percentages shown in the last line in Table 5-3. Similarly, the capital revenue requirement in Table 5-1 is allocated as shown on Line 13 in Table 5-4. The revenue offsets, over which the City has discretion, are allocated to the cost centers based on the allocation of operating costs excluding supply costs.

The resulting net revenue requirement allocation is shown in the last line of the table. This allocation is further adjusted to reallocate General and Administration costs. This results in an adjusted net revenue requirement allocation shown in the last line.

Table 5-5: Adjusted Cost of Service
Revenue Requirement Base Max Day Max Hour Supply Conservation Meters Fire Protection Customer Service Revenue Offset General Total Operating Revenue Requirement $4,272,940 $1,999,596 $1,157,258 $13,594,969 $398,294 $1,937,054 $0 $2,998,660 $0 $4,012,462 $30,371,233 Capital Revenue Requirement $2,195,825 $1,027,574 $1,289,360 $6,985 $0 $92,026 $0 $218,582 $0 $405,937 $5,236,289 Revenue Offsets $0 $0 $0 $0 $0 $0 $0 $0 -$1,214,183 -$917,074 -$2,131,257 Total-Cost of Service $6,468,765 $3,027,170 $2,446,618 $13,601,954 $398,294 $2,029,080 $0 $3,217,242 -$1,214,183 $3,501,325 $33,476,264 Allocation of General Costs $1,287,828 $602,661 $487,083 $0 $79,294 $403,958 $0 $640,502 $0 -$3,501,325 $0 Total-Adjusted Cost of Service $7,756,593 $3,629,831 $2,933,700 $13,601,954 $477,587 $2,433,038 $0 $3,857,743 -$1,214,183 $0 $33,476,264

5.3. Derivation of Units of Service

5.3.1. Equivalent Meters
Table 5-6 shows the total equivalent meters. These totals are used as a denominator in developing unit costs for the rate components of the bi-monthly fixed service charges.

Table 5-6: Equivalent Meters
Meter AWWA Capacity Equivalent
Meter Size
Count Ratio Meters
5/8" 15,197 1.00 15,197
3/4" 810 1.50 1,215
1" 2,475 2.50 6,188
1 1/2" 545 5.00 2,725
2" 792 8.00 6,336
3" 65 17.50 1,138
4" 44 31.50 1,386
6" 10 65.00 650
3" 2 140.00 280
10" 0 210.00 0
Total 19,940 35,114

City of Upland/Water and Wastewater Rate Study Report 33

5.3.2. Unit Costs of Service
Customer class demands vary depending on their respective usage characteristics. For example, the demand characteristics of a single-family residential customer will differ from the demand characteristics of an irrigation customer. Peak demands are a key difference in usage characteristics of customer classes. Raftelis used detailed customer billing data, by billing cycle, from FY 2025, which was provided by City staff, to assess the demand characteristics by customer class. The concept of proportionality requires that cost allocations consider both the average quantity of water consumed(base demand)and the peak rate at which it is consumed(peak demands).

The use of peak demands in the cost allocation process is consistent with cost-of-service principles because a water system is designed, constructed, and operated to meet peak demands. These additional peaking costs must be allocated to customer classes in proportion to their peak usage characteristics to ensure costs are being appropriately passed on.

Single-family use is shown by tiers. The tiers are defined and explained in Section 6.2 of this report. The max day peaking factors for customer classes, average and peak billing period use, are shown below in Table 5-7.

Bi-monthly data is used as a proxy for the max day data for different classes. This is a reasonable proxy for our analysis because we are comparing the peaks for different classes to allocate the costs proportionately, and comparing the billing cycle data provides a reasonable basis for the analysis. Establishing peaking characteristics is important to ensure that customer class rates reflect their proportionate share of costs for the use of the system. In the residential class, multi-family and condominium peaking factors are very similar based on FY 2025 water consumption data provided by City staff, and are grouped together in Table 6-4, under Multi-Family.

Table 5-7: Calculation of Class Specific Peaking Factors Class-Specific Peaking Factors Bi-monthly Tiers Avg Bi-Month Max Bi-Month Peaking Factor Single Family
Tier 1 0-20 251,817 284,481 1.13
Tier 2 21-50 182,028 260,839 1.43 Tier 3 51+ 105,392 195,822 1.86
Multi Family All Use 186,154 218,937 1.18 Landscape All Use 105,796 168,239 1.59 Commercial All Use 114,647 132,659 1.16 School All Use 14,479 21,278 1.47
Government All Use 18,061 28,951 1.60
Condominiums All Use 15,238 17,569 1.15
Recycled All Use 37,473 68,234 1.82
Table 5-8 shows the units of service for each customer class and tier. Column A shows the projected annual use for FY 2026. Column B shows the average daily use. This is calculated by taking the value in Column A and dividing it by 365 days.

Max day and max hour extra capacity requirements for different customer classes are derived from the water consumption data provided by the City. Max hour data is determined by using the City's max hour factor and applying it to the max day factor for each class and tier. This provides a reasonable basis for allocating the max hour costs among the classes. These data are used to allocate peaking costs based on customer class- specific water use patterns during peak demand periods. Max day total capacity(Column D)is the average daily use(Column B)multiplied by the max day capacity factor(Column C). Max day extra capacity

City of Upland/Water and Wastewater Rate Study Report 34 (Column E)is the difference between the max day total capacity(Column D)and the average daily use (Column B). Max hour total capacity(Column G)is the average daily use(Column B)multiplied by the max hour capacity factor(Column F). Max hour extra capacity(Column H)is the difference between the max hour total capacity(Column G)and the max day total capacity(Column D).

