Victorville City Council
August 8, 2023

City Council Chambers
14343 Civic Drive
Victorville, CA
www.victorvilleca.gov
VICTORVILLE CITY COUNCIL
VICTORVILLE LIBRARY BOARD OF TRUSTEES
SOUTHERN CALIFORNIA LOGISTICS AIRPORT AUTHORITY
SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY
THE CITY AS HOUSING ASSETS SUCCESSOR
JOINT POWERS FINANCING AUTHORITY
VICTORVILLE WATER DISTRICT
NOTICE: The Mayor has called a Special Meeting
pursuant to Government Code Section 54956.

Tuesday, August 8, 2023
5:00 p.m. Special Council Meeting
The

City

Council

holds

its

business

meetings

in

public

in

accordance

with

the

requirements

of

the

Ralph
M.

Brown

Act,

its

established

policies

and

procedures,

and

its

adopted

parliamentary

authority.

The
Council

strives

to

carry

out

its

meetings

in

an

atmosphere

of

professionalism

with

full

participation

by
members

of

the

body

and

the

public.

As

such,

the

Presiding

Officer

is

empowered

to

govern

City

Council
Meetings

to

foster

the

efficient

and

fair

administration

of

City

business

and

reserves

the

right

to

enforce
(or

cause

to

be

enforced)

the

Meeting

Rules

of

Conduct

and

Decorum

as

set

forth

in

Chapter

5 of

the

City
Council Policy and Procedures Manual.

The

City

Council

welcomes

and

encourages

public

participation

and

invites

the

community

to
attend

in

person.

Now

that

COVID-19

cases

in

our

area

have

reduced

to

a

point

that

social
distancing

requirements

have

been

lifted,

City

Council

Meetings

will

be

held

in-person

at

City

Hall
in

Council

Chambers.

Remote

viewing

of

our

Council

Meetings

is

available

through

YouTube,

but
public comments must be given in-person at the meeting or in advance as noted below.

Public

Comments:

Members

of

the

public

may

submit

comments

electronically
to

[email protected]

by

4 p.m.

the

day

of

the

meeting

to

be

distributed

to

City

Council.

During
special

meetings,

all

testimony

is

limited

to

items

posted

on

the

special

meeting

agenda.

Public
comments

will

be

no

longer

than

three

(3)

minutes

per

community

member.

Should

a

speaker

conclude
their

comments

prior

to

the

expiration

of

three

(3)

minutes,

the

speaker

waives

the

right

to

speak

for

any
remaining

amount

of

time.

For

further

information

about

how

to

address

the

Council,

please

refer

to

the
City’s website at
victorvilleca.gov/government/agendas
.

In

compliance

with

the

Americans

with

Disabilities

Act,

if

you

need

special

assistance

to

participate

in

this
meeting, please contact the City Clerk’s office at
(760) 955-5188
prior to the meeting.

5:00 p.m. Special Session

Call to Order

Roll Call

Invocation:

Pledge of Allegiance: Police Captain John Wickum

City Clerk Presents Agenda/Revisions to Agenda

Conflict of Interest Declarations
Any

items

on

this

agenda

that

might

be

a

conflict

of

interest

to

any

Council
Members/Board Members should be identified at this time

Introduction to Public Comments

Public Comments

WRITTEN COMMUNICATIONS

1. Proposed

Resolution

No.

23-068

to

Accept

the

2023

Solid

Waste

Rate

Study;

Set
the

Date,

Time,

and

Location

for

a

Public

Hearing

on

Proposed

Adjustments

to
Rates

and

Fees

for

Solid

Waste

Services;

and

Authorize

Preparation

and

Mailing

of
Notices of Public Hearing in Accordance with Proposition 218.

Recommendation:

Staff recommends that the Honorable City Council adopt Resolution No. 23-068 to:
(1) Accept the 2023 Solid Waste Rate Study;
(2)

Set

October

3,

2023,

as

the

date

for

the

Public

Hearing

on

the

proposed
adjustments to the City’s rates and fees for Solid Waste Services; and (3)

Authorize

City

Staff

to

prepare

and

mail

Notices

of

the

Public

Hearing

in
accordance with Proposition 218.

2. Proposed

Resolution

No.

23-063

to

Accept

the

2023

Sewer

Rate

Study;

Set

the
Date,

Time,

and

Location

for

a

Public

Hearing

on

Proposed

Adjustments

to

Sewer
Service

Rates;

and

Authorize

the

Preparation

and

Mailing

of

Notices

of

Public
Hearing in Accordance with Proposition 218.

Recommendation:

Staff recommends that the Honorable City Council adopt Resolution No. 23-063 to:
(1) Accept the 2023 Sewer Rate Study;
(2)

Set

October

3,

2023,

as

the

date

for

the

Public

Hearing

on

the

proposed
adjustments to the City’s Sewer Service Rates; and
(3)

Authorize

City

Staff

to

prepare

and

mail

Notices

of

the

Public

Hearing

in
accordance with Proposition 218.

Adjournment

Item Number: 1
City Council / Board of Directors
Written Communications
Meeting of: August 8, 2023
Submitted By:

Doug Mathews, Director of Public Works and Water

Subject:

Proposed Resolution No. 23-068 to Accept the 2023 Solid Waste Rate Study; Set the Date, Time, and Location for a Public Hearing on Proposed Adjustments to Rates and Fees for Solid Waste Services; and Authorize Preparation and Mailing of Notices of Public Hearing in Accordance with Proposition 218.

Recommendation:

Staff recommends that the Honorable City Council adopt Resolution No. 23-068 to:
(1) Accept the 2023 Solid Waste Rate Study;
(2) Set October 3, 2023, as the date for the Public Hearing on the proposed adjustments to the City’s rates and fees for Solid Waste Services; and (3) Authorize City Staff to prepare and mail Notices of the Public Hearing in accordance with Proposition 218.

Fiscal Impact:

This action will result in a fiscal impact of approximately $32,600, resulting from direct costs of mailing required hearing notices and notice publications. An additional appropriation is not required. This project will be funded entirely from the Solid Waste Fund No. 426. There are sufficient funds in this account to cover the planned expense.

Budget Account No. Available Funds Account Description
4260400-52300 $128,831 Solid Waste – Contract Services Strategic Plan Goal:

This item aligns with Goal A, Financial Stability; and Goal E, Invest in Infrastructure.

Periodically evaluating and adjusting Solid Waste Rates and fees helps ensure the City has necessary resources to adequately fund services and operation and maintenance of related capital assets.
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Background:

City Management of Solid Waste and Recycling
Section 6.36.020 of the Victorville Municipal Code (VMC) states that it is the policy of the City to provide for solid waste handling services and devise recycling/diversion programs to comply with California state laws.

Section 6.36.036(a) of the VMC states that the City shall provide solid waste and recycling service to all occupied premises in the City and that the City shall collect fees which are adopted by resolution of the City Council for the provision of the services.

Current Solid Waste Billing
The City bills approximately 31,300 single-family residential customers and 1,700 commercial customers each month for Solid Waste Services. The Solid Waste Rates currently include the costs for collection services, solid waste disposal, state mandated recycling/diversion programs, pavement impact fees, City costs to administer solid waste programs, and franchise fees. Household Hazardous Waste Fees are also billed to residential accounts as a separate fee.

Solid Waste Rate Adjustment Background
The City provides for collection of trash and recyclables through its franchised hauler, Victorville Disposal (Burrtec), per the terms of a contract that was executed in November 2009, and subsequently amended in 2014 and 2018. The City also has a contract for solid waste disposal with San Bernardino County as well as contracts for recycled material processing at the Victor Valley Materials Recovery Facility (MRF) and organic material processing at the Victor Valley Compost Facility. All of these contracts include annual cost of living adjustment provisions.
2018 Solid Waste Rate Study and Resolution No. 18-012
In 2018, the City retained NBS, an independent consulting firm, to perform a comprehensive Solid Waste Rate Study. The key objectives of the study were to review the City’s solid waste operating budgets and to develop a financial plan to appropriately fund operations, establish adequate operating reserves, and ensure that residential and commercial Solid Waste Rates (which had not been adjusted since 2008) met the projected financial needs for providing such services over the next five years. It is generally considered good practice to perform comprehensive rate studies at least every five years.

After review of the Solid Waste Study and following appropriate Proposition 218 procedures, the City Council adopted Resolution No. 18-012, on June 5, 2018, to establish a schedule of rates and fees for a period of five years. Rates and fees became effective on July 1, 2018, and provided for annual increases over a five-year period ending in fiscal year 2023.
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State Law Senate Bill 1383 (Organics Recycling) Requirements When Resolution No. 18-012 was adopted in June 2018, the Solid Waste Rates did not include the costs for full compliance with California state Senate Bill 1383 (SB 1383), because the regulations to implement SB 1383 had not yet been finalized by the state.

SB 1383 was enacted in 2016 and established the following goals to reduce emissions of short-lived climate pollutants (SLCP), including methane emissions from landfills:
•Reduce organic waste disposal 50% by 2020 and 75% by 2025, as compared to 2014 levels.
•Recover at least 20% of currently disposed, surplus, edible food for human consumption by 2025.

This bill required the California Department of Resources Recycling and Recovery (CalRecycle) to adopt regulations to achieve the targeted goals for reducing organic waste disposal in landfills. In 2017, CalRecycle began a multi-year process to develop regulations, with the final regulations adopted in November 2020.

The SB 1383 regulations are wide-ranging, imposing multiple requirements on local jurisdictions, haulers, waste generators, landfill operators, and recycling facility operators.

Below are some of the major obligations the SB 1383 regulations imposed on the City and other covered jurisdictions:
•Adopt an enforceable ordinance requiring organic waste generators, haulers, and other entities within the jurisdiction to comply with the regulations. •Implement programs to recover organic materials from all residential and commercial waste generators, including multi-family residential complexes. •Implement a “container contamination minimization” program to monitor waste, recycle, and organics container contents and reduce contamination. The program may include route reviews (inspection of containers) and/or waste evaluations as well as follow up notifications to generators with violations. •Implement outreach and education programs to notify generators about diversion program requirements.
•Implement edible food recovery (rescue) programs to divert surplus edible food to food banks for distribution to residents.
•Notify “Tier One” and “Tier Two” edible food generators (as defined in SB 1383 regulations) about requirements.
•Procure “recovered organic waste products” such as compost or mulch in quantity and quality that meets or exceeds the target specified by CalRecycle. •Procure recycled paper products with at least 30% post-consumer recycled content.
•Implement compliance reviews for all commercial and multi-family accounts generating two or more cubic yards of materials per week (trash, organics, and recycling combined).
•Take enforcement actions including issuing Notices of Violation (which provide a 3 2
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period of time for generators to come into compliance) and ultimately assessing penalties via the administrative citation process (starting in January 1, 2024). •Maintain all implementation records in a central location that can be made available to CalRecycle within ten business days. The implementation records will include but are not limited to information about inspections, enforcement actions, outreach and education, program descriptions, procurement activities, edible food recovery programs, etc.

The City, through its contract with Victorville Disposal, has already implemented organics collection programs for commercial customers. Commercial programs to recover food waste, garden trimmings, and wood waste started in FY 18/19 after the adoption of the previous rate Resolution No. 18-012, and the 2018 revision of the Victorville Disposal franchise agreement to add commercial organics collection services.

The City still needs to implement additional programs to fully comply with all the requirements of SB 1383. Major programs yet to be implemented include residential curbside organics collection utilizing a third (green) cart, container contamination minimization, inspection and enforcement, procurement of recovered organic waste products, outreach and education, and development of the “implementation record” to document compliance with SB 1383 requirements. The proposed 2023 Solid Waste Rates include the costs for implementing expanded organics recycling services needed to comply with SB 1383.

Discussion:

Solid Waste Rate Study Update
Given its familiarity with the City’s existing solid waste rate structure and customer classes, the City again engaged NBS to review and update the 2018 Solid Waste Rate Study. The key objectives of the new Rate Study were to review the solid waste fund operating budget, develop an updated financial plan to appropriately fund operations and establish adequate operating and capital reserves, and develop updated rates to ensure that residential and commercial Solid Waste Rates meet the projected financial needs for providing such services over the next five years. A key objective of the updated Rate Study was to ensure that all costs associated with compliance with California state law SB 1383 were incorporated into the Solid Waste Rates for residential and commercial customers.

Street Sweeping
As part of the 2023 Solid Waste Rate Study, NBS was also requested to review the City’s street sweeping services and costs and provide an analysis of options for including street sweeping costs in the Solid Waste Rates. The full street sweeping cost analysis is included in the Solid Waste Rate Study (Exhibit 1 of Attachment A). Some details from the NBS Study and a brief discussion of the costs and nature of the service are provided here.
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City streets are swept for the benefit of customer properties receiving Solid Waste Services, collecting debris from areas of accumulation (or removing trash from City streets) to dispose of at the landfill. Street sweeping is essentially a trash collection and disposal effort, some of which is the result of debris from trash barrels placed on the street during weekly collection days. Regular street sweeping removes unsightly and potentially harmful trash and debris from the streets and gutters bordering the homes and businesses of solid waste customer properties, providing both health and aesthetic benefits. Street sweeping further prevents accumulation of debris from blocking storm drain facilities, thereby minimizing the potential for localized flooding of customer properties during heavy rains.

The City’s total street sweeping costs for FY 21/22 were used as a baseline to project the total annual cost for providing street sweeping services to residential and commercial streets in the city on a going forward basis, utilizing City staff and equipment. Future costs also include planned capital replacement costs.

Street sweeping benefits and costs are more directly related to the number of customer properties receiving solid waste services rather than a property’s specific container size or level of service. That is, both residential and commercial customers contribute to the cost-causation (i.e., they both generate the materials collected by street sweepers). While street sweeping fees can be collected from customer properties with commercial bins, roll-offs, and compactors, etc., the most direct nexus is to curbside collection customer properties, including both residential and commercial cans.

NBS has opined that street sweeping costs can and should be applied to residential and commercial curbside customer properties in an across-the-board manner, with a rate defined by dividing the annual cost of street sweeping operations by the number of residential and commercial curbside customer properties. City streets are swept as often as possible within the confines of budgeted staff and equipment, with commercial streets receiving more frequent sweeping due to a larger amount of trash that accumulates in these areas. Trash most often accumulates in center medians, intersections, cross gutters, and along curbed areas, but other areas are swept as well on an as needed or reported/requested basis.

The Solid Waste Rate Study (Exhibit 1 of Attachment A) presents the findings of the updated Solid Waste Rate Study and the street sweeping cost analysis.

Current and Proposed Solid Waste Service Rates
All occupied premises in the City are provided with solid waste services and are subject to charges for the services. The Solid Waste Rates include the costs for collection services, solid waste disposal, state mandated recycling/diversion programs, pavement impact fees, City costs to administer solid waste programs, and franchise fees. Collection costs are set per the terms of the City’s contract with Victorville Disposal and vary with service type. Other costs are allocated to customer classes (residential vs. commercial) based on quantity of waste generated, then per unit costs are calculated based on the number of accounts (for residential) or the number of cubic yards (for commercial). 3 2
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There are no proposed changes to the current Solid Waste Rate methodology. However, several additional costs have been added to the rates as noted below:
•Organics Collection costs have been added to the rate for residential cart customers to cover the costs of new organics collection service required by state law SB 1383.
•Organics recycling program costs have been added to the residential cart rate to cover other SB 1383 related costs.
•Street sweeping costs have been added to residential and commercial cart rates.

Summary of Proposed Rate Increases
To ensure sufficient funding for future operations as determined by the 2023 Solid Waste Rate Study and to allow for implementation of new organics recycling programs needed to comply with state SB 1383 mandates, both residential and commercial rates are proposed to be increased. For residential customers, the monthly rate is proposed to increase by $12.15 per month from $30.77 to $42.92 per month, an increase of 39%. For a commercial customer using a three (3) cubic yard bin with weekly service, the increase will be $9.57 per month from $134.05 to $143.62 per month, a 7% overall increase.

The table below summarizes the proposed rate increase for a single-family residence with 95-gallon cart service.

Table 1
Current & Proposed Residential (95-Gal Cart/Curbside pickup) Rate Components The residential rate increase of $12.15 per month reflects the additional costs associated with provision of new organics recycling programs, CPI increases for collection and disposal services, and the incorporation of street sweeping costs. Major components of the increase include:
•Organics Program Costs: Costs associated with implementing new residential organics recycling programs as required by SB 1383 account for $7.37 or 60% of the proposed increase. This includes the cost for organics collection (green cart program), organics processing, and other SB 1383 program costs.

Pavement Impact Fee $0.75 $0.29 ($0.46)
Organics Program $0.00 $0.90 $0.90 $0.90
Organics Collection $0.00 $4.20 $4.20 $4.20
AB 939 Fee $1.01 $0.94 ($0.07)
Street Sweeping (NEW) $0.00 $0.83 $0.83
Franchise Fee $2.28 $3.12 $0.84
Admin $3.40 $5.18 $1.78 $0.27
Disposal $5.03 $7.82 $2.79 $2.00
Collection $18.30 $19.64 $1.34
Total $30.77 $42.92 $12.15 $7.37
Change in
SFR Rate
SB 1383
Costs
Solid Waste Residential
Fees (95-Gal. Cart) FY'22/23 FY'23/24
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•CPI Adjustment for Collection Costs: The 7.33% CPI adjustment (for FY 23/24) to collection services per the terms of the City’s franchise agreement resulted in a $1.34 increase in collection costs, representing 11% of the total $12.15 increase. •Street Sweeping Costs: The addition of street sweeping costs accounts for 83 cents per month or 6% of the total increase.