Table 5-8: Units of Service
Max Day Max Hour
Annual Use Average Daily Total Capacity Extra Capacity Total Capacity Extra Capacity Number of Number of Customer Class Peaking Factor Peaking Factor
(hcf) Use(hcf/day) (hcf/day) (hcf/day) (hcf/day) (hcf/day) Equiv.Meters Customers Line (A) (B) (C) (D) (E) (F) (G) (H) (I) (J) Single Family 3,786,229 10,373 14,257 3,884 19,960 5,703 1 Tier 1 0-20 1,768,123 4,844 1.13 5,473 628 1.58 7,662 2,189 2 Tier 2 21-50 1,278,101 3,502 1.43 5,018 1,516 2.01 7,025 2,007 3 Tier 3 51+ 740,005 2,027 1.86 3,767 1,740 2.60 5,274 1,507 4 5 Multi Family 1,201,826 3,293 1.18 3,873 580 1.65 5,422 1,549 6 Landscape 1,101,882 3,019 1.59 4,801 1,782 2.23 6,721 1,920 7 Commercial 784,815 2,150 1.16 2,488 338 1.62 3,483 995 8 School 112,615 309 1.47 453 145 2.06 635 181 9 Government 120,755 331 1.60 530 199 2.24 742 212 10 Condominiums 102,339 280 1.15 323 43 1.61 453 129 11 12 Total Potable 7,210,461 19,755 26,725 6,971 37,416 10,690 35,114 19,940 13 14 Recycled 267,548 733 1.82 1,335 602 2.55 1,869 534 - - Table 5-9 shows the reallocation of peaking costs. Starting with the cost of service values from Table 5-5, peaking costs represent the capacity of the system to meet peak demands. Meters are sized based on the peak demands of a customer; therefore, a portion of the peaking costs is assigned to meters. To maintain the current level of revenue stability, approximately 75%of max day and max hour costs are assigned to meters.

The remaining costs are assigned to the commodity rate to recognize that system size is also dependent on water use. Applying these adjustments results in the total shown on Line 10 and repeated on Line 1 of Table 5-10.

Table 5-9: Reallocation of Peaking Costs
Fixed Commodity
Line Cost Components Cost of Service Meter Customer Base Max Day Max Hour Supply Conservation Offset Total 1 Base $7,756,593 0% 100% 100%
2 Max Day $3,629,831 76% 24% 100%
3 Max Hour $2,933,700 75% 25% 100% 4 Supply $13,601,954 0% 100% 100%
5 Conservation $477,587 100% 100% 6 Meters $2,433,038 100% 100%
8 Customer Service $3,857,743 100% 100% 9 Revenue Offset -$1,214,183 100% 100% 10 Total $33,476,264 $7,397,852 $3,857,743 $7,756,593 $871,160 $727,558 $13,601,954 $477,587 -$1,214,183 $33,476,264 Table 5-10 divides the adjusted cost of service for FY 2026 by the respective units of service for each cost component to determine the unit cost for each component.

Table 5-10: Calculation of Unit costs
Line Unit Costs Total Meter Customer Base Max Day Max Hour Supply Conservation Offset 1 Cost of Service $33,476,264 $7,397,852 $3,857,743 $7,756,593 $871,160 $727,558 $13,601,954 $477,587 -$1,214,183 2 3 Units of Service 210,684 119,640 7,210,461 6,971 10,690 7,210,461 7,210,461 1,768,123 Annual equiv. Annual use Peak capacity Peak capacity Annual use Use in Res Tier 4 meters Annual bills (hcf) (hcf/day) (hcf/day) Annual use(hcf) (hcf) 1 5 6 Unit Cost $35.11 $32.24 $1.08 $124.97 $68.06 $1.89 $0.07 -$0.69 7 equiv.meter bill hcf hcf/day hcf/day hcf hcf hcf

City of Upland/Water and Wastewater Rate Study Report 35

6. Proposed Water Rates and
Charges

6.1 Proposed Bi-Monthly Service Charac
The City's water charges include a bi-monthly service charge based on meter size, and a commodity rate based on water use. The service charge has been calculated to recover the fixed costs the City incurs to provide the service, such as billing and collection, customer service, meter reading, meter maintenance, and a portion of costs associated with meeting peak demands. The volumetric charge recovers the balance of the remaining costs.

Recycled water customers receive the same bi-monthly fixed charge as potable water customers,based on meter size, because they use the potable system when recycled water may not be available. They receive a volumetric charge specific to the class, based on the cost of the recycled water purchased.

The Meter component is derived based on total equivalent meters. Therefore, the meter unit cost in Line 6 of Table 5-10 is multiplied by the capacity ratio for each meter size to appropriately reflect the share of cost by meter size. The Customer cost does not vary by meter size, and therefore, the Customer unit cost shown in Line 6 of Table 5-10 is applied uniformly across all meter sizes. These two components determine the proposed bi-monthly service charge shown below.
fable 6-1: Bi-Monthly Service Charge Derivation
Meter Size Capacity Ratio Meter Customer Proposed Bi- Monthly Charge
5/8" 1.00 $34.91 $32.24 $67.16
3/4" 1.50 $52.37 $32.24 $84.62
1" 2.50 $87.28 $32.24 $119.53
1 1/2" 5.00 $174.57 $32.24 $206.82
2" 8.00 $279.31 $32.24 $311.56
3" 17.50 $610.98 $32.24 $643.23
4" 31.50 $1,099.77 $32.24 $1,132.02
6" 65.00 $2,269.37 $32.24 $2,301.62
8" 140.00 $4,887.87 $32.24 $4,920.12

6.2. Proposed Commodity Rates
Raftelis recommends that the City retain its current rate structure with tiered rates for single-family customers and uniform rates for the remaining customers. Single-family usage is more homogenous and lends itself well to tiering, recognizing the costs of providing service in each tier. Non-single-family customers are of varying sizes and demands and are not homogeneous and therefore charged uniform rates. The current 10 hcf per month in Tier 1 provides a family of four using an average of 55 gpd indoor, about 10 hcf. Therefore, the first tier is retained at 10 hcf per month or 20 hcf bi-monthly. The second tier provides average water use in summer, and the third tier covers any additional usage.

City of Upland/Water and Wastewater Rate Study Report 36 The tiers are selected so that the peaking characteristics of each tier are clearly defined. Tier 1 represents indoor use, which is pretty consistent throughout the year, and the associated costs can be readily determined.

Tier 2 primarily represents average irrigation use, and Tier 3 represents larger irrigation use for single-family customers. Tiers are selected to ensure the costs associated with peaking can be clearly determined and spread based on the cost of service. It should be noted that the costs for providing water in each tier are calculated based on the tiers and the use in each tier. This ensures that the appropriate peaking factor is used and also that the type of use is considered in the tier definitions.

The City's water commodity rates consist of five components: Base, Peaking, Supply, Conservation, and Offset. The following subsections will present the calculations for each of the components.

6.2.1. Base-Delivery Unit Cost
The Base component is applied uniformly across all units of water and is equal to the Base unit cost in Table 5-10, Line 6.

6.2.2. Supply Unit Cost
Table 6-2 show the calculation of the unit cost for each source of water. The water purchase costs for each source (Lines 1 and 2)were provided by City staff and are divided by the estimated demand from each source (Line 3)to calculate the unit costs(Line 5). Line 6 takes the$/AF value in Line 5 and divides it by 435.6 to convert to a$/hcf rate. Table 6-3 shows the supply unit cost calculation for each customer class and tier. A non-differentiated unit supply cost is being used, meaning that all customer classes pay the same amount for the supply unit cost. This cost is shown in the last column on Line 6 of Table 6-2. It is calculated by dividing the total costs by the total demand.

Table 6-2: Potable Water Supply Cost
Line Unit Costs of Water Six Basin WECWC SAWCo Chino Basin WFA Total 1 Cost of Water $28,888 $711,342 $3,314,277 $1,326,452 $6,337,645 $11,718,604 2 Cost of Power $109,519 $316,324 $1,161,911 $216,346 $1,804,100 3 Quantity of Water,AF 784 2,264 8,316 1,548 3,640 16,552 4 Quantity of Water,hcf 341,443 986,192 3,622,442 674,492 1,585,598 7,210,167 5 Unit Cost,$/AF $176.57 $453.92 $538.26 $996.37 $1,741.10 $816.97 6 Unit Cost$/hcf $0.41 $1.04 $1.24 $2.29 $4.00 $1.88 The water from each supply is allocated proportionally to the use in class as a whole. In the single-family class, the water is allocated so that the first tier gets the benefit of the lowest cost sources of water, and the next tier gets the next lowest cost water, and so on. The results are shown in Table 6-3.

Table 6-3: Supply Component Calculation
Water Use %of Water Supply Unit
Line Customer Classes Six Basin WECWC SAWCo Chino Basin WFA Total Demand Total Cost (hcf) Use Cost
1 Single Family 3,786,229 53% 179,293 517,851 1,902,152 354,177 832,601 3,786,075 $7,100,801 $1.88 2 Tier 1 1,768,123 25% 179,293 517,851 1,070,979 0 0 1,768,123 $1,935,698 $1.09 3 Tier 2 1,278,101 18% 0 0 831,173 354,177 92,751 1,278,101 $2,207,919 $1.73 4 Tier 3 740,005 10% 0 0 0 0 739,850 739,850 $2,957,185 $4.00 5 6 Multi Family 1,201,826 17% 56,911 164,377 603,782 112,423 264,285 1,201,777 $2,253,939 $1.88 7 Landscape 1,101,882 15% 52,178 150,707 553,571 103,074 242,307 1,101,837 $2,066,501 $1.88 8 Commercial 784,815 11% 37,164 107,341 394,281 73,414 172,583 784,783 $1,471,864 $1.88 9 School 112,615 2% 5,333 15,403 56,576 10,534 24,764 112,610 $211,201 $1.88 10 Government 120,755 2% 5,718 16,516 60,666 11,296 26,554 120,750 $226,467 $1.88 11 Condominiums 102,339 1% 4,846 13,997 51,414 9,573 22,505 102,335 $191,929 $1.88 12 13 Total Water Available by Source(hcf) 7,210,461 100% 341,443 986,192 3,622,442 674,492 1,585,598 7,210,167 $13,522,704 $1.88

City of Upland/Water and Wastewater Rate Study Report 37

6.2.3. Peaking Unit Cost
Table 6-4 shows the peaking unit cost calculation for each customer class and tier. Peaking costs are the sum of max day and max hour costs for each class and tier. This is calculated by multiplying the unit rates shown for max day and max hour from Line 6 of Table 5-10 by the corresponding extra capacity value in column E of Table 5-8 for max day, and by the corresponding extra capacity value shown in column H for max hour.

Peaking costs are divided by annual use to determine the Peaking unit cost for each class and tier. Due to similar patterns in peaking factors, residential accounts in condominiums are combined with multi-family accounts.

Table 6-4: Peaking Unit Cost Calculation
Peaking Unit Cost Annual Use (hcf) Peaking Costs Unit Cost Single Family 3,786,229 $873,534 $0.23
Tier 1 0-20 1,768,123 $227,509 $0.13
Tier 2 21-50 1,278,101 $326,071 $0.26
Tier 3 51+ 740,005 $319,955 $0.43
Multi Family 1,304,165 $192,052 $0.15
Landscape 1,101,882 $353,365 $0.32
Commercial 784,815 $109,949 $0.14
Schools 112,615 $30,451 $0.27
Government 120,755 $39,365 $0.33
Total 7,210,461 $1,598,717

6.2.4. Conservation Component
The conservation unit rate recovers costs of the City's water conservation program. Costs include staffing and education and outreach. Since the conservation program is targeted to reduce demand on the system to benefit the availability of water to larger users, the total single-family conservation cost is applied to single- family residential Tier 3 only. All other customer classes receive a uniform conservation rate. This component is shown in Table 5-10, Line 6 under the column labeled conservation.

6.2.5. Offset Component
The offset component is applied to single-family residential Tier 1 only. It is equal to the Offset unit cost (Table 5-10, Line 6). The offset helps provide affordability in Tier 1.

6.2.6. Recycled Water Commodity Rates
Recycled water customers have a specific commodity rate based on the cost of purchasing the recycled water, shown in Table 4-6. Table 6-5 shows the recycled water expenses the City incurs, and the units of recycled water used for FY 2026. By dividing these values, you arrive at the proposed FY 2026 commodity rate for recycled water customers.