There are several ways that residents may be able to lessen the impact of the Solid Waste Services rate increase. First, many households (approximately 20%) currently have an extra trash cart. It is likely that many of these households will be able to cancel their extra trash cart once they receive a new green cart for garden trimmings and food scraps. The proposed rate for an extra trash cart is $13.93 per month. By cancelling their extra trash cart, these residents will see a $1.78 decrease in their monthly bill. A new, 65-gallon trash cart option is also being added for residential customers. The smaller cart offers a $2.88 per month savings vs. standard 95-gallon trash service. A 35-gallon trash cart for those with minimal amounts of solid waste offers a $5.34 per month savings vs. 95-gallon service.

Table 2 summarizes rate changes for residential customers and a variety of commercial customer types.

Table 2 – Current and Proposed Residential and Commercial Rates ($/Month) Table 3 shows the percentage increases across a variety of customer types. Larger increases in FY 23/24 reflect the addition of new organics programs and street sweeping costs. Proposed increases for FY 24/25 onward range from 8.2% to 4.5% to keep pace with anticipated inflation factors.

Table 3 – Current and Proposed Residential and Commercial Rates (% Increases) Effective Rate Increases (sum of all rate components)
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28Single Family Residential $30.77 $42.92 $46.44 $49.25 $51.49 $53.83Multi-Family Residential $30.77 $42.92 $46.44 $49.25 $51.49 $53.83Commercial Can $38.95 $43.30 $46.36 $48.98 $51.03 $53.17Commercial Bin (3.0 CY Bin, 1 Pickup/week) $134.05 $143.62 $148.49 $154.54 $160.85 $167.44Comm. Compactor Bin (1.5 CY, 1 Pickup/week) $113.34 $109.94 $114.95 $119.21 $123.64 $128.25Commercial Recycling (3 CY Bin, 1 Pickup/week) $95.77 $106.84 $114.87 $121.85 $129.79 $138.96Roll-offs (10 CY Roll-Off, 1 Pickup/week) $867.65 $960.83 $1,013.08 $1,081.25 $1,154.27 $1,232.49 Customer Class Projected Solid Waste Rates (Partial List)CurrentRates Effective Rate Increases (sum of all rate components)
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28Single Family Residential 39.5% 8.2% 6.1% 4.5% 4.5%Multi-Family Residential 39.5% 8.2% 6.1% 4.5% 4.5%Commercial Can 11.2% 7.1% 5.7% 4.2% 4.2%Commercial Bin (3.0 CY Bin, 1 Pickup/week) 7.1% 3.4% 4.1% 4.1% 4.1%Commercial Compactor Bin (1.5 CY, 1 Pickup/week) -3.0% 4.6% 3.7% 3.7% 3.7%Commercial Recycling (3 CY Bin, 1 Pickup/week) 11.6%* 7.5% 6.1% 6.5% 7.1%Roll-offs (10 CY Roll-Off, 1 Pickup/week) 10.7% 5.4% 6.7% 6.8% 6.8% *Note: Commercial Recycling goes up by more than other rates due to the addition of Admin. and AB 939 Fees.

Customer Class Projected Solid Waste Rates (Partial List) 3 2
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The Household Hazardous Waste Fee is charged to residential accounts to pay for the cost of the City’s Household Hazardous Waste (HHW) program which includes operation of the HHW Center. The HHW fee has been 32 cents per unit per month since 2018. Due to rising costs for contract staffing and disposal of collected wastes, the HHW fee is proposed to increase, beginning in FY 24/25, as noted below:

Proposed HHW Rate
Current Rate FY 24/25 FY 25/26 FY 26/27 FY 27/28
$0.32/unit/mo. $0.37 $0.39 $0.41 $0.44
$ Increase $0.05 $0.02 $0.02 $0.03
% Increase 15.2% 2.3% 2.7% 6.7%
The Rate Study includes a comparison of the proposed new residential and commercial rates to rates in neighboring jurisdictions. However, it is difficult to make equivalent rate comparisons because the solid waste services provided vary between jurisdictions.

Proposition 218 – Adoption of Proposed Solid Waste Rates Proposition 218, a voter-adopted ballot initiative, added Articles XlllC and XlllD to the California Constitution to create rules and limitations on the imposition of assessments, taxes, and fees. Section 6 of Article XlllD, which applies to property-related fees, requires a public hearing be scheduled to consider adoption of any new rates or fees and notification to be sent to the record owner of each identified parcel upon which any new (or increased) fees, rates or charges are proposed to be imposed. The required notification is a public hearing notice, which must be mailed at least forty-five (45) days in advance of the public hearing, and must describe the amount of the fee or charge proposed to be imposed upon each parcel; the basis upon which the amount of the proposed fee or charge was calculated; the reason for the fee or charge; together with the date, time, and location of the public hearing.

Upon adoption of Resolution No. 23-068, the Rate Study will be accepted, and a public hearing will be scheduled to take place at the City Council’s regularly-scheduled meeting on October 3, 2023 (the "Public Hearing"). Notice of the Public Hearing (the "Notice") will also be prepared by City Staff (in consultation with the City Attorney) and mailed to the record owner of each identified parcel upon which the City proposes to impose the proposed Solid Waste Rates 45 days prior to the Public Hearing date. Each record owner will have the right to submit a written protest against the proposed new rates in the manner to be set forth in the Notice. The Notice will also provide the procedures by which such protests will be considered valid and counted.

Although specific protest procedures are not set forth in Proposition 218, such written protests typically are submitted by mail or in person to the City Clerk no later than the conclusion of the public hearing. Written protests may require the signature of the record owner of the affected parcel and inclusion of parcel number identification information to ensure authenticity and proper tabulation. In the case of multiple owners of a parcel, only one protest per parcel is counted.
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At the October 3, 2023 Public Hearing, the City Council will hear testimony and consider all valid written protests against the proposed Solid Waste Rates received by the City Clerk prior to the close of the Public Hearing. If valid written protests are presented by a majority of owners of the identified parcels (50% plus one, a “Majority Protest”), the City Council will not impose the proposed Solid Waste Rates. If there is no Majority Protest, the City Council may adopt the new rates by resolution. The new rates will be effective for all billings made on or after November 1, 2023, and on each July 1 thereafter, for fiscal years 24/25, 25/26, 26/27, and 27/28.

Staff remains available for any questions the Council may have.

Attachments: A. Resolution No. 23-063

ATTACHMENT A
1 RESOLUTION NO. 23-068

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VICTORVILLE ACCEPTING THE SOLID WASTE RATE STUDY ;

SETTING A DATE, TIME, AND LOCATION FOR A PUBLIC HEARING ON PROPOSED INCREASES AND ADDITIONS TO THE CITY’S SOLID
WASTE SERVICES RATES; AND AUTHORIZING PREPARATION AND

MAILING OF A NOTICE OF PUBLIC HEARING ON THE PROPOSED
SOLID WASTE RATES IN ACCORDANCE WITH PROPOSITION 218
WHEREAS, the City Council of the City of Victorville (the “ City Council”) has previously adopted Chapter 6.36 of the Victorville Municipal Code (the “ VMC”) which provides for the collection, removal, and disposal of solid waste within the City of Victorville (the “City”); and
WHEREAS, on April 19, 2022, the City Council adopted Ordinance No. 2425 which added Chapter 6.37 (Mandatory Organic Waste Disposal Reduction) of the VMC which provides for the management and diversion of organic materials as required by California State Senate Bill 1383 (“SB 1383”); and
WHEREAS, Section 6.36.020 of the V MC declares that it is the City’s policy to provide for solid waste handling services and devise recycling/diversion program s to comply with California laws; and
WHEREAS, VMC Section 6.36.036 states that the City shall provide solid waste and recycling services to all occupied premises in the City and that the City shall collect such fees as are adopted by resolution of the City Council of the City; and WHEREAS, the City currently charges rates and fees for solid waste collection and household hazardous waste services fees in accordance with Resolution No. 18-012; and WHEREAS, pursuant to California Public Resources Code Section 40059, the City may determine “[a]spects of solid waste handling which are of local concern, including, but not limited to, frequency of collection, means of collection and transportation, level of services, charges and fees, and nature, location, and extent of providing solid waste handling services; and
WHEREAS, the solid waste and solid waste-related services the City provides (as described above) or may in the future provide, may, for the purposes of brevity , this resolution, and other documents relating to this rate proceeding be hereafter referred to collectively as “Solid Waste Services”; and
WHEREAS, for the purposes of brevity, this resolution, and other documents relating to this rate proceeding, the various rates and fees the City charges for such Solid Waste Services may hereafter be referred to collectively as “Solid Waste Rates”; and 2 WHEREAS, the City provides for the collection of solid waste and recyclables through a contract with its franchised hauler , Victorville Disposal , Inc., which contract includes an annual cost of living adjustment provision; and WHEREAS, the City also has a contract with the County of San Bernardino County for the disposal of solid waste at the County’s landfill, which contract provides for annual rate adjustments per a specified formula; and
WHEREAS, the City last adjusted its Solid Waste Rates in July of 2018, approving a five -year rate schedule after conducting a comprehensive review of its solid waste operating budgets and completing a Solid Waste Cost of Service/Rate Study (the “ Rate Study”) with the assistance of NBS consultants; and
WHEREAS, it is necessary to update the Rate Study in order to consider the adoption of a new fee for street sweeping (a solid waste -related service) and to re- evaluate the City’s current Solid Waste Rates; and
WHEREAS, the City again retained NBS to provide an updated Solid Waste Cost of Service/ Rate Study ; conduct a comprehensive review of the City’s solid waste operating budgets ; develop a financial plan to appropriately fund operations ; evaluate operating reserves ; provide rates for new mandatory o rganics diversion programs as mandated by SB 1383 ; and ensure that any proposed adjustments to residential and commercial Solid Waste Rates are proportional to the costs of providing such services and meet the City’s projected financial needs over the next five years; and WHEREAS, the 2023 Rate Study, attached to this Resolution as Exhibit 1, is now being presented to the City Council to propose revisions, adjustments, and additions to the City’s Solid Waste Rates schedules for the Solid Waste Services it provides to be implemented effective November 1, 2023; and
WHEREAS, Proposition 218 was adopted by the voters on November 6, 1996, adding Articles XIII C and XIII D to the California Constitution; and WHEREAS, it is the intention of the City Council to initiate proceedings to revise, increase, and make additions to the City’s Solid Waste Rates to account for Solid Waste Services to be provided (the “Proposed Rates”) in accordance with the substantive and procedural requirements of Section 6 of Article XIII D, which provides standards for setting rates reflective of the proportional cost of providing the services, as well as requirements for providing notice, a public hearing, and the ability to protest such Proposed Rates; and WHEREAS, the City Council wishes to consider acceptance of the attached Rate Study and direct City staff to proceed with the notice, public hearing and such other matters required by law in order to consider adoption of the Proposed Rates in compliance with the requirements of Proposition 218.
3 NOW, THEREFORE, THE CITY COUNCI L OF THE CITY OF VICTORVILLE , CALIFORNIA, DOES HEREBY RESOLVE AS FOLLOWS:

Section 1. Recitals
The above recitals are true and correct and are incorporated herein by this reference.

Section 2. Acceptance of Rate Study
The City Council hereby accepts the Rate Study attached hereto as Exhibit 1 and incorporated as part of this Resolution by this reference. This acceptance does not constitute the City Council’s final adoption or imposition of any of the Proposed Rates set forth in the Rate Study.

Section 3. Proposed Rates
The Proposed Rates are those set forth in the Appendix of the Rate Study (pages 19-23), as further described in the City’s Staff Report dated August 8, 2023.

Section 4. Public Hearing
The public hearing on the Proposed Rates shall be held on the date of the City Council’s regularly scheduled meeting on:

Date: Tuesday, October 3, 2023
Time: 6:00 p.m., or as soon thereafter as the matter may be heard Location: Victorville City Council Chambers
14343 Civic Drive
Victorville, CA 92392
Section 5. Preparation and Mailing of Notices
City Staff (in consultation with the City Attorney’s Office) is directed to prepare and mail to the record owners of each identified parcel upon which the Proposed Rates are to be imposed, a Notice of Public Hearing (the “Notice”). The Notice shall be mai led on or before August 19 to ensure compliance with Proposition 218’s mandated minimum advance notice of forty-five (45) days. The Notice shall also contain information regarding the reasons for and amounts of the Proposed Rates; the basis upon which the Proposed Rates were calculated; the date, time, and location of the public hearing; protest procedures; and such other matters as required by the applicable provisions of Proposition 218.
4 Section 6. Hearing Date Notice Publication
The City Clerk shall also provide notice of the date, time, place, and subject matter of the public hearing on the Proposed Rates by: (1) publishing such information in accordance with Government Code section 6062a; and (2) posting such information (or a copy of the Notice of Public Hearing prepared and mailed in accordance with Section 5 of this Resolution) on sites customarily used by the City for the posting of public hearing notices, not less than ten (10) days in advance of the date of the Public Hearing.

Section 7. Effective Date
This Resolution shall take effect immediately upon its adoption.

Section 8. Certification
The City Clerk shall certify to the passage and adoption of this Resolution; shall enter the same in the book of original Resolutions of the City; and shall make a minute of passage and adoption thereof in the records of the proceedings of the City Council, in the minutes of the meeting at which this Resolution is passed and adopted.

P:\APPS\WPDATA\VVCA\0001-23 - SOLID WASTE INCREASE & RELATED MATTERS 2018-2023\CITY RATE STUDY 2023 AND RELEATED DOC\300.1-RESO. NO 23-068 SOLID WASTE SET HEARING 08.01.23 DA TLT 08.04.23.DOCX
EXHIBIT 1

OFFICE LOCATIONS:

Temecula – Corporate Headquarters
32605 Temecula Parkway, Suite 100
Temecula, CA 92592
San Francisco – Regional Office
870 Market Street, Suite 1223
San Francisco, CA 94102
California Satellite Offices
Atascadero, Davis
Huntington Beach,
Joshua Tree, Riverside
Sacramento, San Jose
www.nbsgov.com
Final Report
Solid Waste Rate Study
August 2023
Summary of Solid Waste Rate Analysis Page 2 July 2023

TABLE OF CONTENTS
INTRODUCTION AND OVERVIEW ........................................................................................... 4 RATE STUDY METHODOLOGY ................................................................................................ 4 RESULTS OF THE SOLID WASTE RATE STUDY........................................................................... 5 Financial Plan ...................................................................................................................... 5 Customer Classes and Rate Components ........................................................................... 8 Summary of Adjustments to Rate Components ............................................................... 10 Summary of Projected Residential and Commercial Rates .............................................. 15 Comparison of Rates in Other Cities ................................................................................. 16 FINDINGS AND RECOMMENDATIONS .................................................................................. 18 NBS’ PRINCIPAL ASSUMPTIONS AND CONSIDERATIONS ....................................................... 18 APPENDIX – DETAILED RATE SCHEDULES

STREET SWEEPING TECHNICAL MEMORANDUM
Summary of Solid Waste Rate Analysis Page 3 July 2023

FIGURES
Figure 1 - Primary Components of a Rate Study ........................................................................................... 4 Figure 2 - Summary of Solid Waste Financial Plan ........................................................................................ 6 Figure 3 - Summary of Solid Waste Financial Plan ........................................................................................ 7 Figure 4 - Projected Single-Family Rates Through FY’27/28 ....................................................................... 16 Figure 5 - Projected Commercial 3-CY Bin Rates Through FY’27/28 ........................................................... 16 Figure 6 - Comparison of Rates for Other Local Jurisdictions ..................................................................... 17 Figure 7 - Comparison of Commercial Rates for Other Local Jurisdictions ................................................. 17 TABLES
Table 1 - Summary of Solid Waste Revenue Requirements ......................................................................... 5 Table 2 - Summary of Solid Waste Reserves ................................................................................................. 7 Table 3 - Number of Residential Accounts .................................................................................................... 8 Table 4 - Number of Commercial Bins Accounts .......................................................................................... 8 Table 5 - Current and Proposed Residential (95-Gal Can/Curbside pickup) Rate Components ................. 10 Table 6 - Current and Proposed Residential and Commercial Rates ($/Month) ........................................ 13 Table 7 - Current and Proposed Residential and Commercial Rates (% Increases) .................................... 13 Table 8 - Current and Proposed Residential and Commercial Rates ($ Increases) ..................................... 13 Table 9 - Current and Proposed Residential Rates and Annual Percentage Increases ............................... 14 Table 10 - Current and Proposed Commercial Rates and Annual Percentage Increases ........................... 14 Table 11 - Current and Projected Street Sweeping Program Costs ............................................................ 15 Table 12 - Projected Street Sweeping Rates ............................................................................................... 15 Summary of Solid Waste Rate Analysis Page 4 July 2023

INTRODUCTION AND OVERVIEW
The City of Victorville (City) contracts for all solid waste services within the City, including refuse collection and disposal for residential and commercial customers, recycling, operation of the City’s Materials Recovery Facility (MRF), and organics material processing. The City provides collection services under a franchise agreement with Victorville Disposal., Landfill disposal services are provided by San Bernardino County through a contract. Recycling and organics processing services are provided through separate contracts with Burrtec Waste Industries. Additionally, the City must now implement expanded organics recycling programs in order to comply with the requirements of California state Senate Bill (SB) 1383 (SB 1383). These new programs include but are not limited to a curbside residential organics collection program, expanded commercial organics collection programs, edible food recovery, compost procurement, education, and outreach and more.