City of Upland/Water and Wastewater Rate Study Report 38 Table 6-5: Derivation of Recycled Water Commodity Rates Recycled Commodity Rates
($/hcf)
Proposed Rate
Recycled Water Operating Expenses $706,668
Recycled Water Units (hcf) 267,548
Recyled Water Commodity Rate($/hcf) $2.64

6.2.7. Proposed FY 2026 Commodity Rates
To calculate the FY 2026 commodity rate for each customer class, the components mentioned above are summed to arrive at a total commodity rate. Table 6-6 shows the calculation for the FY 2026 commodity rate.

The total rate is rounded up to the nearest cent to ensure adequate cost recovery. It should be noted that the Government customer class cost of service results resulted in a decrease from their current rate. This rate applies only to City Government customers. The City has opted to maintain its current rate and not reduce the commodity charge, as shown in Table 6-8. All future years for the customer class will increase by the proposed revenue adjustments.

Table 6-6: Derivation of FY 2026 Commodity Rates ($/hcf) Commodity Charges . P .. Si . .I7 C. • 0 Pre•• •• Single Family
Tier 1 $1.08 $0.13 $1.88 -$0.69 $2.40 Tier 2 $1.08 $0.26 $1.88 $3.21
Tier 3 $1.08 $0.43 $1.88 $0.34 $3.73 Multi Family $1.08 $0.15 $1.88 $0.07 $3.17 Landscape $1.08 $0.32 $1.88 $0.07 $3.34 Commercial $1.08 $0.14 $1.88 $0.07 $3.16 School $1.08 $0.27 $1.88 $0.07 $3.29 Government $1.08 $0.33 $1.88 $0.07 $3.35 Recycled Rate $2.64

6.3. Proposed 5-Year Water Rate Schedule
Table 6-7 shows the proposed 5-year rate schedule of fixed water charges. Table 6-8 shows the proposed 5- year schedule of commodity water rates. The Government customer class is opting to retain its current rate instead of the resulting rate from the cost of service analysis, which resulted in a lower rate. All other rates for FY 2026 are the result of the cost-of-service analysis,while future years are multiplied by the revenue adjustment. Rates are rounded up to the nearest cent. The proposed FY 2026 rates are effective June 1, 2026.

Each following year is effective January 1st. The service charges include the Meter Equivalent Unit(MEU) charge imposed by IEUA. Since those charges are not known for future years, any increases in those charges beyond the assumptions used in the rate study will be passed through to customers. Any increases in potable and recycled water purchase costs from IEUA beyond the assumptions used in the study will be passed through to customers.

City of Upland/Water and Wastewater Rate Study Report 39 Table 6-7: Proposed 5-year Service Charge Rate Schedule, ($/Bi-Monthly) Current Proposed Proposed Proposed Proposed Proposed Service Charges(Bi-Monthly) FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 5/8" $65.26 $67.36 $70.73 $74.27 $77.99 $81.89 3/4" $82.68 $84.92 $89.17 $93.63 $98.32 $103.24 1" $117.52 $120.03 $126.04 $132.35 $138.97 $145.92 11/2" $204.72 $207.82 $218.22 $229.14 $240.60 $252.63 2" $309.35 $313.16 $328.82 $345.27 $362.54 $380.67 3" $588.33 $646.74 $679.08 $713.04 $748.70 $786.14 4" $902.15 $1,138.32 $1,195.24 $1,255.01 $1,317.77 $1,383.66 6" $1,773.93 $2,314.63 $2,430.37 $2,551.89 $2,679.49 $2,813.47 8" $2,820.12 $4,948.14 $5,195.55 $5,455.33 $5,728.10 $6,014.51 Table 6-8: Proposed 5-year Commodity Rate Schedule, ($/hcf) Current Proposed Proposed Proposed Proposed Proposed Commodity Charges FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Single Family
Tier 1 $2.33 $2.40 $2.52 $2.65 $2.79 $2.93 Tier 2 $3.08 $3.21 $3.38 $3.55 $3.73 $3.92 Tier 3 $3.68 $3.73 $3.92 $4.12 $4.33 $4.55 Multi Family $2.87 $3.17 $3.33 $3.50 $3.68 $3.87 Landscape $3.17 $3.34 $3.51 $3.69 $3.88 $4.08 Commercial $2.76 $3.16 $3.32 $3.49 $3.67 $3.86 Schools $3.38 $3.29 $3.46 $3.64 $3.83 $4.03 Government $3.47 $3.47 $3.65 $3.84 $4.04 $4.25 Recycled Water $2.54 $2.64 $2.78 $2.92 $3.07 $3.23

City of Upland/Water and Wastewater Rate Study Report 40

7. Drought Rates
Raftelis calculated a demand reduction surcharge(drought rates or drought surcharge)in order to recover the revenue shortfall that occurs because of demand reductions during water shortage scenarios.

Drought rates may take effect during times of declared drought, where certain levels of reduction are mandated. Drought rates are charged to each unit of water used and are calculated to recover costs through volumetric revenue due to reduced water use. The changes to the drought rates are different at different reduction levels based on the projected revenue shortfall.

To determine the demand reduction surcharge, the first step is to project the water demand reduction for each customer class under different levels of shortage. Table 7-1 shows the projected water demand for each customer class and tier at different levels of reduction. Raftelis analyzed individual customer usage data, assuming that customers using more water are expected to reduce more since they have more discretionary water use. The analysis calculates the increase in commodity rates that must be applied to all usage, including the tiers, for each reduction stage. Note that the reduction achieved under each drought stage is lower than the maximum targeted at each level but falls near or within each range.