The City last updated its solid waste rates in 2018 (NBS performed the rate study), and the City retained NBS to update its current solid waste rates.

The additional SB 1383 costs are the primary changes to the current rates, although the City has also determined that street sweeping costs should be added to the solid waste rates rather than continuing to fund street sweeping through various other sources.

The new rates will incorporate these additional SB 1383 and street sweeping cost components and will be based on the financial plan developed as a part of this study. This memo summarizes the analysis and the recommended new rates.

RATE STUDY METHODOLOGY
Rate studies typically include the three components shown in Error! Reference source not found.:

Figure 1 - Primary Components of a Rate Study

N
Preparation of a Financial Plan – This plan incorporates current and projected budget data, including projected expenses and revenues. Revenue consists of both rate- and non-rate revenues. Rate revenues are the fees and charges the City uses to collect r evenue for solid waste services. Miscellaneous other revenues such as late fees, recyclable material sales, and interest earnings would be considered non-rate revenues This plan also evaluated current and planned reserve -fund levels, which are discussed fu rther below.

Cost of Service Analysis – This component focuses on equitably allocating costs to the various customer classes, or types of service, such as single -family residential, commercial bins, roll -offs, etc. In the City’s case, many of the charges a re established in the City’s hauler agreement with Victorville Disposal, Step 3: Rate Design - Considers
what rate structure will best meet
the District’s need to collect rate
revenue from each customer class.

Step 2: Cost-of-Service Analysis –
Proportionately allocates the revenue
requirements to the customer classes
in compliance with industry standards
and State Law.

Step 1: Financial Plan/ Revenue
Requirements – Compares current
sources and uses of funds and
determines the revenue needed
from rates and project rate
adjustments.

FINANCIAL PLAN/

REVENUE

REQUIREMENTS

COST-OF-SERVICE

ANALYSIS

RATE DESIGN

ANALYSIS
1 2
3 Summary of Solid Waste Rate Analysis Page 5 July 2023 although the City’s administrative and overhead costs are also allocated and incorporated into solid waste rates.

Rate Design Analysis – In most rate studies, this component determine s how rate revenue is collected from customer classes. The City’s solid waste rate structure is already established and will only be modified as needed to accommodate the SB 1383 and street sweeping-related charges.

RESULTS OF THE SOLID WASTE RATE STUDY
Financial Plan
The financial plan incorporates the planned expenditures and both rate and non-rate revenues, such as fees, interest earnings, and miscellaneous revenues . Although the financial plan identifies how closely revenues match overall expenditures, the overall rate increases each year do not directly tie to the various rate components for each customer class and service level. Th e cost-of-service analysis and rate design determine those individual components.

Table 1 and Figure 2 summarize the net revenue requirements, which is the total revenues less non-rate revenues minus total operating expenses, and revenues under current and proposed rates. Net revenue requirements are the revenue required from rates over the next five years and directly i mpact the increases in rates. These rate increases are passed on to the individual rate components, which vary based on the changes in the costs included in each rate component.

Table 1 - Summary of Solid Waste Revenue Requirements
Budget
FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 Sources of Solid Waste Funds
SW-Admin Fee 3,164,800 3,164,800 3,164,800 3,164,800 3,164,800 3,164,800 SW-Solid Waste Fee 16,471,778 16,471,778 16,471,778 16,471,778 16,471,778 16,471,778 Pavement Impact Fee Revenue 506,000 206,000 506,000 506,000 506,000 506,000 Rate Revenue 20,142,578 19,842,578 20,142,578 20,142,578 20,142,578 20,142,578 Revenue from Other Solid Waste Fees: 1,398,000 1,514,700 1,531,173 1,557,589 1,585,389 1,616,070 Source Reduction/Recycling Revenues: 1,503,848 1,420,700 1,425,500 1,430,462 1,435,592 1,440,895 Street Sweeping Contract Services - 7,100 7,400 7,700 8,000 8,300 Non-Rate Revenue 2,901,848 2,942,500 2,964,073 2,995,751 3,028,980 3,065,265 Total Sources of Funds $23,044,426 $22,785,078 $23,106,651 $23,138,329 $23,171,558 $23,207,843 Uses of Solid Waste Funds
SW-Hauling Charges 12,572,400$ 15,209,718$ 15,818,107$ 16,450,831$ 17,108,864$ 17,793,219$ SW-Disposal Charges 4,787,000$ 4,519,400$ 4,700,176$ 4,888,183$ 5,083,710$ 5,287,059$ Source Reduction and Recycling 2,366,807$ 2,461,310$ 2,559,762$ 2,662,153$ 2,768,639$ 2,879,385$ Customer Service 967,521$ 1,008,908$ 1,049,264$ 1,091,235$ 1,134,884$ 1,180,280$ Add'l SB 1383 Organics Proram Costs $ - $ - 581,700 $ 611,000$ 642,000$ 674,000$ Street Sweeping $ - 568,148 $ 754,361$ 1,096,300$ 1,167,600$ 1,243,500$ Pavement Impact 506,000$ 206,000$ 506,000$ 506,000$ 506,000$ 506,000$ All Other Operating Costs 2,153,708$ 2,516,651$ 2,909,077$ 3,005,200$ 3,105,168$ 3,275,399$ Total Operating Expenses 23,353,437$ 26,284,135$ 28,372,447$ 29,804,902$ 31,010,866$ 32,332,841$ Total Uses Less Non-Rate Revenue $20,451,589 $23,341,635 $25,408,374 $26,809,151 $27,981,886 $29,267,576 Total Rate Revenue After Rate Increases 23,044,426 23,932,138 25,613,217 26,844,125 27,911,274 29,031,183 Surplus (Deficiency) after Rate Increase (309,011) 590,503 204,843 34,974 (70,612) (236,394) Summary of Sources and Uses of Funds and
Net Revenue Requirements
Projected
Summary of Solid Waste Rate Analysis Page 6 July 2023 Figure 2 - Summary of Solid Waste Financial Plan
Reserve Funds – Table 2 and Figure 3 summarize the solid waste reserve funds over the next five years and indicate that reserves exceed the minimum in each of the years. The following are the recommended reserve fund target year-end balances:
• Operating & Maintenance (O&M ) Reserve – This reserve is intended to cover emergency and unplanned costs, as well as normal cash -flow management. Typical utility O&M reserves are intended to cover for three months (90 days) of annual operating costs. In the City’ s case, this three-month reserve only applies to City O&M costs, and excludes costs related to contracted operations (i.e., the hauler agreement) and disposal costs. Contracted operations were excluded because they are not likely to change and disposal costs are not a direct operating cost addressed by this reserve. This target reserve amounts to approximately $1.65 to $2.2 million over the next five years.
• Capital and MRF Repair & Replacement Reserve – This reserve provides emergency funds related to capital assets, including materials recovery facility (MRF) and corporation yard rolling stock, buildings, and structures. Because most of the collection and disposal rolling stock and maintenance facilities are provided by the contracted hauler (Victorville Disposal ), the City’s capital assets are relatively small. However, with the broader new requirements of SB 1383, there is additional risk that new equipment and/or changes in the MRF operations will require additional reserves. The analysis assumes that 40 percent of the value of City -owned capital assets, which is approximately $1.6 to $1.85 million over the five year rate period, is a reasonable target reserve level.
$23.4 mil.
$23.3 mil.
$25.4 mil.
$26.8 mil. $28.0 mil.
$29.3 mil.
$0 mil.
$5 mil.
$10 mil.
$15 mil.
$20 mil.
$25 mil.
$30 mil.
$35 mil.

FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 Total Obligations
Fiscal Year Ending June 30
Solid Waste Revenue Requirements vs.

Revenue Under Existing and Recommended Rate Increases
Net Revenue Requirements
Solid Waste Funding w/ Current Rates
Solid Waste Funding w/ Proposed Rates
Summary of Solid Waste Rate Analysis Page 7 July 2023 Table 2 - Summary of Solid Waste Reserves
Figure 3 - Summary of Solid Waste Financial Plan
Although the amount of the projected reserve is greater than the targeted minimum, it is recommended to maintain the additional reserve and monitor fund balance as the new rates a re implemented. There are several “unknowns” which could impact expenses and revenues in future years, including costs for SB 1383 mandated procurement of Recovered Organic Waste Product. In addition, it is unknow how many residential customers will turn in their extra trash carts when they receive an additional cart for organics recycling. If 75% of the residential customers who have an extra trash cart decide to turn in their extra trash cart, this could reduce revenues by over $240,000 per year. In a ddition, residents may choose the new 65-gallon trash carts, further reducing revenues. If the extra reserve is maintained or increases in future years, then a decision can be made to use the extra reserve to delay or reduce a future rate increase.

Inflation and Growth Projections – Assumptions regarding cost inflation were used to project future revenues and expenses for the study period. The following annual inflation factors were used in the analysis:
• No customer growth is expected.
• General cost inflation is 4 percent.

Budget
FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 Solid Waste O&M Reserve Fund
O&M Reserve Fund Ending Balance 4,704,410$ 3,725,682$ 3,856,312$ 3,725,969$ 3,501,984$ 3,107,972$ O&M Reserve Fund Recom. Min. Target 1,372,000 1,587,000 1,692,000 1,837,000 1,918,000 2,018,000 Capital and MRF Repair & Replac. Reserve Fund
Capital & MRF R&R Reserve Fund Balance - $ 1,569,231$ 1,643,443$ 1,722,326$ 1,789,017$ 1,860,485$ Capital & MRF R&R Reserve Min. Target 1,520,000 1,581,000 1,644,000 1,710,000 1,778,000 1,849,000 Ending Balance - Unrestricted Reserves 4,704,410$ 5,294,913$ 5,499,755$ 5,448,295$ 5,291,001$ 4,968,457$ Recom. Min. Target - Unrestricted Reserves 2,892,000$ 3,168,000$ 3,336,000$ 3,547,000$ 3,696,000$ 3,867,000$ Ending Reserve Fund Balances and
Recommended Reserve Targets
Projected
$4.7 mil.
$5.3 mil. $5.5 mil. $5.4 mil. $5.3 mil.
$5.0 mil.
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 Ending Reserves ($ mil.)
Fiscal Year Ending June 30
Ending Solid Waste Reserve Fund Balances vs.

Recommended Reserve Targets
Ending Balance - Unrestricted Reserves
Recom. Min. Target - Unrestricted Reserves
Summary of Solid Waste Rate Analysis Page 8 July 2023 • Fuel cost inflation is 9 percent.
• Materials Recovery Facility (MRF) inflation is 6.5 percent. • Collection system cost inflation is 5 percent.
• Landfill cost inflation is 3 percent.
• AB 939 cost inflation is 4 percent.

Customer Classes and Rate Components
The City’s solid waste rates are identified by residential and commercial customer classes that define the type of service (size of container and number of pickups per week) that customers receive. The following are the various customer classes:

Residential Classes – Typical residential service (single-family and multi-family) is once per week collection of a 95 -gallon trash container and 65-gallon recycling container. There are approximately 31,300 single family and 1,000 multi -family residential accounts. A smaller 65- and 35-gallon trash container is also available, and extra carts are provided as requested. Because some com mercial businesses receive the same type of service as residential customers (i.e., 95 -gallon cans plus 65-gallon recycling cans with one pickup per week), these commercial accounts are considered the same as residential accounts for ratemaking purposes. Table 3 shows the number of accounts.

Commercial Bins – The City’s commercial rate schedule includes a large variety of services based on container size and number of pickups per week; Table 4 summarizes the most common levels of service and container sizes. Roll-off containers make up a much smaller type of commercial service. There are approximately 174 roll-off accounts.

Table 3 - Number of Residential Accounts
Table 4 - Number of Commercial Bins Accounts
Type Size Frequency Units
Single-Family Residential (SFR) 95 gal. 1 31,338
SFR- Extra Green Cans 95 gal. 1 6,353
SFR- Extra Blue Cans 60 gal. 1 2,610
SFR-Hardship 95 gal. 1 252
Total Single-Family Accounts* 31,338
Multi-Family Residential (MFR) 95 gal. 1 994
MFR- Extra Green Cans 95 gal. 1 12
MFR- Extra Blue Cans 60 gal. 1 6
Total Multi-Family Accounts* 994
Commercial Cans 95 gal. 1 64
Commercial Cans-Extra Green 95 gal. 1 6
Commercial Cans-Extra Blue 60 gal. 1 25
Total Commercial Accounts* 64
Residential Service (Once/week)

Summary of Solid Waste Rate Analysis Page 9 July 2023

Rate Components – The following are the rate components included in the solid waste rates:
• Collection charges for refuse, recycling, organic materials, including bin rental (as defined in the City’s hauler agreement).
• Disposal charges (as per the Waste Delivery Agreement contract between the City and San Bernardino County ). Disposal charges also includes MRF residue disposal costs and organic material processing costs.
• AB 939 fees covers MRF operational and maintenance costs as well as the costs for membership in the Mojave Desert & Mountain Recycling Authority.
• Pavement Impact fees recover a portion of the costs of street repair that is directly related to the impacts of refuse collection vehicles on the City’s streets. • Administrative fees recover miscellaneous administrative and program management costs. • New Organics Recycling/Diversion Program Costs to comply with CA state law SB 1383. • Franchise fees are for a payment to the City ’s General Fund as part of the hauler’s agreement and is currently set at 8% of the above fees and charges. • Household Hazardous Waste Fee pays for the cost of operating the City’s Household Hazardous Waste (HHW) Program. The City HHW Collection Center is located on Loves Lane and staffed by Victorville Disposal under contract to the City. Hazardous materials are disposed of through a contract with the San Bernardino County Fire Protection District. The HHW fee is charged to only residential customers: commercial accounts cannot use the HHW facility and are not charged the HHW fee.
• Street Sweeping fees, which were previously funded through other sources, are now proposed to be funded through the solid waste program. Proposed fees are a monthly charge to all single- family, multi-family, and commercial 95-gallon can/recycling service with one pickup per week.

These customers account for approximately 96 percent of solid waste customers (roll -offs and commercial bins make up the remainder).

Each of these fees has been examined and adjusted as needed to reflect inflation-related cost increases, agreement-related cost increases, and new or increasing operational costs. The following is a summary of the adjustment factors considered in this analysis.

Overview of Rate Adjustments – Individual rates for each customer classes were adjusted as follows:
• Refuse, recycling, and organics collection service costs were adjusted based on the Consumer Price Index, as identified in the terms of the City’s contract with Victorville Disposal. • Other solid waste and recycling program costs are allocated to residential and commercial customers based on the percentage of refuse that is attributable to the two different sectors -- residential and commercial. The current allocation is 55% residential and 45% commercial. Once the percentage of costs is determined for each sector, the residential rate is then further allocated based upon the most recent number of residential units (32,614 units) and the comm ercial rate Commodity Size Frequency Quantity
Trash 1.5 CY 1 /week 178
Trash 2.0 CY 1 /week 125
Trash 3.0 CY 1 /week 310
Trash 3.0 CY 2 /week 184
Trash 3.0 CY 3 /week 177
Total Commercial Bins* 1,312
Commercial Bins (Most Common Service Levels - Partial List) * Since this is a partial list, the total is higher than those listed here.

Summary of Solid Waste Rate Analysis Page 10 July 2023

is based on cubic yards per year (873,750 total cubic yards/year), including 584,900 cubic yards of trash and 288,850 cubic yards of recyclables and organics. • Disposal costs reflect higher landfill costs and organics processing costs. • The franchise fee has remained unchanged at 8% per the City’s agreement with Victorville Disposal.
• Administrative fees reflect increases in City overhead and operating costs, including those related to new mandated programs such as SB 1383.
• Street sweeping fees are based on the City’s current operating costs for the City properties served by this program plus the need to add an additional street sweep er operator, for a total of five instead of four, and an equipment replacement plan.

Table 5 summarizes the current and proposed fees for residential/commercial 95-gallon can curbside pickup services.

Table 5 - Current and Proposed Residential (95-Gal Can/Curbside pickup) Rate Components

As the table above shows, costs associated with implementation of SB 1383 programs account for $7.37 or 60% of the total residential rate increase. The addition of street sweeping costs accounts for another $0.83 or 6% of the total increase. Combined, SB 1383 costs and sweeping costs account for 6 6% of the total proposed increase. However, the street sweeping charge is temporarily low due to ARPA funding of street sweeper replacements; this cost will be borne by the City in the future and increase this ra te component to $2.80 per residential account in FY 25/26.

Over the past two years, the Collection component has increased significantly due to CPI adjustments per the franchise agreement. For FY 22/23, the collection component increased by 8.59% and for FY 23/24, the collection component is increasing an additional 7.33%. The 7.33% increase in collection costs added $1.34 to the residential collection cost for FY 23/24. The $1.34 represents 11% of the total $ 12.15 residential rate increase.

Summary of Adjustments to Rate Components
The following are descriptions of how individual rate components were adjusted.

Refuse, Recycling, and Organics Collection Fee – Section 10.06 of the First Amended, Consolidated and Restated Exclusive Franchise Agreement between the City of Victorville and Victorville Disposal, Inc., from 2009 as subsequently updated by Amendment Number 2 in 2018 provides that:

Pavement Impact Fee $0.75 $0.29 ($0.46)
Organics Program $0.00 $0.90 $0.90 $0.90
Organics Collection $0.00 $4.20 $4.20 $4.20
AB 939 Fee $1.01 $0.94 ($0.07)
Street Sweeping (NEW) $0.00 $0.83 $0.83
Franchise Fee $2.28 $3.12 $0.84
Admin $3.40 $5.18 $1.78 $0.27
Disposal $5.03 $7.82 $2.79 $2.00
Collection $18.30 $19.64 $1.34
Total $30.77 $42.92 $12.15 $7.37
Change in
SFR Rate
SB 1383
Costs
Solid Waste Residential
Fees (95-Gal. Cart) FY'22/23 FY'23/24

Summary of Solid Waste Rate Analysis Page 11 July 2023

Contractor’s compensation as set forth in Attachment E, Contractor Service Unit Rates, shall be adjusted each July 1 st by an amount equal to the average January to January change in the Consumer Price Index for All Urban Consumers for Riverside-San Bernardino-Ontario as published by the United States Department of Labor, Bureau of Labor Statistics (“CPI”).” The CPI adjustment due for FY 23/24 is 7.33%. The CPI adjustment for the prior year, FY 22/23, was 8.59%.

The two most recent increases are much larger than prior increases, which have typically ranged between 1-3% annually.

As a result of the 7.33% adjustment to collection costs for FY 23/24, the residential collection service cost will increase $1.34 per month, to $19.64 per month, up from $18. 30/month. In addition, the new residential organics collection program will add another $4.20 to the residential collection component, bringing the total residential collec tion cost to $ 42.92 per month for three -can service. Commercial customers will also see a 7.33% increase in refuse , recycling, and organics collection component costs.

Actual dollar increases for commercial customers will vary, depending on their level o f service. For a customer with a 3-cubic yard trash bin emptied once per week, the collection component will be $ 53.66 per month, up from $49.99 per month previously.

Dump/Disposal Fees – The Dump/Disposal Fee component of the solid waste rate pays for the following three items: disposal of trash from residential and commercial waste collected by Victorville Disposal ; disposal of residue from the Victor Valley MRF processing center; and organic material processing costs.

Refuse from City residents and businesses is disposed of at San Bernardino County’s Victorville landfill per the terms of the December 1997 Waste Delivery Agreement between the City of Victorville and the County of San Bernardino and subsequent amendments. Each July, the County adjusts the landfill rate for a cost- of-living increase as outlined in the Waste Delivery Agreement . The County landfill rate increased 3.2% for FY 23/24, from $40.75 per ton to $42.07 per ton. MRF residue is also disposed at the County landfill at the Waste Disposal Agreement contract disposal rate.

Organic materials are processed at the Victor Valley Compost Facility operated by Burrtec Waste Industries. For FY 23/24, processing fees increased 8.7% at the compost facility.

Disposal/processing costs are allocated to each customer class based on the tonnage generated/disposed.

The residential disposal fee for FY 23/24 is calculated to be $7.82 per month, based on an average waste generation of 1.49 tons/year per household; the landfill disposal rate of $42.07 per ton; estimated organics generation of .37 tons per household and a processing fee of $106.58/ton; and MRF residue of .10 tons (200 pounds) per year. Residential organics processi ng costs are estimated to comprise $2.00 per month of the total. The commercial disposal rate is based on an average of 91 pounds per cubic yard of trash and works out to $2.62 per cubic yard, including $.55/cubic yard for organics processing. Disposal fees are not assessed on commercial recycle bins.

AB 939/Recycling Program Costs – The AB 939 Fee covers the City’s portion of costs of operating the Victor Valley MRF as well as the costs of membership in the Mojave Desert and Mountain Recycling Auth ority. .Revenues from the sale of recyclable materials help offset MRF operating costs, but do not cover 100% of the costs. Due to increased recyclable volumes, higher revenues are forecast, and t he AB 939 Fee is therefore decreasing for residential cu stomers to 9 4 cents per month (down from $1.01/month) and decreasing to 34 cents per cubic yard (down from 42 cents/yard) for commercial customers.

Organics Program Fee – SB 1383 was enacted in 2016 and imposed numerous requirements on jurisdictions for new organics collection programs, plus requirements for outreach and education, inspection and enforcement, container contamination minimization, and record-keeping for the new organics programs. SB 1383 regulations also mandate that jurisdictions procure .08 tons per capita per year of “Recovered Organic Waste Products,” which could include compost, mulch, renewable gas, and electricity from renewable gas, as well as several other products. According to calculations from CalRecycle, by 2025, Victorville is required to procure the equivalent of 5,900 tons/year or 14,754 cubic

Summary of Solid Waste Rate Analysis Page 12 July 2023

yards/year of compost. The quantity required to be procured increases from 30% of the total by 2023; 65% by 2024; and 100% of the total by 2025 and beyond.

The Organics Program Fee component pays for the above mentioned expenses, including compost procurement at the 30% level, but does not include organics collection costs. (Organics collection costs are included in the Collection Fee component of the rate.) Commercial customers were charged an Organics Fee starting in 2018, since commercial organics programs were implemented back in 2018 in response to CA state law AB 1826 (Mandatory Commercial Organics Recycling). For residential customers, the Organics Fee is proposed to be a new component of the rate starting in FY 23/24 to coincide with implementation of residential organics programs. The residential cost is 90 cents per month and the commercial cost is 38 cents per cubic yard of trash. Going forward, the City will need to evaluate options and additional costs for reaching 100% of the Recovered Organic Waste Product procurement goal. This is an unknown for future years. To the extent that there is a positive Solid Waste fund balance reserve, this will help cover additional costs associated with meeting the full procurement goal.

Administrative Fee – This fee component covers the cost for City administration of solid waste and recycling programs, which includes customer service and billing functions. The Administrative Fees portion of the rate works out to $ 5.18 per month for residential accounts and $1.8 9 per cubic yard for commercial customers.

Street Sweeping Fee – Street sweeping fees are proposed to be included in solid waste rates. As discussed in detail later in this report, the costs are recommended to be allocated equally to residential and commercial curbside customers, resulting in a fee of $2.09 per account per month. However, due to ARPA funding for street sweeper replacements in FY 23/24 and FY 24/25, the fee was reduced to $0.83 and $1.99, respectively. Including street sweeper replacements at the City’s cost, the fee will increase to $2.80 in FY 25/26.

Pavement Impact Fee – The Pavement Impact Fee covers a portion of the costs to maintain roads damaged by solid waste collection vehicles. In 2018, the City of Victorville Engineering Division completed an Analysis of Pavement Damage Costs from Refuse/Recycling Vehicles . This analysis concluded that approximately 40% of the damage to roads is associated with refuse/recycling collection vehicles and that the cost of this damage is approximately $3,484,800 per year. Revenues from the Pavement Impact Fee are used as the funding source for the City’ s annual $506,000 base -year match that is required for Victorville to receive Road Maintenance and Rehabilitation Account —Local Streets and Roads funding.

Due to growth in the number of residential and commercial customers and the accumulation of a small surplus of these fu nds, the Pavement Impact Fee is proposed to decrease to 29 cents per residential account per month and 9 cents per cubic for commercial customers. Once that one-time use of surplus funds has been used, the fee in FY 24/25 will be 71 cent s for residential and 22 cents per cubic yard for commercial.

Household Hazardous Waste Fee – The HHW Fee has been 32 cents per residential unit per month since 2018. Due to increased costs for staffing and disposal services, it is proposed to increase the HHW Fee by 5 cents per month, up to 37 cents per month starting in FY 24/25.

Based on the various costs included in each of the residential/commercial curbside fees and the commercial bin and roll-off services, Table 6 summarizes the projected residential and commercial solid waste rates. Tables 7 and 8 summarize the rate increases in dollars and percentages.

Summary of Solid Waste Rate Analysis Page 13 July 2023 Table 6 - Current and Proposed Residential and Commercial Rates ($/Month) Table 7 - Current and Proposed Residential and Commercial Rates (% Increases) Table 8 - Current and Proposed Residential and Commercial Rates ($ Increases)

Summary of Residential 95-Gal. Can Rate Component Escalators – Based on the v arious inflation and cost-related adjustments to the residential 95 -gallon can rates, Table 9 summarizes the cost -of-service based rate components and/or the annual escalation rates. The highlighted and bold italics rates show the calculated cost-of-service rate components, while the annual percentage escalations are the annual adjustments where these percentages are applied to the previous year’s rate component.

Summary of Commercial 95-Gal. Can Rate Component Escalators – Similar inflation a nd cost -related adjustments to the commercial property 95-gallon can rates are shown in Table 10. As with the residential rates, the highlighted and bold italics rates show the calculated cost-of-service rate components, while the annual percentage escalat ions are the annual adjustments where these percentages are applied to the previous year’s rate component.

Effective Rate Increases (sum of all rate components)
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Single Family Residential $30.77 $42.92 $46.44 $49.25 $51.49 $53.83 Multi-Family Residential $30.77 $42.92 $46.44 $49.25 $51.49 $53.83 Commercial Can $38.95 $43.30 $46.36 $48.98 $51.03 $53.17 Commercial Bin (3.0 CY Bin, 1 Pickup/week) $134.05 $143.62 $148.49 $154.54 $160.85 $167.44 Comm. Compactor Bin (1.5 CY, 1 Pickup/week) $113.34 $109.94 $114.95 $119.21 $123.64 $128.25 Commercial Recycling (3 CY Bin, 1 Pickup/week) $95.77 $106.84 $114.87 $121.85 $129.79 $138.96 Roll-offs (10 CY Roll-Off, 1 Pickup/week) $867.65 $960.83 $1,013.08 $1,081.25 $1,154.27 $1,232.49 Customer Class Projected Solid Waste Rates (Partial List)Current Rates
Effective Rate Increases (sum of all rate components)
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Single Family Residential 39.5% 8.2% 6.1% 4.5% 4.5%
Multi-Family Residential 39.5% 8.2% 6.1% 4.5% 4.5%
Commercial Can 11.2% 7.1% 5.7% 4.2% 4.2%
Commercial Bin (3.0 CY Bin, 1 Pickup/week) 7.1% 3.4% 4.1% 4.1% 4.1% Commercial Compactor Bin (1.5 CY, 1 Pickup/week) -3.0% 4.6% 3.7% 3.7% 3.7% Commercial Recycling (3 CY Bin, 1 Pickup/week) 11.6%* 7.5% 6.1% 6.5% 7.1% Roll-offs (10 CY Roll-Off, 1 Pickup/week) 10.7% 5.4% 6.7% 6.8% 6.8% *Note: Commercial Recycling goes up by more than other rates due to the addition of Admin. and AB 939 Fees.

Customer Class Projected Solid Waste Rates (Partial List) FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Single Family Residential $12.15 $3.52 $2.81 $2.23 $2.34 Multi-Family Residential $12.15 $3.52 $2.81 $2.23 $2.34 Commercial Can $4.35 $3.06 $2.63 $2.04 $2.15
Commercial Bin (3.0 CY Bin, 1 Pickup/week) $9.57 $4.86 $6.05 $6.31 $6.59 Comm. Compactor Bin (1.5 CY, 1 Pickup/week) -$3.40 $5.01 $4.26 $4.43 $4.61 Commercial Recycling (3 CY Bin, 1 Pickup/week) $11.07 $8.04 $6.98 $7.94 $9.16 Roll-offs (10 CY Roll-Off, 1 Pickup/week) $93.18 $52.25 $68.17 $73.02 $78.22 Dollar Increase from Previous Year
Customer Class Projected

Summary of Solid Waste Rate Analysis Page 14 July 2023

Table 9 - Current and Proposed Residential Rates and Annual Percentage Increases

Table 10 - Current and Proposed Commercial Rates and Annual Percentage Increases

Similar adjustments were made for roll-offs, bins, and compactor bins.

Street Sweeping Rates – The City is proposing to incorporate street sweeping rates i nto the solid waste rates. NBS prepare a separate analysis of the cost of service for street sweeping services that recommended uniform charges to all curbside residential and commercial properties (i.e., 95-gallon can or smaller cans if the customers chose a 65- or 35-gallon trash can).1 Street sweeping costs were allocated to customer classes based on total annual solid waste revenues for calendar year 2022. We believe this represents a reasonable basis for the allocation of benefits to customer classes.

This analysis also evaluated three rate alternatives, including one that allocated street sweeping costs to all residential and commercial customers (i.e., commercial bins and roll-offs) and two that allocated street sweeping costs solely to curbside residential and commercial customers, which represent approximately 96 percent of all solid waste customers.

The recommended rate allocates street sweeping costs equally to all curbside customers because this approach:

1 Analysis of Street Sweeping Funding Alternatives, Technical Memorandum, NBS, July 2023. (Included in the Appendix) Effective Rate Increases (sum of all rate components)
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Franchise Fee $2.28 8.0% 8.0% 8.0% 8.0% 8.0%
Collection Increase (CPI) $18.30 $19.64 5.0% 5.0% 5.0% 5.0% Organics Component (SB 1383) N.A. $0.90 5.0% 5.0% 5.0% 5.0% Organics Collection (SB 1383) N.A. $4.20
Disposal (County LF Cost Increase) $5.03 $7.82 3.0% 3.0% 3.0% 3.0% AB 939 Fee (Resid. & Comm.) $1.01 $0.94 4.0% 4.0% 4.0% 4.0% Pavement Impact Fee for Resid. $0.75 $0.29 144.8% 0.0% 0.0% 0.0% City Admin Fee (CPI) $3.40 $5.18 5.0% 5.0% 5.0% 5.0%
Street Sweeping (COS Adjustment) N.A. $0.83 $1.99 32.4% 5.0% 5.0% Total $30.77 $42.92 $46.44 $49.25 $51.49 $53.83
Effective Rate Increase N.A. 39.5% 8.2% 6.1% 4.5% 4.5%
Cost-of-service derived rates are highlighted in bold italic.

FY’23/24 rates assume a full year of service; some programs may be only partial years (for both revenues and expenses).

Current Rate
($/Mo.)
Projected Residential (95-Gal. Can) Solid Waste Rates
or Percent Rate IncreaseComponent of Residential
95-Gal. Can Rates
Effective Rate Increases (sum of all rate components)
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Franchise Fee $2.89 8.0% 8.0% 8.0% 8.0% 8.0%
Collection Increase (CPI) $24.97 7.3% 5.0% 5.0% 5.0% 5.0% Organics Component (SB 1383) ($/CY) $0.82 $0.77 5.0% 5.0% 5.0% 5.0% Disposal (County LF Cost Increase) $5.32 $5.34 3.0% 3.0% 3.0% 3.0% AB 939 Fee (Resid. & Comm.) $1.01 $0.94 4.0% 4.0% 4.0% 4.0% Pavement Impact Fee for Resid. $0.75 $0.29 144.8% 0.0% 0.0% 0.0% City Admin Fee (CPI) $3.20 $5.18 5.0% 5.0% 5.0% 5.0%
Street Sweeping (COS Adjustment) N.A. $0.83 $1.99 32.4% 5.0% 5.0% Total $38.95 $43.30 $46.36 $48.98 $51.03 $53.17
Effective Rate Increase N.A. 11.2% 7.1% 5.7% 4.2% 4.2%
Cost-of-service derived rates are highlighted in bold italic.

FY’23/24 rates assume a full year of service; some programs may be only partial years (for both revenues and expenses).

Component of Residential
95-Gal. Can Rates
Current Rate
($/Mo.)
Projected Commercial (95-Gal. Can) Solid Waste Rates

Summary of Solid Waste Rate Analysis Page 15 July 2023

• Treats residential and commercial customers equally.
• Makes the rates per account minimal compared to other rate options. • Is easy to understand and administer.

In the recommended street sweeping rate option, t here is no adjustment for smaller cans, since street sweeping rates are intended to apply to residential and commercial properties, regardless of can size.

Table 11 summarizes the street sweeping program costs, including the small amount of revenue the City receives for contracted street sweeping services. The FY 24/25 cos ts include the addition of one more street sweeper operator, increasing the total to five street sweeper operators. Table 12 summarizes the projected street sweeping rates for curbside residential and commercial customers for FY 23/24, FY 24/25, and FY 2025/26, including the adjustments for the temporary ARPA funding street sweeper replacements.

Table 11 - Current and Projected Street Sweeping Program Costs

Table 12 - Projected Street Sweeping Rates

Summary of Projected Residential and Commercial Rates
Figures 4 and 5 below illustrate the projected single-family (95-gal.) and commercial (3 CY) bin rates for FY 2023/24 through FY 2027/28.

FY 2021/22
Actuals
FY 2023/24
Projected
FY 2024/25
Projected
220 - Gas Tax Operating Expenses $327,794 $392,390 $503,730 220 - Gas Tax Equipment Expenses $7,576 $7,576 $9,725
202 - Storm Drain Operating Expenses $154,708 $160,076 $205,498 370 - LMADS/MAD Wages & Benefits $7,854 $8,107 $10,407
(Currently Unfunded) Capital Replacement $250,000 $250,000 $275,000 (Currently Unfunded) Annual Capital Replacement -- -- $25,000 Total Annual O&M $747,932 $818,148 $1,029,361
(less) Special Service
Fees
Contract Street Sweeping
Services ($6,870) ($7,200) ($7,600)
Net Annual O&M $741,062 $810,948 $1,021,761

1. Although not shown in this table, ARPA funds were available for street sweeper replacements in FY 23/24 and FY 24/25, but have been reflected in the street sweeping rate component.