Table 7-1: Projected Water Demand by Usage Reduction
Customer Bi-Monthly Proposed 40-50%
FY2026 %Reduction 0-10% %Reduction 10-20% %Reduction 20-30% %Reduction 30-40% %Reduction Class Tier Rates Reduction Reduction Reduction Reduction Reduction Single Family
Tier 1 0-20 $2.40 1,768,123 -5.0% 1,679,717 -7.0% 1,644,355 -10.0% 1,591,311 -15.0% 1,502,905 -24.0% 1,343,774 Tier 2 21-50 $3.21 1,278,101 -15.0% 1,086,386 -20.0% 1,022,481 -30.0% 894,671 -40.0% 766,861 -50.0% 639,051 Tier 3 51+ $3.73 740,005 -20.0% 592,004 -40.0% 444,003 -60.0% 296,002 -80.0% 148,001 -95.0% 37,000 Subtotal Single Family 3,786,229 -11.3% 3,358,107 -17.8% 3,110,838 -26.5% 2,781,984 -36.1% 2,417,766 -46.7% 2,019,824 Multi Family $3.17 1,304,165 -8.0% 1,199,832 -12.0% 1,147,665 -25.0% 978,124 -25.0% 978,124 -25.0% 978,124 Landscape $3.34 1,101,882 -10.0% 991,694 -25.0% 826,412 -35.0% 716,223 -50.0% 550,941 -70.0% 330,565 Commercial $3.16 784,815 -8.0% 722,030 -12.0% 690,637 -25.0% 588,611 -35.0% 510,130 -40.0% 470,889 Schools $3.29 112,615 -8.0% 103,606 -12.0% 99,101 -25.0% 84,461 -35.0% 73,200 -40.0% 67,569 Government $3.47 120,755 -8.0% 111,095 -12.0% 106,264 -25.0% 90,566 -35.0% 78,491 -40.0% 72,453 Subtotal Non-Single Family 3,424,232 -8.6% 3,128,256 -16.2% 2,870,080 -28.2% 2,457,986 -36.0% 2,190,885 -43.9% 1,919,599 Total Potable Water(hcf) 7,210,461 6,486,363 5,980,918 5,239,969 4,608,651 3,939,424 Demand Reduction Achieved -10.0% -17.1% -27.3% -36.1% -45.4% The next step is to estimate the water supply cost savings that result when there is a reduction in demand.

Table 7-2 shows the estimated percentage reduction from each water source for each reduction stage. In the first stage, it is expected that the City would reduce WFA usage so that it still will use a minimum of 2,000 ac- ft per year. Any remaining reduction is applied uniformly to all the remaining sources. The variable costs associated with each supply are used to determine the cost savings. Almost all other costs are fixed; therefore, no other costs are included in the analysis. Table 7-3 shows the estimated cost savings in the water supply costs for each stage due to the reduction in usage.

Table 7-2: Percentage Reduction by Water Source
Reduction Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Groundwater -0.2% -9% -15% -14% -18% WFA -45% 0% 0% 0% 0%

City of Upland/Water and Wastewater Rate Study Report 41 Table 7-3: Estimated Cost Savings by Usage Reduction
FY 2026 0-10% 10-20% 20-30% 30-40% 40-50%
Reduction Reduction Reduction Reduction Reduction Supply(AF)
Six Basin 784 782 712 608 520 427 WECWC 2,264 2,259 2,055 1,757 1,503 1,234 SAWCo 8,316 8,297 7,550 6,455 5,521 4,532 Chino Basin 1,548 1,545 1,406 1,202 1,028 844 WFA 3,640 2,009 2,009 2,009 2,009 2,009 Total Potable Supply(AF) 16,552 14,892 13,732 12,031 10,582 9,046 -10.0% -7.8% -12.4% -12.0% -14.5%
Variable Cost ($/AF)
Six Basin $171.82 $171.82 $171.82 $171.82 $171.82 $171.82 WECWC $300.22 $300.22 $300.22 $300.22 $300.22 $300.22 SAWCo $396.72 $396.72 $396.72 $396.72 $396.72 $396.72 Chino Basin $979.81 $979.81 $979.81 $979.81 $979.81 $979.81 WFA $1,068.96 $1,068.96 $1,068.96 $1,068.96 $1,068.96 $1,068.96 Total Variable Costs $9,521,726 $7,765,791 $7,259,831 $6,518,126 $5,886,164 $5,216,254 Cost Savings $1,755,935 $2,261,895 $3,003,600 $3,635,562 $4,305,472 The final step is to calculate the drought surcharge, shown in Table 7-4. First, the projected potable water revenue is calculated by multiplying the demand projections from Table 7-1 for each level of reduction in use and the proposed water rates in FY 2026. The revenue shortfall is determined by comparing this revenue for each reduction level with the FY 2026 revenues. Next, we add the estimated cost savings from Table 7-3 for each reduction level. The net revenue is the sum of the revenue shortfall and cost savings. The percent revenue shortfall is then the shortfall divided by the projected variable revenue. The percentages shown will be applied to all water usage rates in place throughout the duration of the shortage.

Table 7-4: Drought Rates by Usage Reduction
FY 2026 Up to 10% Up to 20% Up to 30% Up to 40% Up to 50% Reduction Reduction Reduction Reduction Reduction Projected Variable Revenue $22,190,445 $19,850,493 $18,160,252 $15,740,118 $13,686,633 $11,580,881 Revenue Shortfall -$2,339,952 -$4,030,193 -$6,450,327 -$8,503,812 -$10,609,564 Cost Savings $1,755,935 $2,261,895 $3,003,600 $3,635,562 $4,305,472 Net Revenue to be Recovered -$584,017 -$1,768,298 -$3,446,727 -$4,868,250 -$6,304,092 %Commodity Rate Increase 3% 10% 22% 36% 54% Table 7-5 shows the proposed drought surcharges for each year of the study period. The surcharges are calculated by taking the FY 2026 proposed volumetric rate for each class and tier shown in Table 6-8 and increasing them by the percentage shown above for each reduction stage. The surcharge for FY 2026 is the difference between this new calculated rate and the proposed rate from Table 6-8. For future years, the surcharge for FY 2026 shown below is increased by the proposed revenue adjustments of 5% each year.