Street Sweeping Program Costs
St. Sweeping
Annual
St. Sweeping
Costs
Type Units ($/Year)2
Curbside Accounts FY'23/24 FY'24/25 FY'25/26
Single-Family Resid. (SFR) 31,338 $542,726 $1.44 $2.63 $2.80 Multi-Family Resid. (MFR) 994 $17,215 $1.44 $2.63 $2.80 Commercial Cans 64 $1,108 $1.44 $2.63 $2.80
Total Curbside Services 32,396 $561,048 $1,021,761 $1,096,300 Adjusted Costs for ARPA Funding $311,048 $746,761
Adjusted Rates for ARPA Funding $0.83 $1.99
Street
Sweeping
Rates
Rates($/Unit/Mo.)
Calculation of Street Sweeping
Rates for Solid Waste Customers

Summary of Solid Waste Rate Analysis Page 16 July 2023

Figure 4 - Projected Single-Family Rates Through FY’27/28

Figure 5 - Projected Commercial 3-CY Bin Rates Through FY’27/28

Comparison of Rates in Other Cities
Figure 6 below provides an overview of comparable rates in similar cities in the region. With the SB 1383 mandates applying to these cities, some may not have fully adjusted their rates to account for these additional costs yet.

$30.77 $30.77 $30.77 $30.77 $30.77
$42.92
$46.44
$49.25
$51.49 $53.83
$0
$10
$20
$30
$40
$50
$60
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Proposed Monthly Rates
Monthly Bill
Current 95 gal Solid Waste, 60 gal recycling
Proposed 95 gal Solid Waste, 60 gal recycling
Single-Family Residential Bill Comparison - Current vs.

Projected Through FY 2027/28
$134.05 $134.05 $134.05 $134.05 $134.05
$143.62 $148.49 $154.54 $160.85 $167.44
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Proposed Monthly Rates
Monthly Bill
Current 3.0 yd Bin 1 PU/WK
Proposed 3.0 yd Bin 1 PU/WK
Commercial Bin Bill Comparison - Current vs. Projected
Through FY 2027/28

Summary of Solid Waste Rate Analysis Page 17 July 2023

Figure 6 - Comparison of Rates for Other Local Jurisdictions

Figure 7 below illustrates rate comparisons for commercial bin collection rates (3 CY, one pickup per week) for similar communities in the region. This comparison indicates that Victorville has some of the lowest commercial bin rates in the area.

Figure 7 - Comparison of Commercial Rates for Other Local Jurisdictions

Rate Model – NBS and City staff worked closely together to develop a rate model to evaluate the three rate study components, as discussed in Rate Study Methodology. The result is an Excel-based rate model that incorporates the analysis and the recommended rates. This model provide s the full documentation of the rate analysis, along with detailed rate schedules for each customer class and level of service and has been provided to City staff for future updates as needed. The recommended rates are provided in the Appendix attached to this memo.

$34.72
$39.94
$37.21 $37.21 $34.97
$31.02 $30.77 $30.57 $29.96
$0.83
$7.37
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
Victorville -
Proposed
Lancaster Apple
Valley
Adelanto Hesperia
(2-95 Gal.)
Barstow Victorville -
Current
Rancho
Cucamonga
Rialto
(60-Gal.)
Comparison of Single-Family Solid Waste Rates ($/Mo.)
SB 1383
Street Sweeping
$238.43 $237.85 $230.49 $229.36 $214.78 $205.90
$167.38
$149.79 $143.62 $141.63 $134.05
$0
$50
$100
$150
$200
$250
$300
Rialto
(Burrtec)
Rancho
Cucamonga
Barstow
Proposed
Hesperia Lancaster Barstow
Current
Adelanto
(Burrtec)
Apple Valley Victorville -
Proposed
Apple Valley
Current
Victorville -
Current
Comparison of Comm. 3-CY Bin (1x/wk) Rates ($/Mo.)

Summary of Solid Waste Rate Analysis Page 18 July 2023

FINDINGS AND RECOMMENDATIONS
The following are the primary findings and recommendations resulting from this rate analysis.

Summary of Findings – Since the City’s solid waste rates were last reviewed in the cost-of-service analysis completed in March of 2018, environmental and regulatory requirements have increased significantly.

California State law SB 1383 mandated extensive organic material recycling/diversion programs. These have significantly inc reased the City’s operating costs, including the contracted services provided by Victorville Disposal. This places the City in the difficult position of adopting non-optional rate increases to pay for these new programs to comply with the law , or else face daily State-mandated fines for non - compliance.

Apart from moving street sweeping program costs into the solid waste utility, this study evaluated the various factors contributing to higher rates , and the recommended rates are those necessary to adequately fund the City’s solid waste services and meet contractual collection and disposal costs.

Recommendations – The following are the actions that NBS, in consultation with City staff, recommend the City take regarding the solid waste rates:
• Review the results of this study and consider proceeding with the adoption process to implement these recommended rates.
• Approve the proposed new rates and formally adopt the recommended reserve fund level as part of the rate resolution.
• Have the City’s legal counsel review the proposed rates and Prop 218 notices to ensure that they comply with existing statutes and legal requirements.
• Direct City staff to proceed with sending out Prop 218 notices to begin the protest ballot process required under State law prior to formal adoption and implementation of these rates. • After a minimum of 45 days after the initial mailing of the Prop 218 notices, determine whether a majority protest to the proposed rates was received. Assuming there was not a majority protest, adopt the proposed rates in a public hearing (scheduled for October 3, 2023 at this time). • Assuming rates are adopted at an October 3, 2023 public hearing , direct staff to implement the new rates, with an effective date of November 1, 2023.
• Whenever a utility adopts new rates, it is advisable to closely monitor the rate revenue generated from those new rates in the next few years to ensure adequate revenues are being collected or whether revenues may be adequate to postpone future increases . The City should follow this advice.

NBS’ PRINCIPAL ASSUMPTIONS AND CONSIDERATIONS
In preparing this memo and the findings included herein, NBS has relied on several principal assumptions and considerations regarding financial and operational matters, including Victorville’s billing records, accounting reports, City program cost analyses, and other conditions and events projected to occur in the future. We have assumed this information and these assumptions were provided by sources that are reliable; NBS has not independently verified this data.

While we believe NBS’ use of such information and assumptions is reasonable for the purpose of this rate study, memo and its findings, some assumptions will invariably not materialize as s tated herein or may vary significantly due to unanticipated events and circumstances. Therefore, the actual results can be expected to vary from those projected to the extent that actual future conditions differ from those assumed by us or provided to us by others.

Summary of Solid Waste Rate Analysis Page 19 July 2023

APPENDIX – DETAILED RATE SCHEDULES

FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Single- and Multi-Family and Comm. Carts
95 gal Solid Waste, 65-gal Recycle, 65-gal Organics $30.77 $42.92 $46.44 $49.25 $51.49 $53.83 65 gal Solid Waste, 65-gal Recycle, 65-gal Organics N/A $40.04 $43.23 $45.95 $48.09 $50.32 35 gal Solid Waste, 65-gal Recycle, 65-gal Organics $25.50 $37.58 $40.94 $43.59 $45.66 $47.82 Additional 95-gallon Trash Container $14.05 $13.93 $14.55 $15.19 $15.87 $16.58 Additional 65-gallon Recycling Container* $1.81 $1.99 $2.08 $2.19 $2.30 $2.41 Additional 65-gallon Organics Container* N/A $13.93 $14.55 $15.19 $15.87 $16.58 Hardship Rate** $24.78 $39.05 $42.38 $44.99 $47.01 $49.12 Hardship & Small Can Rate** $21.17 $33.71 $36.88 $39.33 $41.18 $43.12 Resid. using trash bin: 65-gal Recycle Cart-Required N/A $15.12 $15.88 $16.67 $17.50 $18.38 Resid. using trash bin: 65-gal Organics Cart-Required N/A $20.46 $21.82 $22.79 $23.81 $24.87 Commercial Cans
95 gal Solid Waste, 65 gal recycling $38.95 $43.30 $46.36 $48.98 $51.03 $53.17 Additional 95-gallon Trash Container $11.30 $15.24 $15.90 $16.47 $17.06 $17.69 Additional 65-gallon Recycling Container N/A $15.12 $15.88 $16.67 $17.50 $18.38 Miscellaneous Charges:*** (Per Occurance)
Late Set Out/Return Trip-Trash, Recycle, Organics $20.21 $18.04 $18.67 $20.00 $20.00 $20.70 Contaminated Recycle/Organics, Empty as Trash $21.56 $19.84 $20.53 $22.00 $22.00 $22.77 Change size/number of carts (in excess of once/year) $33.68 $34.86 $36.08 $38.65 $38.65 $40.00 * The first additional recycling can is free; this charge applies to more than 2 recycling cans. ** Only if granted by the City; applies only to single-family accounts. *** Applies to both resdiential and commercial can service.

SOLID WASTE RATE SCHEDULE Proposed Monthly RatesCurrent Rates
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Bin Size (CY) Pick ups/week

1.5 1 $68.25 $73.16 $77.10 $80.27 $83.58 $87.03

1.5 2 $130.59 $139.48 $147.03 $153.01 $159.25 $165.75

1.5 3 $192.34 $205.80 $216.96 $225.74 $234.91 $244.48

1.5 4 $254.39 $272.12 $286.88 $298.48 $310.58 $323.20

1.5 5 $316.44 $338.44 $356.81 $371.22 $386.25 $401.92

1.5 6 $378.48 $404.76 $426.74 $443.95 $461.91 $480.65

1.5 7 $440.53 $471.08 $496.66 $516.69 $537.58 $559.37

1.5 8 $502.58 $537.40 $566.59 $589.42 $613.24 $638.09

1.5 9 $564.62 $603.72 $636.52 $662.16 $688.91 $716.82
2 1 $90.39 $96.87 $100.17 $104.27 $108.54 $113.00
2 2 $173.12 $185.30 $191.48 $199.22 $207.30 $215.72
2 3 $255.85 $273.73 $282.78 $294.17 $306.06 $318.45
2 4 $338.58 $362.16 $374.09 $389.13 $404.81 $421.18
2 5 $421.31 $450.58 $465.39 $484.08 $503.57 $523.91
2 6 $504.04 $539.01 $556.69 $579.03 $602.33 $626.64
2 7 $586.77 $627.44 $648.00 $673.99 $701.09 $729.36
2 8 $669.50 $715.86 $739.30 $768.94 $799.85 $832.09
2 9 $752.23 $804.29 $830.60 $863.89 $898.61 $934.82
Proposed Monthly RatesSOLID WASTE RATE SCHEDULE
Commercial Bins
Current
Rates

Summary of Solid Waste Rate Analysis Page 20 July 2023

FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Bin Size (CY) Pick ups/week
3 1 $134.05 $143.62 $148.49 $154.54 $160.85 $167.44
3 2 $258.15 $276.26 $285.44 $296.97 $308.99 $321.53
3 3 $382.24 $408.90 $422.40 $439.40 $457.13 $475.62
3 4 $506.34 $541.54 $559.35 $581.83 $605.27 $629.72
3 5 $630.43 $674.18 $696.31 $724.26 $753.40 $783.81
3 6 $754.52 $806.83 $833.27 $866.69 $901.54 $937.90
3 7 $878.62 $939.47 $970.22 $1,009.12 $1,049.68 $1,091.99 3 8 $1,002.71 $1,072.11 $1,107.18 $1,151.55 $1,197.82 $1,246.08 3 9 $1,126.81 $1,204.75 $1,244.13 $1,293.98 $1,345.96 $1,400.18 4 1 $180.78 $193.75 $200.35 $208.53 $217.08 $225.99
4 2 $346.24 $370.60 $382.95 $398.44 $414.59 $431.45
4 3 $511.70 $547.46 $565.56 $588.35 $612.11 $636.90
4 4 $677.16 $724.31 $748.17 $778.25 $809.63 $842.36
4 5 $842.62 $901.17 $930.78 $968.16 $1,007.15 $1,047.81 4 6 $1,008.08 $1,078.02 $1,113.39 $1,158.06 $1,204.66 $1,253.27 4 7 $1,173.53 $1,254.87 $1,295.99 $1,347.97 $1,402.18 $1,458.73 4 8 $1,338.99 $1,431.73 $1,478.60 $1,537.88 $1,599.70 $1,664.18 4 9 $1,504.45 $1,608.58 $1,661.21 $1,727.78 $1,797.22 $1,869.64 Proposed Monthly RatesSOLID WASTE RATE SCHEDULE
Commercial Bins (Cont.)
Current
Rates
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Roll-Off Size (CY) 1x/Week $/Pickup
10 $867.65 $200.23 $221.73 $233.79 $249.52 $266.37 $284.42 20 $978.49 $225.81 $250.89 $269.57 $286.54 $304.69 $324.09 30 $1,089.33 $251.38 $280.05 $301.01 $318.89 $337.98 $358.37 40 $1,200.16 $276.96 $309.21 $332.46 $351.25 $371.28 $392.64 * Disposal costs, if any, will be charged based on actual tonnage charges determined at landfill or other disposal/recycling site, plus Franchise Fee.

Current
Per Pickup
Rates
Proposed Rates (Cost per Pickup)*SOLID WASTE RATE SCHEDULE Solid Waste Roll-Offs
& Recycling Roll-Offs
Current
Monthly
Rates
(Note: disposal cost plus 8% franchise fee will be added) Summary of Solid Waste Rate Analysis Page 21 July 2023 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Bin Size (CY) Pick ups/week

1.5 1 $49.10 $54.76 $58.85 $62.41 $66.45 $71.11

1.5 2 $92.01 $102.69 $110.52 $117.28 $124.99 $133.92

1.5 3 $134.91 $150.62 $162.19 $172.15 $183.53 $196.72

1.5 4 $177.81 $198.55 $213.86 $227.02 $242.07 $259.52

1.5 5 $220.72 $246.48 $265.54 $281.90 $300.61 $322.33

1.5 6 $263.62 $294.40 $317.21 $336.77 $359.15 $385.13

1.5 7 $306.52 $342.33 $368.88 $391.64 $417.69 $447.93

1.5 8 $349.42 $390.26 $420.55 $446.51 $476.23 $510.74

1.5 9 $392.33 $438.19 $472.22 $501.38 $534.77 $573.54
2 1 $64.87 $72.35 $77.77 $82.48 $87.83 $94.01
2 2 $122.07 $136.26 $146.66 $155.64 $165.88 $177.74
2 3 $179.27 $200.16 $215.56 $228.80 $243.94 $261.48
2 4 $236.48 $264.06 $284.45 $301.96 $321.99 $345.22
2 5 $293.68 $327.97 $353.35 $375.13 $400.04 $428.96
2 6 $350.89 $391.87 $422.24 $448.29 $478.09 $512.70
2 7 $408.09 $455.77 $491.14 $521.45 $556.14 $596.44
2 8 $465.29 $519.68 $560.04 $594.61 $634.20 $680.17
2 9 $522.50 $583.58 $628.93 $667.78 $712.25 $763.91
3 1 $95.77 $106.84 $114.87 $121.85 $129.79 $138.96
3 2 $181.57 $202.69 $218.22 $231.59 $246.87 $264.56
3 3 $267.38 $298.55 $321.56 $341.34 $363.95 $390.17
3 4 $353.18 $394.40 $424.90 $451.08 $481.03 $515.78
3 5 $438.99 $490.26 $528.25 $560.83 $598.10 $641.38
3 6 $524.80 $586.12 $631.59 $670.57 $715.18 $766.99
3 7 $610.60 $681.97 $734.94 $780.31 $832.26 $892.60
3 8 $696.41 $777.83 $838.28 $890.06 $949.34 $1,018.21
3 9 $782.22 $873.68 $941.62 $999.80 $1,066.42 $1,143.81 4 1 $129.73 $144.70 $155.53 $164.95 $175.66 $188.01
4 2 $244.14 $272.51 $293.32 $311.28 $331.77 $355.49
4 3 $358.55 $400.32 $431.11 $457.60 $487.87 $522.96
4 4 $472.96 $528.13 $568.91 $603.93 $643.98 $690.44
4 5 $587.36 $655.93 $706.70 $750.25 $800.08 $857.92
4 6 $701.77 $783.74 $844.49 $896.58 $956.18 $1,025.39
4 7 $816.18 $911.55 $982.28 $1,042.90 $1,112.29 $1,192.87 4 8 $930.59 $1,039.36 $1,120.07 $1,189.23 $1,268.39 $1,360.35 4 9 $1,045.00 $1,167.16 $1,257.86 $1,335.55 $1,424.50 $1,527.82 $/Pickup
Proposed Monthly Rates ($/mo.)Current
Rates

SOLID WASTE RATE SCHEDULE
Comm. Bins -
Recycling
Current
Rates

Summary of Solid Waste Rate Analysis Page 22 July 2023

FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Bin Size (CY) 1x/Week $/Pickup
10 $1,170.36 $270.08 $298.76 $314.67 $329.88 $345.85 $362.59 15 $1,225.78 $282.87 $313.34 $330.46 $346.21 $362.72 $380.04 16 $1,236.87 $285.43 $316.25 $333.62 $349.47 $366.10 $383.53 20 $1,281.20 $295.66 $327.92 $346.25 $362.53 $379.60 $397.49 28 $1,369.87 $316.12 $351.24 $371.53 $388.66 $406.60 $425.40 29 $1,380.96 $318.68 $354.16 $374.69 $391.92 $409.98 $428.89 30 $1,392.04 $321.24 $357.08 $377.84 $395.19 $413.35 $432.38 35 $1,447.46 $334.03 $371.66 $393.64 $411.51 $430.23 $449.83 40 $1,502.88 $346.82 $386.24 $409.43 $427.84 $447.11 $467.28 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Bin Size (CY) 1x/Week $/Pickup