City of Upland/Water and Wastewater Rate Study Report 42 Table 7-5: Proposed Drought Surcharges
Customer Class FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Revenue Adjustments 5% 5% 5% 5%
0-10%Reduction
Single Family
Tier 1 $0.08 $0.08 $0.09 $0.09 $0.10
Tier 2 $0.10 $0.11 $0.11 $0.12 $0.12
Tier 3 $0.11 $0.12 $0.12 $0.13 $0.13
Multi Family $0.10 $0.11 $0.11 $0.12 $0.12
Landscape $0.10 $0.11 $0.11 $0.12 $0.12
Commercial $0.10 $0.11 $0.11 $0.12 $0.12
Schools $0.10 $0.11 $0.11 $0.12 $0.12
Government $0.11 $0.12 $0.12 $0.13 $0.13
10-20%Reduction
Single Family
Tier 1 $0.24 $0.25 $0.26 $0.28 $0.29
Tier 2 $0.32 $0.34 $0.35 $0.37 $0.39
Tier 3 $0.37 $0.39 $0.41 $0.43 $0.45
Multi Family $0.31 $0.33 $0.34 $0.36 $0.38
Landscape $0.33 $0.35 $0.36 $0.38 $0.40
Commercial $0.31 $0.33 $0.34 $0.36 $0.38
Schools $0.33 $0.35 $0.36 $0.38 $0.40
Government $0.34 $0.36 $0.37 $0.39 $0.41
20-30%Reduction
Single Family
Tier 1 $0.53 $0.56 $0.58 $0.61 $0.64
Tier 2 $0.71 $0.75 $0.78 $0.82 $0.86
Tier 3 $0.82 $0.86 $0.90 $0.95 $1.00
Multi Family $0.70 $0.74 $0.77 $0.81 $0.85
Landscape $0.74 $0.78 $0.82 $0.86 $0.90
Commercial $0.70 $0.74 $0.77 $0.81 $0.85
Schools $0.73 $0.77 $0.80 $0.85 $0.89
Government $0.76 $0.80 $0.84 $0.88 $0.92
30-40%Reduction
Single Family
Tier 1 $0.86 $0.90 $0.95 $1.00 $1.05
Tier 2 $1.15 $1.21 $1.27 $1.33 $1.40
Tier 3 $1.33 $1.40 $1.47 $1.54 $1.62
Multi Family $1.13 $1.19 $1.25 $1.31 $1.37
Landscape $1.19 $1.25 $1.31 $1.38 $1.45
Commercial $1.13 $1.19 $1.25 $1.31 $1.37
Schools $1.18 $1.24 $1.30 $1.37 $1.43
Government $1.24 $1.30 $1.37 $1.44 $1.51

City of Upland/Water and Wastewater Rate Study Report 43 Customer Class FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 40-50%Reduction
Single Family
Tier 1 $1.31 $1.38 $1.44 $1.52 $1.59
Tier 2 $1.75 $1.84 $1.93 $2.03 $2.13
Tier 3 $2.04 $2.14 $2.25 $2.36 $2.48
Multi Family $1.73 $1.82 $1.91 $2.00 $2.10
Landscape $1.82 $1.91 $2.01 $2.11 $2.21
Commercial $1.73 $1.82 $1.91 $2.00 $2.10
Schools $1.80 $1.89 $1.98 $2.08 $2.19
Government $1.89 $1.98 $2.08 $2.19 $2.30

City of Upland/Water and Wastewater Rate Study Report 44

8. Wastewater Financial Plan
This section of the report details the wastewater enterprise's long-term financial plan, based on the projected revenues, expenses, debt service, and capital project costs. Raftelis modeled the financial plan without revenue adjustments (status quo) and with proposed revenue adjustments to ensure the financial sustainability of the wastewater utility. The results of the water financial plan are the proposed rates for five years based on the proposed revenue adjustments.

8.1 . Current Rate Revenue
The City's revenues consist of rate revenues, interest earnings on cash reserves, and other miscellaneous revenues. The rate revenue projection shown below assumes that current FY 2026 rates are in effective throughout the study period. This status quo scenario provides a baseline from which Raftelis evaluates the need for revenue adjustments.

8.1.1. Calculated Wastewater Rate Revenues
Raftelis projected wastewater rates revenues from the City's monthly charge per EDU for the study period based on current wastewater rates, and the projected number of equivalent dwelling units(EDUs).

The City collects fixed bi-monthly charges from its customers based on the number of EDUs. San Antonio Heights customers are charged a rate 1.5 times the EDU rate based on the additional infrastructure needed to provide service to customers in that area and is based on an agreement between the City and San Antonio Heights. Table 8-1 shows projected rate revenues the City will collect under current rates for the rate-setting period.

Table 8-1: Projected Rate Revenues Under Current Wastewater Rates Sewer Rate Revenue FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 City Local Sewer Services Charges $4,032,427 $4,356,224 $4,356,224 $4,356,224 $4,356,224 SA Heights Sewer Services Charges,1.5 times the rate $22,557 $22,557 $22,557 $22,557 $22,557 Total City Local Services Charge Revenue $4,054,984 $4,378,781 $4,378,781 $4,378,781 $4,378,781

8.1.2. Other Revenues
Table 8-2 shows the projected miscellaneous revenues for the wastewater enterprise, assuming no revenue adjustments.

Table 8-2: Projected Other Wastewater Enterprise Revenues, Status Quo Line Item FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Other Operating Revenue $150,800 $152,308 $153,831 $155,369 $156,923 Interest Income $552,567 $382,077 $350,927 $260,712 $177,254 Total Other Revenue $703,367 $534,385 $504,758 $416,081 $334,177

8.2. Annua. .xpenses - Wastewater
The City's annual expenses include operations and maintenance expenses and capital expenses. This section discusses the expenses in detail.

City of Upland/Water and Wastewater Rate Study Report 45

8.2.1. Total Operations and Maintenance Budget
The City provided Raftelis with its actual expenses for FY 2025 and budget for FY 2026. The City also provided adjustments in future years to account for changes in staffing and reductions in anticipated operating and maintenance expenses. To project the City's O&M expenses, Raftelis used the escalation factors shown in Table 3-6. Table 8-3 shows a summary of the budgeted and projected O&M.

Table 8-3: Summary of Projected Wastewater Operations and Maintenance Expenses Line Item FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Customer Service $89,000 $91,670 $94,420 $97,253 $100,170 Maintenance & Operations $3,185,302 $3,645,893 $3,766,296 $3,890,697 $4,019,230 Sewer- Residential $946,840 $977,125 $1,008,384 $1,040,650 $1,073,953 Sewer- Non-Residential $341,280 $352,811 $364,734 $377,061 $389,806 Capital Projects _ $5,650 $5,876 $6,111 $6,355 $6,610 Total $4,568,072 $5,073,376 $5,239,945 $5,412,016 $5,589,770

8.2.2. Capital Improvement Plan
Table 8-4 shows the City's capital improvement plan for wastewater capital projects through FY 2030. The plan averages roughly$810,000 a year over the study period.

I able 8-4: Projected Wastewater Capital Improvement Projects FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Total Rate Funded CIP $750,000 $780,000 $811,200 $843,648 $877,394

8.2.3. Existing and Proposed Debt Service
The City currently has no existing debt for the wastewater utility. Raftelis is not proposing any new debt issuances.

8.3. Reserve Targets
The City maintains multiple wastewater enterprise reserve funds.

Operating Reserve—The Operating Reserve is used primarily to meet ongoing cash flow requirements. The City's minimum reserve target is set at 25% of O&M expenses. The maximum target is set at 50% of O&M expenses.

Capital Reserve—The Capital Reserve is used to cover capital costs and any unexpected and unplanned infrastructure repairs and replacements not included in the budget as well as to set aside money for future capital projects. The minimum target is set at 100%of the five-year average of capital projects. The maximum target is set at 300% of the five-year average of capital projects.

Rate Stabilization Reserve—The Rate Stabilization Reserve is used primarily to help reduce an annual revenue adjustment due to short-term spikes in costs. The City's minimum reserve target is set at 25% of rate revenues.

The maximum target is set at 50% of rate revenues.

City of Upland/Water and Wastewater Rate Study Report 46

8.4. Proposed Financial Plan and Revenue Adjustments The proposed revenue adjustments are necessary to ensure adequate revenue to fund the wastewater enterprises'operating expenses. The first revenue adjustment is effective on July 1, 2026,with each following year effective on January 1. The proposed revenue adjustments would allow the City to cover its O&M costs.

The CIP projects are mostly funded through the existing reserves. Table 8-5 shows the proposed wastewater revenue adjustments for the five-year rate-setting period. Even though the wastewater enterprise has adequate reserves, revenue adjustments are still needed to ensure that rate revenues cover operating expenses over the next five years.

Table 8-5: Proposed Wastewater Revenue Adjustments
Effective Date Adjustment
July 1, 2026 4.0%
January 1, 2027 4.0%
January 1, 2028 4.0%
January 1, 2029 4.0%
January 1, 2030 4.0%
Table 8-6 shows the wastewater cashflow for the study period, taking into account the revenue adjustments shown above in Table 8-5. Line 1 shows the projected wastewater rate-revenue under existing rates. Line 9 shows the total rate-revenue including the proposed revenue adjustments. Line 14 shows total wastewater fund revenue, including miscellaneous revenues and interest. Line 24 shows total O&M expenses. Line 26 shows rate funded capital costs for each year. The wastewater enterprise does not have any current debt service, and Raftelis is not proposing to issue any. Line 28 shows the net cash flow. As shown, each year of the rate-setting period results in a negative cashflow. This is the result of reserves being drawn upon to minimize customer bill impacts.

City of Upland/Water and Wastewater Rate Study Report 47 Table 8-6: Wastewater Cashflow
Line Item FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Revenue Under Existing Rates $4,054,984 $4,378,781 $4,378,781 $4,378,781 $4,378,781 2 Revenue Adjustments
3 Adjustment Mo. Effective
4 FY 2026 0.0% 12 $0 $0 $0 $0 $0 5 FY 2027 4.0% 12 $175,151 $175,151 $175,151 $175,151 6 FY 2027 4.0% 6 $91,079 $182,157 $182,157 $175,151 7 FY 2028 4.0% 6 $94,722 $189,444 $189,163 8 FY 2029 4.0% 6 $98,511 $196,730 9 FY 2030 4.0% 6 $102,300
10 Total Rate Revenue $4,054,984 $4,645,011 $4,830,812 $5,024,044 $5,217,277 11 Other Revenue
12 Other Operating Revenue $150,800 $152,308 $153,831 $155,369 $156,923 13 Interest Income $552,567 $386,070 $365,814 $287,206 $213,817 14 Total Other Revenue $703,367 $538,378 $519,645 $442,575 $370,740 15 16 Total Revenue $4,758,351 $5,183,389 $5,350,457 $5,466,619 $5,588,016 17 18 O&M Expenses
19 Customer Service $89,000 $91,670 $94,420 $97,253 $100,170 20 Maintenance&Operations $3,185,302 $3,645,893 $3,766,296 $3,890,697 $4,019,230 21 Sewer-Residential $946,840 $977,125 $1,008,384 $1,040,650 $1,073,953 22 Sewer-Non-Residential $341,280 $352,811 $364,734 $377,061 $389,806 23 Capital Projects $5,650 $5,876 $6,111 $6,355 $6,610 24 Total O&M Expenses $4,568,072 $5,073,376 $5,239,945 $5,412,016 $5,589,770 25 26 Rate Funded CIP $750,000 $780,000 $811,200 $843,648 $877,394 27 28 Net Cash Flow -$559,720 -$669,986 -$700,688 -$789,044 -$879,147 Figure 8-1 shows the proposed five-year financial plan for the wastewater enterprise. Status quo revenue is shown by the solid line. Projected revenue is shown by the dashed line. Annual expenditures are shown by the columns. The green bars below the X-axis show reserves are drawn down year to year to fund capital costs. Revenue from current rates is not enough to cover annual operating and maintenance costs. Therefore, revenue adjustments are required to generate sufficient revenue to cover these costs over the study period.

City of Upland/Water and Wastewater Rate Study Report 48 Figure 8-1: Proposed Wastewater Financial Plan
Financial Plan
$6
$4
$2
$0
-$2
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 O&M Expenses Rate Funded Capital Projects
Reserve Funding Current Revenues
——— Proposed Revenues
Figure 8-2 shows the projected wastewater capital improvement plan for the study period. The City does not plan to issue debt to pay for future CIP.