1.5 $113.34 $26.16 $25.37 $26.53 $27.51 $28.53 $29.60
2 $150.51 $34.73 $33.67 $35.21 $36.51 $37.87 $39.28
3 $224.23 $51.75 $50.12 $52.40 $54.34 $56.35 $58.44
4 $301.02 $69.47 $67.35 $70.42 $73.02 $75.73 $78.55
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Bin Size (CY) Pick ups/week
65 gal. - Organics 1 $33.88 $43.90 $46.15 $46.06 $48.21 $50.47 65 gal. - Organics 2 $61.64 $74.08 $77.89 $77.70 $81.28 $85.04 65 gal. - Organics 3 $85.38 $99.79 $104.94 $104.64 $109.42 $114.42 65 gal. - Organics 4 $109.47 $125.92 $132.42 $132.02 $138.01 $144.28 65 gal. - Organics 5 $141.28 $160.54 $168.83 $168.32 $175.98 $183.99 65 gal. - Organics 6 $157.11 $177.54 $186.74 $186.11 $194.50 $203.29 95 gal. - Greenwaste 1 N/A $40.67 $42.77 $42.61 $44.52 $46.51 95 gal. - Greenwaste 2 N/A $73.38 $79.03 $78.70 $82.19 $85.84 95 gal. - Greenwaste 3 N/A $101.42 $109.46 $108.96 $113.73 $118.73 95 gal. - Greenwaste 4 N/A $130.41 $140.88 $140.21 $146.32 $152.72 95 gal. - Greenwaste 5 N/A $167.90 $181.24 $180.40 $188.30 $196.56 95 gal. - Greenwaste 6 N/A $165.37 $173.09 $172.78 $180.86 $189.33 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
N/A $23.95 $25.15 $26.40 $27.73 $29.11
N/A $2.00 $2.10 $2.21 $2.32 $2.43
N/A $61.00 $64.05 $67.25 $70.62 $74.15
N/A $35.00 $36.75 $38.59 $40.52 $42.54
N/A $45.00 $47.25 $49.61 $52.09 $54.70
N/A $40.00 $42.00 $44.10 $46.31 $48.62

N/A N/C N/C N/C N/C N/C
N/A $85.00 $89.25 $93.71 $98.40 $103.32
*Includes up to 3 items. Additional items at $14 each.

Current Rates Proposed Rates
Commercial Bin Cleaning/Exchange
Locking Device Setup-Trash
Optional Residential Walkup Service-Additional
Charge Per Month
Extra Trash Bags-Per Bag
Bulky Pickup, Extra Service-Residential or
Commercial locations*
Cart Cleaning/Exchange Fee
Current Rates
(Per Pickup)

SOLID WASTE RATE SCHEDULE
Organics Program Current Rates
Locking Device Setup-Recycle
Return Trip Fee-Dry Run-Rolloff/Compactors
Service

SOLID WASTE RATE SCHEDULE
Miscelleaneous Fees
Proposed Monthly Rates
(Note: disposal cost plus 8% franchise fee will be added)

SOLID WASTE RATE SCHEDULE
Commercial Bins -
Internal Compactors
Current
Mo. Rates
Proposed Rates per Pickup ($/PU)*
Current
Mo. Rates
* Disposal costs will be charged based on actual tonnage charges determined at the landfill or other disposal/recycling site, plus Franchise Fee.

Proposed Rates per Pickup ($/PU)*SOLID WASTE RATE SCHEDULE Compactor Boxes
(Note: disposal cost plus 8% franchise fee will be added) Current Rates
(Per Pickup)
Summary of Solid Waste Rate Analysis Page 23 July 2023 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
N/A $132.35 $138.97 $145.92 $153.22 $160.88
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
N/A $483.91 $508.11 $533.51 $560.19 $588.20
N/A $489.51 $513.99 $539.68 $566.67 $595.00
N/A $495.11 $519.87 $545.86 $573.15 $601.81
N/A $500.71 $525.75 $552.03 $579.63 $608.62
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
N/A $187.71 $197.10 $206.95 $217.30 $228.16
N/A $197.11 $206.97 $217.31 $228.18 $239.59
N/A $206.51 $216.84 $227.68 $239.06 $251.01
N/A $215.91 $226.71 $238.04 $249.94 $262.44
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
N/A $326.78 $343.12 $360.27 $378.29 $397.20
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Cost Per Residential Unit per Month 0.32$ 0.32 $ 0.37 $ 0.39 $ 0.41 $ 0.44 $ Proposed Rates*SOLID WASTE RATE SCHEDULE
Household Hazardous Waste Fee Rate
Schedule
Current Rates
(Note: disposal cost plus 8% franchise fee will be added) (Note: disposal cost plus 8% franchise fee will be added) * Up to 1 week.

SOLID WASTE RATE SCHEDULE
Temporary Services Fees - Mixed
Construction and Demolition Waste
Current Rates Proposed Rates*
Bin Size (CY)
10 Bin Size (CY)
Bin Size (CY)
3 40
Proposed Rates*
20 30
40 * Up to 1 week. Includes 3 tons of disposal. Excess disposal billed at landfill rate.

SOLID WASTE RATE SCHEDULE
Temporary Services Fees - Residential Clean Current Rates Proposed Rates* * Disposal costs will be charged based on actual tonnage charges determined at the landfill or other disposal/recycling site, plus Franchise Fee. * Disposal costs will be charged based on actual tonnage charges determined at the landfill or other disposal/recycling site, plus Franchise Fee.

SOLID WASTE RATE SCHEDULE
Temporary Services Fees - Residential Clean
Out
Current Rates Proposed Rates*
10 20
30 40
Bin Size (CY)

SOLID WASTE RATE SCHEDULE
Temporary Services Fees - Source Separated
Material
Current Rates
Analysis of Street Sweeping Funding Alternatives Page 1 July 2023

TECHNICAL MEMORANDUM
TO:

FROM:

RE:

DATE:

Doug Mathews, Director of Public Works and Water, City of Victorville Dana Armstrong, Environmental Programs Manager, City of Victorville Greg Clumpner, Director, NBS Utility Rate Practice Group Jeremy Tamargo, Senior Consultant, NBS Utility Rate Practice Group

ANALYSIS OF STREET SWEEPING FUNDING ALTERNATIVES - FINAL July 2023

INTRODUCTION AND BACKGROUND
The City has asked NBS to evaluate alternatives for funding the City’s street sweeping program, including (1) examples of how other cities are funding similar programs, (2) available funding alternatives, (3) street sweeping rate design issues, and (4) street sweeping rate alternatives. This technical memo addresses these issues.

While the City’s residential and commercial customers may see street sweeping as a “free” service, the current street sweeping funding sources summarized in Table 1 are nonetheless real costs to the City. If street sweeping could be added to the cost of other programs, such as the solid waste program, these funding sources could be better used for other services, such as the storm drainage and street maintenance programs.

The contracted revenue is to provide services to Caltrans for some state routes and a parking lot.

FY’24/25 includes a 25% increase in O&M costs for street sweeper s and $25,000 to fund the annual replacement cost of a mobile screen shaker.

As with many mu nicipal services, funding mechanisms were often established many years ago and reflect historical practices and it is not always clear how they were originally created.

EXAMPLES OF STREET SWEEPING FUNDING IN OTHER CITIES
In the following examples, street sweeping services are provided by city personnel and funded either through a direct fee or incorporated into solid waste rates. Details are provided below.

FY 2021/22
Actuals
FY 2023/24
Projected
FY 2024/25
Projected
220 - Gas Tax Operating Expenses $327,794 $392,390 $503,730 220 - Gas Tax Equipment Expenses $7,576 $7,576 $9,725
202 - Storm Drain Operating Expenses $154,708 $160,076 $205,498 370 - LMADS/MAD Wages & Benefits $7,854 $8,107 $10,407
(Currently Unfunded) Capital Replacement $250,000 $250,000 $275,000 (Currently Unfunded) Annual Capital Replacement -- -- $25,000 Total Annual O&M $747,932 $818,148 $1,029,361
(less) Special Service
Fees
Contract Street Sweeping
Services ($6,870) ($7,200) ($7,600)
Net Annual O&M $741,062 $810,948 $1,021,761

1. Although not shown in this table, ARPA funds were available for street sweeper replacements in FY 23/24 and FY 24/25, but have been reflected in the street sweeping rate component.

Street Sweeping Program Costs
Analysis of Street Sweeping Funding Alternatives Page 2 July 2023 City of Madera – In its last rate study, the City decided to incorporate street sweeping costs into the solid waste rates. The following is an excerpt from the City’s cost-of-service rate study2 that was completed in 2022 (and rates were subsequently adopted):

The City currently has a street sweeping fee of $0.0248 per foot of street exposure and a fee of $0.0125 for additional cleaning. The City currently expects to collect about $406,637 from these fees in FY 2021/22, although actual costs are approximately $660,000 with the difference of about $261,000 funded by the City’s General Fund and other Enterprise fund transfers. The nexus of the benefits of street cleaning to either the per- foot charges or the costs collected from various residential and commercial customers is not abundantly clear3, and NBS recommends incorporating the street sweeping costs into solid waste rates on a broader basis from all customers. While this would increase solid waste rates, it would also eliminate the current street sweeping charges.

The street sweeping program benefits solid waste customers in two ways: (1) the direct benefit to residents and businesses receiving the street/curb cleaning in front of their home and/or business and, (2) improved sanitation and trash removal in other public areas (streets) not necessarily tied to an individual solid waste customer. The nexus between these street sweeping benefits and the cost allocated to all solid waste customers would support including these costs on an across-the-board basis.

Street Sweeping costs were incorporated into solid waste rates but not as a separate fee. Street sweeping costs accounted for about 7% (or $2.24/month/customer) of the new standard residential solid waste rate of $32/month.

City of Redding – Like the City of Madera, street sweeping services in Redding are provided by City personnel and the City incorporates them into residential, commercial customer, and drop boxes customer class rates.

While there are also solid waste rates for transfer station customers, street sweeping costs were not included in these rates. All solid waste rates were documented in the City’s 2020 Cost of Service Rate Study.4 The City’s total street sweeping costs for FY’19/20 were $1.22 million; these costs were allocated between residential and commercial classes by the total miles of street sweeping provided, with a smaller amount allocated to roll-off/drop boxes based on City estimates. Street sweeping costs were allocated to residential and commercial curbside customers without a distinction in the costs allocated between difference size waste carts (i.e., 95-, 65-, and 45-gallon carts were all allocated the same street sweeping cost). The average cost per residential customer for street sweeping was approximately $1.45/account/month.

City of Fresno – Fresno provides its own street sweeping program (vs. contracted with a waste management company) and funds these service through a “Sanitation Fee” that includes median landscape maintenance, street sweeping, street tree maintenance, and litter control.

For the existing level of service, which the City considers significantly underfunded, the City collects a Sanitation fee of about $7.40/month/customer, of which the street sweeping portion is about $2.09/month/customer. The 2 City of Madera, Solid Waste Rate Study, Final Report, April 2022, NBS. 3 The City has no formal documentation of how these rates were developed or the rationale for this approach. 4 City of Redding, Utility Rate Program Update, Final Report, February 2020, NBS.

Analysis of Street Sweeping Funding Alternatives Page 3 July 2023

City believes the appropriate level (which they referred to as an “enhanced level” of service), the estimated Street Sweeping costs for FY’22 were about $6.9 million for actual street sweeping, plus a one-time equipment replacement costs of about $5.5 million. On an annual budgeting basis, total annual costs were estimated to be about $8.1 million, with the $5.5 million replacement cost reflected as a $1.2 million/year loan repayment.

The City has about 110,000 single-family customers plus about 40,000 multi-family units if they are counted as 50% of a single-family equivalent customer: this totals about 150,000 customers. The estimated cost of the “enhanced” level of street sweeping was about $4.37/month/customer (i.e., this excluding median landscape and street tree maintenance and litter control).

STREET SWEEPING FUNDING ALTERNATIVES
Although the Proposition 218 approval mechanisms can be onerous, the legislature carved out three exemptions for water, sewer, and solid waste services, meaning there is a fairly simple “protest ballot” process used to approve these types of parcel-related charges. The City Attorney’s office has provided their legal opinion on whether street sweeping services can be included in solid waste rates and concluded that this is legal under Prop 218 provided that it is properly allocated to the properties being served.

Under Prop 218, street sweeping services could hypothetically be funding through one or some combination of the City’s other utilities:
• Water
• Sewer
• Solid Waste
Essentially as long as a utility can adequately demonstrate that the benefits to utility customer properties are equal to the charges they are paying for street sweeping (or any other service), those charge or rates can be justified under Prop 218 (subject of course to approval by legal counsel and adopted by the administrative body).

That is, the validity of this would rely on the nexus, or relationship between the benefits provided to water, sewer, or solid waste customer properties and the amount they pay for these services. In NBS’s opinion, the most tangible benefits of street sweeping accrue to solid waste customers for the following reasons:
• Street sweeping collects and disposes of solid waste that accumulates on the streets through normal activities of residential and commercial customers that, for health and sanitary reasons, need to be removed and disposed.
• Street sweeping is performed in both residential and commercial areas, providing direct benefits to these solid waste customer properties as well as secondary benefits to the community as a whole. • While the City provides solid waste services through a contractor Victorville Disposal, street sweeping operations are provided directly by City personnel and equipment in a similar manner to solid waste collection and disposal. That is, street sweepers use City streets to collect the trash and refuse materials which City personnel then disposed of.

The benefits of street sweeping to water and sewer customers are typically associated with (1) protection of the City’s groundwater resources (e.g., from pollution that may otherwise contaminate t hese resources) and (2) avoidance of floodwaters entering sewer collection systems and reduce effluent flowing to the treatment facilities (which in the absence of removal of street debris would increase localized flooding and intensify infiltration and

Analysis of Street Sweeping Funding Alternatives Page 4 July 2023

inflow of contaminated waters into the sewer collection system). There are also benefits to the stormwater system specifically and more generally to public safety, such as minimizing localized flooding by keeping stormwater collection basins clear of debris.

In short, NBS sees many other public agencies using solid waste utilities to collect street sweeping funding and, as a relatively common practice, we believe it has a generally high level of acceptance by the public. We also believe the benefits of street sweeping are most directly connected to solid waste operations.

STREET SWEEPING RATE DESIGN ISSUES
The questions regarding how street sweeping costs could or should be collected through solid waste rates, assuming the City decides to pursue this path, include:
• Should the street sweeping cost be collected through a specific charge or rate that is separately identified vs. being generally incorporated into solid waste rates? • What financial impacts might this have on the City’s franchise fee payments? • How should street sweeping costs be allocated to solid waste customers? • What should the “rate design” of street sweeping charge be – that is, what solid waste customers pay what amount, and does this demonstrate a reasonable cost-basis as required under Prop 218? While these questions have legal components that should be answered by the City’s legal counsel (and we believe have been), there are ratemaking components to consider. While this is a fairly simple cost-of-service rate study, we believe it is sufficient to justify including street sweeping rates in the solid waste rate schedules and adopt them through the City’s Prop 218 approval process.

Franchise Agreement Issues – Because of the implications for the City’s solid waste franchise agreement, it is NBS’ opinion that the street sweeping should be a separate charge so that it can be segregated from other solid waste program costs. Since street sweeping is a City-provided service that does not impact the privately contracted solid waste services, it should not be used to increase franchise fees paid to Burrtec.

Street Sweeping Benefits – Street sweeping benefits are more broadly defined compared to services for specific sizes of refuse containers and specific number of pickups per week. That is, both residentia l and commercial customers contribute to the cost-causation (i.e., they both generate the materials collected by street sweepers), and residential customers are in a sense, also the generators of waste materials in the commercial areas of town served by co mmercial bins and roll -offs. In other words, were it not for residential customers frequenting commercial areas of town, there would be minimal waste generation in these areas.

Street Sweeping Rate Design – NBS’ opinion is that, while street sweeping fees could be collected from commercial bins, roll -offs, and compactors, etc., the most direct nexus is to curbside collection customers, including both residential and commercial cans. We also believe that street sweeping benefits accrue to residential and commercial curbside customer properties regardless of the size of their collection can (i.e., whether they have a 95 -, 65 -, or 35 -gallon collection can). In essence, the benefit is to a household or household equivalent, regardless of the size of their collection can. Because of this, we believe street sweeping rates can and should be applied to residential and commercial curbside customers in an across -the-board manner. We believe this approach is consistent with the City’s Attorney’s opinion regarding street sweeping costs being collected through solid waste charges.

Analysis of Street Sweeping Funding Alternatives Page 5 July 2023

STREET SWEEPING RATE ALTERNATIVES
NBS has prepared three alternatives for collecting street sweeping costs through solid waste rates. These alternatives assume that street sweeping costs can be allocated to solid waste customers on the basis of the total amount of solid waste rate revenue each customer class pays, as shown in Table 2. We believe the total rate revenues broadly reflect the level of solid waste services received by customer clas ses. Also, as we have argued elsewhere, street sweeping benefits are more directly related to the number of customer properties served rather than a property’s specific container size or level of service (i.e., number of pickups per week).