Figure 8-2: Projected Wastewater Capital Plan and Funding Sources Capital Financing Plan
$0.9
SO
3 $0.9 $0.8
$0.8
$0.8
$0.8 80.8
$0.8
$0.7
$0.7
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 •Rate Funded
Figure 8-3 shows the projected wastewater enterprise ending balance for each year of the study period. The gray line represents the maximum reserve targets, and the black line represents the minimum reserve targets.

The green bars represent the ending fund balance for each year of the study period. The balances are being drawn down to fund the CIP.

City of Upland/Water and Wastewater Rate Study Report 49 Figure 8-3: Projected Wastewater Fund Ending Balance
Fund Balances
N $16
o $14 $13.4 $12.7
$12 $11.2
$12P I.1 $10.4
$10 v PI
$8
$6
$4
$2 IILad
$0
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Ending Balance -Reserve Target-Min -Reserve Target-Max

City of Upland/Water and Wastewater Rate Study Report 50

9. Wastewater Cost-of-Service
Analysis
The cost-of-service analysis utilized to develop the wastewater rates followed the guidelines for allocating costs outlined in the WEF Manual No. 27.

Using these principles, the revenue requirement is distributed to customers. This section details the cost-of- service analysis for the City's wastewater collection system.

9.1 . Revenue Requirement Determination
The first step of the cost-of-service analysis is to determine the revenue requirement for the test year, or rate- setting year. The test year of this study is FY 2026. The total revenue requirement shown in Line 5 is equal to operating expenses(Table 8-6, Line 24), and capital expenses (Table 8-6, Line 26) for FY 2026. Revenue offsets in Line 11 are equal to (Table 8-6, Line 14)for FY 2026. These reduce the total revenue required from rates. The transfer to or from reserves (Line 14) is subtracted to account for the draw from reserves. The adjustment to annualize rate increase (Line 15) is to account for the revenue adjustment occurring part way through the fiscal year and helps determine the rate as if the rate were calculated for the whole year, in this case since the revenue adjustment is applied to the whole year, it is zero. The total revenue to be recovered from rates is equal to Line 5 minus Line 11 and Line 16.

Table 9-1: Wastewater Revenue Requirement
Line Revenue Requirement- FY 2027 Operating Capital Total 1 Revenue Requirements
2 O&M Expenses $5,073,376 $5,073,376
3 Debt Service $0 $0
4 Rate Funded CIP $780,000 $780,000
5 Total - Revenue Requirements $5,073,376 $780,000 $5,853,376 6 7 Revenue Offsets
8 Other Operating Revenue $152,308 $152,308 9 Non-Operating Revenue $0 $0
10 Interest Income $386,070 $386,070
11 Total - Revenue Offsets $538,378 $0 $538,378 12 13 Less Adjustments
14 Transfer from (to) Reserves $669,986 $669,986 15 Adjustment to Annualize Rate Increase $0 $0 16 Total - Less Adjustments $669,986 $0 $669,986 17 18 Total Revenue to be Recovered from Rates $3,865,011 $780,000 $4,645,011

City of Upland/Water and Wastewater Rate Study Report

9.2. Operating and Capital Cost Allocation
In order to allocate the City's revenue requirements to cost causation components, Raftelis functionalized expenses.

Table 9-2 shows the functional allocations of O&M expenses and assets. Table 9-3 and Table 9-4 use these percentages by multiplying the total shown in each row, which are the functionalized values, by the corresponding percentage to allocate the costs. Table 9-3 and Table 9-4 show the percentage allocation of costs.

Table 9-2: Wastewater Percentage Allocations
Customer Service and
Function Collection Fixed Capacity Related General Total Costs
Collection 100% 100%
Customer Service 100% 100%
General&Admin 100% 100%
Table 9-3: Wastewater O&M Cost Allocation
Customer Service and
O&M Expenses Collection Fixed Capacity Related General Total Costs
Collection $4,126,624 $0 $0 $4,126,624 Customer Service $0 $374,738 $0 $374,738 General&Admin $0 $0 $572,013 $572,013 Total $4,126,624 $374,738 $572,013 $5,073,376 Operating Allocation% 81% 7% 11%
Table 9-4: Wastewater Capital Asset Allocation
Customer Service and
Asset Allocation Collection Fixed Capacity Related General Total Costs
Collection $31,578,205 $0 $0 $31,578,205 Customer Service $0 $0 $0 $0
General&Admin $0 $0 $791,568 $791,568
Total $31,578,205 $0 $791,568 $32,369,773 Asset Allocation% 98% 0% 2%

9.3. Derivation of Units of Service

9.3.1. Unit Costs of Service
Raftelis calculated unit costs for each cost component by assessing the total number of EDUs. Table 9-5 shows the units of service and unit costs calculations for the City's wastewater collection system. General costs are reallocated to Collection and Customer components based on their proportional percentage of the total cost of service. After the reallocation of general costs, the adjusted cost of service is divided by the units of service(EDUs). Since the City charges wastewater accounts on an EDU basis, the net revenue requirement for each cost component is divided by the total number of EDUs to derive the unit cost. The proposed charges per EDU are shown in the last two rows of the table for the annual and monthly costs, respectively. The sum of Columns B, C, and D equals the total cost per EDU shown in Column A. It is important to note that this value is rounded up to the nearest cent in future tables.

City of Upland/Water and Wastewater Rate Study Report 52 Table 9-5: Units of Service, FY 2027
(A) (B) (C) (D) (E) (F)
Customer Class 2027 Collection Customer Revenue Offsets General Total Operating Cost $4,403,389 $3,581,666 $325,251 $0 $496,473 $4,403,389 Capital Cost $780,000 $760,926 $0 $0 $19,074 $780,000 Revenue Offsets $0 $0 $0 -$538,378 $0 -$538,378 Total Cost of Service $5,183,389 $4,342,591 $325,251 $0 $515,547 $4,645,011 Percent excluding General Costs 93% 7% 0% Allocation of General Costs $0 $479,624 $35,923 $0 $0 $0 Total Cost of Service $4,645,011 $4,822,216 $361,174 -$538,378 $0 $4,645,011 Units of Service(EDUs) 32,321 32,321 32,321 32,321 Unit Cost/year $143.72 $149.20 $11.17 -$16.66 Unit Cost/Month $11.98 $12.43 $0.93 -$1.39