As shown in Table 2, over 96% of solid waste customers are curbside accounts. Additionally, because of the relatively small number of customers and the complexity of service options for commercial bins and roll - off/compactors (e.g., combinations of container size and number of collections per week as shown in the City rate schedules), allocating costs to commercial bins and roll -off/compactors would be far more complex than necessary.

As we have also stated, street sweeping costs could be allocated entirely to curbside customers, which represent more than 96% of all customers. However, the three street sweeping rate alternatives shown in Table 3 follow different cost allocation methodologies with different resulting rates:

Option 1 – Costs are allocated to customer classes based on total number of solid waste rate revenues shown in Table 2. Rates are then calculated by dividing the allocated costs by the number of units (i.e., accounts, containers, or bins). This results in large disparities in the charges for each account type.

Option 2 – Costs are allocated to curbside customer based on the percentages of solid waste rate revenue within the curbside collection accounts only. The street sweeping rates are then calculated by dividing the allocated costs by the number of curbside accounts. This results in charges to commercial cans that are over three times as much as multi-family residential cans.

Option 3 – Costs are allocated to curbside customer properties based on the number of solid waste curbside collection accounts only. The street sweeping rates are then calculated by dividing the allocated costs by the number of curbside accounts. This results in the same charges to all residential and commercial curbside accounts (i.e., 95-gal. cans).

FY'22 Revenue1 % of Revenue Size Frequency Units % of Units Curbside Accounts
Single-Family Resid. (SFR) $9,353,724 57.6% 95 gal. 1 /week 31,338 93.4% Multi-Family Resid. (MFR) $280,876 1.7% 95 gal. 1 /week 994 3.0% Commercial Cans $55,822 0.3% 95 gal. 1 /week 64 0.2%
Total Curbside Services $9,690,422 59.7% 32,396 96.6%
Commercial Bins
Trash 1.5 CY 1 /week 178
Trash 2.0 CY 1 /week 125
Trash 3.0 CY 1 /week 310
Trash 3.0 CY 2 /week 184
Trash 3.0 CY 3 /week 177
Commercial Bin Totals $5,008,266 30.9% 974 2.9%
Roll Off/Compactor Accts $1,530,581 9.4% Varies Varies 174 0.5% Total $16,229,269 100.0% 33,544 100.0%

1. July '21 through June '22 solid waste rate revenue, Source: Sanitation Billings Summary.xlsx Type
Table 2 - Analysis of Street Sweeping Cost Allocation Data for Solid Waste Customers
Analysis of Street Sweeping Funding Alternatives Page 6 July 2023 As shown in T able 3, street sweeping rates are significantly different for these three options. Although all three alternatives have a cost-of-service basis, selecting a recommended approach considers other factors, as discussed below. Option 3 also shows the adjusted rate to account for temporary ARPA funding for street sweeper replacements in those two year. The full costs of replacements would be incurred in FY 25/26. Including inflation, that results in a rate of $2.89 per residential account.

Street Sweeping Rates – The FY’24/25 Option 3 street sweeping rate of $2. 63/month shown in Table 3 includes an additional 25% in operating costs to fund one additional street sweeper operator (an increase from four to five operators), plus the $250,000/year for street sweeper replacement and $25,000/year for a mobile screen shaker replacement (on a 10-year replacement cycle). Without the additional street sweeper operator, the FY’24/25 rate of $2.63 would drop by $0.38 to $2.25.

Selecting a Rate Alternative – Some of the basic ratemaking philosophy and industry standards in utility rate analysis that are relevant to selecting a street sweeping rate alternative are discussed below.

Legal interpretations of Prop 218 have evolved over time and in 2015, following the San Juan Capistrano ruling, the Association of California Water Agencies (ACWA) conducted a workshop to discuss the ratemaking implications for water agencies. One such workshop5 in 2015 resulted in two key principles for consideration in the face of the perceived legal challenges and the potential increase in litigation:
• Cost apportionment is not a determination that lends itself to precise calculations. • Ratemaking does not have to be perfect.

Other industry authorities on utility ratemaking, such as the American Water Works Association (AWWA), publishes the Principles of Water Rates, Fees, and Charges 6 (commonly referred to as the “M1 Manual”). This 5 ACWA Board of Directors Workshop Agenda Packet, July 30, 2015, p. 8 of 95. 6 American Water Works Association (AWWA), Principles of Water Rates, Fees, and Charges, Manual of Water Supply Practices, M1, Seventh Edition, 2017.

Annual
St. Sweeping
Costs
Street
Sweeping
Rates
Annual
St. Sweeping
Costs
Street
Sweeping
Rates
Annual
St. Sweeping
Costs
Type ($/Year) ($/Unit/Mo.) ($/Year)1 ($/Unit/Mo.) ($/Year)2 Curbside Accounts FY'23/24 FY'24/25 FY'25/26
Single-Family Resid. (SFR) $323,360 $0.86 $541,555 $1.44 $542,726 $1.44 $2.63 $2.80 Multi-Family Resid. (MFR) $9,710 $0.81 $16,262 $1.36 $17,215 $1.44 $2.63 $2.80 Commercial Cans $1,930 $2.51 $3,232 $4.21 $1,108 $1.44 $2.63 $2.80 Total Curbside Services $334,999 $561,048 $561,048 $1,021,761 $1,096,300 Adjusted Costs for ARPA Funding $311,048 $746,761
Adjusted Rates for ARPA Funding $0.83 $1.99
Commercial Bins

1.5 CY $31,641 $14.81

2.0 CY $22,220 $14.81

3.0 CY $55,105 $14.81

3.0 CY $32,708 $14.81

3.0 CY $31,463 $14.81
Commercial Bin Totals $173,137
Roll Off/Compactor Accts $52,912 $25.34
Total Street Sweeping Costs ('23/24) $561,048

1. Costs allocated based on % of cubside revenues.

2. Costs allocated based on % of curbside units (i.e., 95-gal. cans).

Street
Sweeping
Rates
Option 3 - Curbside Units EquallyOption 1 - Total Revenue Basis Option 2 - Curbside Rev. Only ($/Unit/Mo.)
Table 3 - Calculation of Street
Sweeping Rates
for Solid Waste Customers
Analysis of Street Sweeping Funding Alternatives Page 7 July 2023 manual is accepted as the industry standard for cost -of-service analysis and utili ty rate studies. Some of the relevant guiding principles when considering how utility rates are calculated include:
• There is no “one right way” to design a rate study.7
• “No rate structure meets all utility objectives equally, and not all objectives are valued the same by the utility or its customers.”2
• “The purpose of the cost-of-service analysis is to equitably distribute the revenue requirements between the various customer classes of service served by the utility… and determine the cost differences, if any, exist between serving the various customer classes.”8
• “In most cost-of-services analyses, the basis for allocating costs is cost causation, by recognizing the parameter or parameters that most influence the level of cost incurred.”9 • “The full revenue requirements should be equitably recovered from customers or classes of customers in proportion to the cost of servicing those customers. However, …other considerations may, at times, be equally important in determining rates and charges and may better reflect emerging objectives of the utility or the community it serves, including water-use efficiency, revenue stability, and affordability.”10 In selecting a street sweeping rate alternative, while the City must adhere to Prop 218 mandates, it must also not lose sight of the over -arching principles that have been reinforced since Prop 218 was adopted in 1996. That is, ratemaking needs to be based on reasonable assumptions and reasonable rate calculations. As noted above, this does not mean they must “be perfect” or “precise” or follow any one particular calculation or methodology.

NBS RECOMMENDATIONS
NBS’ professional opinion is that Option 3 is preferred because:
• It treats residential and commercial customers equally. • The rates are minimal compared to some included in Options 1 or 2. • It is easy to understand and administer.

Therefore, NBS recommends the City use Rate Option 3 as presented in Table 3 above. 7 AWWA, 2017, p. 104.
8 AWWA, 2017, p. 5.
9 AWWA, Principles of Water Rates, Fees, and Charges, Manual of Water Supply Practices, M1, Fifth Edition, 2000. p. 182. 10 AWWA, 2017, p. xix.

Item Number: 2
City Council / Board of Directors
Written Communications
Meeting of: August 8, 2023
Submitted By:

Brian Gengler, City Engineer
Doug Mathews, Director of Public Works and Water

Subject:

Proposed Resolution No. 23-063 to Accept the 2023 Sewer Rate Study; Set the Date, Time, and Location for a Public Hearing on Proposed Adjustments to Sewer Service Rates; and Authorize the Preparation and Mailing of Notices of Public Hearing in Accordance with Proposition 218.

Recommendation:

Staff recommends that the Honorable City Council adopt Resolution No. 23-063 to:
(1) Accept the 2023 Sewer Rate Study;
(2) Set October 3, 2023, as the date for the Public Hearing on the proposed adjustments to the City’s Sewer Service Rates; and
(3) Authorize City Staff to prepare and mail Notices of the Public Hearing in accordance with Proposition 218.

Fiscal Impact:

This action will result in a fiscal impact of $15,553.23, resulting from direct costs of mailing required hearing notices and notice publications. An additional appropriation is not required. This project will be funded entirely from Fund No. 425, the Sewer Fund, and Fund No. 412, the Industrial Wastewater Treatment Plant (IWWTP) Fund. There are sufficient funds in both accounts to cover the planned expenses.

Budget Account No. Available Funds Account Description
4250700-52300 $173,991.90 Sewer – Contract Services
4120710-52300 $2,314,100.00 IWWTP – Contract Services
Strategic Plan Goal:

This item aligns with Goal A, Financial Stability; and Goal E, Invest in Infrastructure.

Periodically evaluating and adjusting sewer rates helps ensure the City has necessary 3 2
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resources to adequately fund the operation and maintenance of its sewer collection and treatment infrastructure.

Background:

The City of Victorville (“City”) owns, operates, and maintains a sanitary sewer collection system and provides for the disposal and treatment of wastewater flows from residents and businesses within the boundaries of the City (the “Sewer Services”), utilizing the treatment facilities of the Victor Valley Regional Wastewater Authority (“VVWRA”) and the Industrial Wastewater Treatment Plant (“IWWTP”) located at the Southern California Logistics Airport.

As authorized by Health and Safety Code section 5470 et seq. and Chapter 10.01 of the City’s Municipal Code, the City prescribes, revises, and collects fees, charges, and rates for its Sewer Services (“Sewer Service Rates”). The City’s last sewer rate study/cost of service analysis, conducted in fiscal year 2018 by NBS, an independent consulting firm engaged by the City, resulted in the City’s implementation of a modified sewer rate structure and Sewer Service Rates (after following appropriate Proposition 218 procedures) which provided for annual increases over a five-year period ending in fiscal year 2023. It is generally considered good utility practice to perform comprehensive rate studies at least every five years.

Given its familiarity with the City’s existing sewer rate structure and customer classes, the City again engaged NBS to study its Sewer Service Rates and the revenues being generated to determine if such revenues are adequate to cover the City’s current costs associated with providing Sewer Services. Such costs include, but are not limited to:
operating and maintaining the City’s sewer collection system; complying with state and federal wastewater treatment and disposal requirements; paying wastewater treatment fees charged by the VVWRA; maintaining the IWWTP; and establishing a minimum cash reserve for sewer operations and capital expenses.

NBS performed a comprehensive cost of service and sewer rate study analysis (“Rate Study”), which included a review of the current Sewer Service Rates to determine if said rates continued to proportionately allocate the City’s costs of providing Sewer Services amongst the property owners/customers utilizing the services.

In the Rate Study (Exhibit 1 to Attachment A) it is shown that the current Sewer Service Rates were insufficient to fully fund the City's ongoing obligations for sewer operations and maintenance expenses. Therefore it is recommended to incrementally increase the Sewer Service Rates over the next five (5) years to ensure continued proper operation and maintenance of the City’s sewer system, cover VVWRA wastewater treatment costs, meet debt service requirements, rehabilitate and replace aging sewer system assets, including vehicles and equipment, and maintain appropriate operating reserves.

Increased revenue requirements identified in the Rate Study are predominantly due to capital costs necessary to rehabilitate and replace aging sewer system infrastructure, and the continued escalation of rising costs of goods and services (inflation) projected over the five-year Rate Study period.
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The Rate Study proposes adjustments to the current Sewer Service Rates and suggests redistributing projected costs to appropriate customer classes to ensure proportionality and appropriate cost recovery for providing reliable Sewer Services to City residences and businesses. The Sewer Service Rates resulting from this Rate Study were developed in a manner that is consistent with industry standard cost-of-service principles.

Discussion:

Current and Proposed Sewer Service Rates
All properties to which Sewer Services are made available are subject to sewer charges.

Wastewater is not metered for specific flows. Instead, domestic water usage (not including water used for irrigation) is used to estimate wastewater flows. The methodology the City currently uses to calculate its Sewer Service Rates is based on customer classes and computed as follows:
•Single-Family Residential Customers are billed a fixed monthly service charge for each dwelling unit.
•Multi-Family Residential Customers (such as apartment buildings) are billed a fixed monthly service charge for each dwelling unit. This fixed monthly charge is lower than that charged to Single-Family Customers to account for lower standard usage.
oA dwelling unit is an individual living unit; for single-family residential customers, this is a single-family home and for multi-family customers, this is an individual unit (for example, an apartment unit, or one of the living units in a duplex or triplex building).
•Commercial Customers are billed a fixed monthly service charge for each account, plus a volumetric charge based on the amount of domestic water used at the property.
•Industrial Customers (user-specific) are billed fixed monthly charges (and in some cases monthly minimum charges), as well as surcharges, which are dependent on the wastewater strength characteristics, including biochemical oxygen demand (“BOD”), chemical oxygen demand (“COD”), suspended solids (“SS”), fixed dissolved solids (“FDS”), and total suspended solids (“TSS”).

The proposed changes to the current Sewer Service Rates methodology are as follows:
•The Industrial Customers (user-specific) class has been divided into two separate rate classes: Industrial Customers and User Specific Rate Customers. oIndustrial Customers will be billed a fixed monthly service charge, a volumetric charge based on the amount of domestic water consumed, plus surcharges for wastewater strength characteristics, including biochemical oxygen demand (“BOD”), total suspended solids (“TSS”).
oUser Specific Rate Customers will each be billed fixed and/or minimum monthly charges and various applicable surcharges based on their wastewater strength characteristics.
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The following table shows the projected increases to rate revenue over the five-year Rate Study period. The actual increases in rates for the various rate components and customer classes will vary from the percentages shown below, especially in the first year when projected costs are redistributed to appropriate customer classes to ensure proportionality and appropriate cost recovery for providing reliable Sewer Services to City residences and businesses. However, after the first year, the proposed rate increases should more closely match the percentages in the table below.

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The following table compares current and recommended (proposed) Sewer Rates:

Pass Through of VVWRA Rates Increases
Currently, the first year of the proposed sewer rate increases also includes the final year of an 8% VVWRA sewer treatment charge pass-through increase, which accounts for approximately three-fifths (3/5) of the 5% projected increase to rate revenue in the FY 23/24. VVWRA is currently studying its rates for the five years following FY 23/24.

However, the future VVWRA rates beyond FY 23/24 are not known. Pursuant to Government Code Section 53756, future rate increases imposed by VVWRA may be passed through to customers as additional adjustments to the rates and fees shown above. Industrial Customers and User Specific Rate Customers whose flows are being conveyed to VVWRA are subject to surcharges based on wastewater characteristics as determined by VVWRA.

FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28Residential Customers 1 Monthly Fixed Service Charge, per Dwelling Unit:Single-Family Residential 51.89$ 59.62$ 62.60$ 65.73$ 69.01$ 72.46$ Multi-Family Residential 38.09$ 31.32$ 32.89$ 34.53$ 36.26$ 38.07$ Commercial CustomersMonthly Fixed Service Charge, per Account: 51.89$ 59.62$ 62.60$ 65.73$ 69.01$ 72.46$ Volumetric Charge, per hcf 2 4.41 4.54$ 4.77$ 5.01$ 5.26$ 5.52$ Industrial Customers3 Monthly Fixed Service Charge, per Account: 51.89$ 59.62$ 62.60$ 65.73$ 69.01$ 72.46$ Volumetric Charge, per hcf 2 4.41 4.54 4.77 5.01 5.26 5.52BOD Charge, per lb - 2.10$ 2.21$ 2.32$ 2.43$ 2.55$ TSS Charge, per lb - 2.03$ 2.14$ 2.24$ 2.35$ 2.47$ User-Specific RatesFederal Corrections Complex (FCC)Monthly Fixed Charge Per EDU 4 52.22$ 64.32$ 67.54$ 70.92$ 74.46$ 78.18$ BOD Charge, per lb 5 2.19$ 2.10$ 2.21$ 2.32$ 2.43$ 2.55$ TSS Charge, per lb 5 2.20$ 2.03$ 2.14$ 2.24$ 2.35$ 2.47$ Kuerig Dr. Pepper (KDP) 6 Monthly Min Charge (excluding capital recovery)7 162,500$ 162,500$ 162,500$ 162,500$ 162,500$ 162,500$ Monthly Fixed Charge (Ion Exchange Service) 8 10,200$ 10,200$ 10,200$ 10,200$ 10,200$ 10,200$ Volumetric Charge, per 1,000 gal6 0.37$ 0.37$ 0.37$ 0.37$ 0.37$ 0.37$ COD Charge, per lb6 0.13$ 0.13$ 0.13$ 0.13$ 0.13$ 0.13$ FDS Charge, per lb 9 2.91$ 2.99$ 3.07$ 3.15$ 3.24$ 3.32$ BOD Charge, per lb10 N/A - - - - -TSS Charge, per lb 10 N/A - - - - -1. Residential customers are assessed on the basis of their number of dwelling units.2. Volumetric charge will apply to monthly water consumption.3. All industrial dischargers that discharge wastewater of unusual strength or character are required to obtain a wastewater discharge permit from IWWTP or VVWRA, respectively. Additional surcharges may apply based on wastewater characteristics.Plastipak and Hydration Source included in this customer category. 4. FCC will be billed based on a flow estimate of 200 gallons per day, per EDU. 5. FCC surcharges for BOD and TSS apply to concentrations above 200 mg/l for BOD and 250 mg/l for TSS. 6. Volumetric charges (per 1,000 gal or lbs) for KDP shall apply accordingly if discharge exceeds 585,000 gpd, 28,100 lbs/day of CODor 1,400 lbs/day of SS in accordance with Wastewater Capacity and Treatment Agreement.Volumetric charges for KDP listed in rate table are in accordance with the Wastewater Capacity and Treatment Agreement.7. Monthly minimum charge for KDP in accordance with Wastewater Capacity and Treatment Agreement.8. Monthly fixed charge per Woodard and Curran operational expenses.9. The FDS surcharge was calculated by Woodard & Curran and is subject to a 2.7% general cost inflation factor in FY 2019/20 and beyond. This will apply to all pound of FDS treated. Source:2018.03.21 FDS Surcharge Limit Table.xlsx10. BOD and TSS charges not applicable to KDP due to wastewater strength characteristics.

Sewer Rate Schedule Recommended Sewer RatesCurrent Rates 3 2
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Current Rate Comparison
A recent review of sewer rates for other jurisdictions compared to Victorville’s sewer rate is shown below:

Proposition 218 – Adoption of Proposed Sewer Service Rates Proposition 218, a voter-adopted ballot initiative, added Articles XlllC and XlllD to the California Constitution to create rules and limitations on the imposition of assessments, taxes, and fees. Section 6 of Article XlllD, which applies to property-related fees such as sewer, requires a public hearing be scheduled to consider adoption of any new rates or fees and notification to be sent to the record owner of each identified parcel upon which any new (or increased) fees, rates or charges are proposed to be imposed. The required notification is a public hearing notice, which must be mailed at least forty-five (45) days in advance of the public hearing, and must describe the amount of the fee or charge proposed to be imposed upon each parcel; the basis upon which the amount of the proposed fee or charge was calculated; the reason for the fee or charge; together with the date, time, and location of the public hearing.

Upon adoption of Resolution No. 23-063, the Rate Study will be accepted, and a public hearing will be scheduled to take place at the City Council’s regularly scheduled meeting on October 3, 2023 (the "Public Hearing"). Notice of the Public Hearing (the "Notice") will also be prepared by City Staff (in consultation with the City Attorney) and mailed to the

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record owner of each identified parcel upon which the City proposes to impose the proposed Sewer Service Rates 45 days prior to the Public Hearing date. Each record owner will have the right to submit a written protest against the proposed new rates in the manner to be set forth in the Notice. The Notice will also provide the procedures by which such protests will be considered valid and counted.

Although specific protest procedures are not set forth in Proposition 218, such written protests typically are submitted by mail or in person to the City Clerk no later than the conclusion of the public hearing. Written protests may require the signature of the record owner of the affected parcel and inclusion of parcel number identification information to ensure authenticity and proper tabulation. In the case of multiple owners of a parcel, only one protest per parcel is counted.

At the October 3, 2023 Public Hearing, the City Council will hear testimony and consider all valid written protests against the proposed Sewer Service Rates received by the City Clerk prior to the close of the Public Hearing. If valid written protests are presented by a majority of owners of the identified parcels (50% plus one, a “Majority Protest”), the City Council will not impose the proposed Sewer Service Rates. If there is no Majority Protest, the City Council may consider for introduction and first reading a Sewer Rate Ordinance to impose the proposed Sewer Service Rates up to the maximum amounts proposed.

A Sewer Rate Ordinance is needed because Section 10.01.010 of the Victorville Municipal Code requires that Sewer Service Rates be set by ordinance passed by a two- thirds (2/3) vote of the entire membership of the City Council. If introduced for first reading on October 3, 2023, the Sewer Rate Ordinance would be brought back to the City Council for second reading and final adoption/passage at its regularly scheduled meeting to be held on October 17, 2023. If finally passed on October 17, 2023, by the requisite two- thirds vote, the new Sewer Service Rates would become effective for all billings made on or after December 1, 2023, and on each July 1 thereafter, for fiscal years 24/25, 25/26, 26/27, and 27/28.

Staff remains available for any questions the Council may have.

Attachments: A. Resolution No. 23-063

ATTACHMENT A

1 RESOLUTION NO. 23-063

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VICTORVILLE ACCEPTING THE SEWER RATE STUDY ;

SETTING A DATE, TIME , AND LOCATION FOR A PUBLIC
HEARING ON THE PROPOSED ADJUSTMENTS TO THE CITY’S
SEWER SERVICE RATES; AND AUTHORIZING PREPARATION

AND MAILING OF A NOTICE OF PUBLIC HEARING ON THE

PROPOSED SEWER SERVICE RATES IN ACCORDANCE WITH
PROPOSITION 218

WHEREAS, the City of Victorville (the “City”) owns, operates and maintains a sanitary sewer collection system and provides for the disposal and treatment of wastewater flows from residents and business es within the boundaries of the City (the “Sewer Services”), utilizing the treatment facilities of the Vict or Valley Regional Wastewater Authority (“VVWRA”) and the Industrial Wastewater Treatment Plant (“IWWTP”) located at the Southern California Logistics Airport; and

WHEREAS, the Victorville City Council (the “City Council”) is authorized by Health and Safety Code section 5470 et seq. and Chapter 10.01 of the City’s Municipal Code to prescribe, revise, and collect fees, charges, and rates for the Sewer Services it provides (the “Sewer Service Rates”) ; and

WHEREAS, the City last increased its Sewer Service Rates in 2018, pursuant to a rate study/cost of service analysis performed by NBS, an independent consulting firm engaged by the City , following appropriate Proposition 218 procedures . The Sewer Service Rates so established provided for annual increases over a five-year period ending in fiscal year 2023; and

WHEREAS, given its familiarity with the City’s existing sewer rate structure and customer classes, the City engaged NBS in 2023 to again study its Sewer Service Rates and the revenues being generated to determine if such revenues are adequate to cover the City’s current costs associated with providing Sewer Services. Such costs include, but are not limited to: operating and maintaining the City’s sewer collection sys tem; complying with state and federal wastewater treatment and disposal requirements; paying wastewater treatment fees charged by the VVWRA; maintaining the IWWTP; and establishing a minimum cash reserve for sewer operations; and

WHEREAS, NBS performed a comprehensive cost of service and sewer rate study analysis (“Rate Study”), which included a review of the current Sewer Service Rates to determine if said rates continued to proportionately allocate the City’s costs of providing Sewer Services amongst the property owners/customers utilizing the services; and

WHEREAS, the Rate Study showed that the City’s current Sewer Service Rates are insufficient to fund the City's ongoing obligations for sewer operations and maintenance expenses; and

2 WHEREAS, the Rate Study demonstrated a need for the City to increase its Sewer Service Rates over the next five (5) years to ensure continued proper operation and maintenance of the City’s sewer system, cover VVWRA wastewater treatment costs, meet debt service requirements, rehabilitate and replace aging sewer system assets, and maintain appropriate operating reserves; and

WHEREAS it is the intention of the City Council to initiate proceedings to increase the City’s current Sewer Service Rates and redistribute projected costs to appropriate customer classes to ensure proportionality and appropriate cost recovery for providing reliable Sewer Services to City residences and businesses; and

WHEREAS, the proposed revisions to and increases of City’s Sewer Service Rates are subject to the substantive and procedural requirements of Proposition 218 (Cal.

Const. Art. XIII D) . Section 6 of Article XIII D sets forth standards for setting rates and fees tha t reflect the proportional cost of providing Sewer Services, as well as requirements for providing notice, a public hearing, and the ability to protest such proposed revisions to and increases of charges and fees for Sewer Services; and

WHEREAS, the City Council wishes to consider acceptance of the attached Rate Study and direct City staff to proceed with notice, public hearing and such other matters required by law in order to consider adoption of the proposed revised Sewer Service Rates in compliance with the requirements of Proposition 218.

NOW, THEREFORE, the City Council of the City of Victorville, California does hereby resolve as follows:

Section 1. Recitals.

The above recitals are true and correct and are incorporated herein by this reference.

Section 2. Acceptance of Study.

The City Council hereby accepts the Rate Study attached hereto as Exhibit 1 and incorporated as part of this Resolution by this reference. This acceptance does not constitute the City Council’s final adoption or imposition of any of the proposed Sewer Service Rates set forth in the Rate Study.

Section 3. Proposed Sewer Service Rates.

The proposed Sewer Service Rates are those set forth in the “Recommended Sewer Rates” section of the Table titled “ CURRENT vs. PROPOSED SEWER RATES:,” which appears on page 25 of 28 of Appendix A of the Rate Study attached hereto.

Section 4. Public Hearing.

A Public Hearing regarding the proposed Sewer Service Rates shall be held on the date of the City’s regularly scheduled meeting of the City Council as follows:
3 Date: Tuesday, October 3, 2023
Time: 6:00 p.m., or as soon thereafter as the matter may be heard Location: Victorville City Council Chambers
14343 Civic Drive
Victorville, California 92392

Section 5. Preparation and Mailing of Notices in Accordance with Proposition 218.

City Staff (in consultation with the City Attorney’s Office) is directed to prepare and mail to the record owners of each identified parcel upon which the proposed Sewer Service Rates are to be imposed, a Notice of Public Hearing (the “Notice”). The Notice shall be mailed on or before August 19 , 2023 to ensure compliance with Proposition 218’s mandated minimum advance notice of forty-five (45) days. The Notice shall also contain information regarding the reasons for and amounts of the proposed Sewer Service Rates; the basis upon which the proposed Sewer Service Rates were calculated; the date, time, and location of the Public Hearing; protest procedures; and such other matters as required by the applicable provisions of Proposition 218.

Section 6. Hearing Date Notice Publication.

The City Clerk shall also provide notice of the date, time, place, and subject matter of the Public Hearing on the proposed Sewer Service Rates by: (1) publishing such information in accordance with Government Code section 6062a; and (2) posting such information (or a copy of the Notice of Public Hearing prepared and mailed in accordance with Section 5 of this Resolution) on the City’s website and other locations customarily used by the City for the posting of public hearing notices, not less than ten (10) days in advance of the date of the Public Hearing.

Section 7. Effective Date.

This Resolution shall take effect immediately upon its adoption.

Section 8. Certification.

The City Clerk shall certify to the passage and adoption of this Resolution; shall enter the same in the book of original Resolutions of the City; and shall make a minute of passage and adoption thereof in the records of the proceedings of the City Council, in the minutes of the meeting at which this Resolution is passed and adopted.

EXHIBIT 1

OFFICE LOCATIONS:

Temecula – Corporate Headquarters
32605 Temecula Parkway, Suite 100
Temecula, CA 92592

San Francisco – Regional Office
870 Market Street, Suite 1223
San Francisco, CA 94102

California Satellite Offices
Atascadero, Davis
Huntington Beach,
Joshua Tree, Riverside
Sacramento, San Jose

www.nbsgov.com

Final Report
Sewer Rate Study
August 2023

TABLE OF CONTENTS

1. BACKGROUND AND PURPOSE ......................................................................................... 1

2. OVERVIEW OF THE STUDY .............................................................................................. 3

2.1 FINANCIAL PLAN ....................................................................................................... 4

2.2 COST OF SERVICE ANALYSIS ..................................................................................... 4

2.3 RATE DESIGN ANALYSIS ........................................................................................... 4

3. SEWER RATE ANALYSIS ................................................................................................... 5

3.1 Financial Plan ............................................................................................................ 5

3.2 Cost of Service Analysis ............................................................................................ 9

3.3 Current and Proposed Sewer Rates ....................................................................... 12

3.4 Comparison of Current and Proposed Sewer Bills ................................................ 15

4. CONSULTANT RECOMMENDATIONS ............................................................................. 16

5. NBS’ PRINCIPAL ASSUMPTIONS AND CONSIDERATIONS ................................................ 17

Appendix A: Detailed Water Rate Study Tables and Figures

FINAL

TABLE OF FIGURES

Figure 1. Primary Components of a Rate Study ............................................................................................ 3 Figure 2. Rate Revenue Targets .................................................................................................................... 7 Figure 3. Summary of Sewer Revenue Requirements .................................................................................. 7 Figure 4. Summary of Reserve Funds ............................................................................................................ 8 Figure 5 Capital Improvement Program ....................................................................................................... 8 Figure 6. Classification of Expenses ............................................................................................................ 10 Figure 7. Adjusted Net Revenue Requirement ........................................................................................... 10 Figure 8. Customer Allocation ..................................................................................................................... 11 Figure 9. Cost of Service Allocation to Each Customer Class ...................................................................... 12 Figure 10. Current and Proposed Sewer Rates ........................................................................................... 14 Figure 11. Monthly Sewer Bill Comparison for Single Family Customers ................................................... 15 Figure 12. Monthly Sewer Bill Comparison for Commercial Customers .................................................... 15

FINAL

BACKGROUND AND PURPOSE
The City of Victorville (City) owns and operates a sewer collection system that collects wastewater from approximately 29,000 connections and transports it either to the City’s Industrial Wastewater Treatment Plant (IWWTP) or the Victor Valley Wastewater Reclamation Authority (VVWRA) for treatment. The City retained NBS to update the current sewer rates. The sewer rate analysis (Study) was undertaken with specific objectives, including:
• Ensuring sewer rates will be able to cover all operating and maintenance costs, including treatment costs.
• Ensuring sufficient funding for essential Capital Improvement Projects. • Maintaining appropriate reserve funds.
• Complying with legal requirements (such as California Constitution article XIII D, section 6, which is commonly referred to as Proposition 218 [Prop 218]).

The rates resulting from this Study were developed in a manner that is consistent with industry standard cost-of-service principles. In addition to documenting the Study methodology, this technical memorandum is provided with the intent of assisting the City to maintain transparent communications with its residents and businesses.

In developing the updated sewer rates, NBS worked cooperatively with City staff in selecting appropriate rate alternatives. Based on input from City staff, the proposed rates are summarized in this memorandum. This technical memorandum presents an overview of the methodologies, assumptions, and data used, along with the financial plans and proposed rates developed in this Study.

1. OVERVIEW OF THE STUDY
Comprehensive rate studies such as this one typically include the following three components, as outlined in Figure 1:

1. Preparation of a Financial Plan, which identifies the net revenue requirements for the utility.

2. Cost of Service Analysis, which determines the cost of providing service to each customer class.

3. Rate Design Analysis, which evaluates different rate design alternatives for each customer class.

Figure 1. Primary Components of a Rate Study

1 FINANCIAL
PLAN

2 COST-OF-

SERVICE

ANALYSIS

3 RATE DESIGN

ANALYSIS
Compares current sources and
uses of funds and determines the
revenue needed from rates and
projects rate adjustments.

Proportionately allocates the
revenue requirements to the
customer classes in compliance
with industry standards and State
Law.

Considers what rate structure will
best meet the City’s need to collect
rate revenue from each customer
class.

FINAL

These steps are intended to follow industry standards and reflect the fundamental principles of cost-of- service rate making embodied in the American Water Works Association (AWWA) Principles of Water Rates, Fees, and Charges
1, also referred to as the M1 Manual. They also address requirements under Proposition 218 that rates not exceed the cost of providing the service, and that they be proportionate to the cost of providing service for all customers. In terms of the chronology of the Study, these three steps represent the order they were performed in this Study. Detailed tables and figures documenting development of the proposed rates are provided in the Appendices.

1.1 FINANCIAL PLAN
As a part of this Study, NBS projected revenues and expenditures on a cash flow basis for the next twenty years. The amount of rate revenue required that will allow reserves to be maintained at the recommended levels, is known as the net revenue requirement. As current rate revenue falls short of the net revenue requirement, rate adjustments -- or more accurately, adjustments in the total revenue collected from rates -- are recommended.

1.2 COST OF SERVICE ANALYSIS
The cost-of-service analysis process includes the following steps:

1. Allocating budget items to approximate cost components (including for those related to flow, strength of effluent , customer connections and bi lls)

2. Gathering customers into classes based upon similar characteristics.

3. Distributing costs to customer classes based upon the amount of anticipated flow and strength of wastewater contributed by each customer class.

1.3 RATE DESIGN ANALYSIS

Rate Design is typically the stage in the Study where NBS and City staff must work closely together to develop rate alternatives that will meet the City’s objectives. Several criteria are typically considered in setting rates and developing sound rate structures. The fundamentals of this process have been documented in several rate-setting manuals, such as the AWWA Manual M1. The foundation for evaluating rate structures is generally credited to James C. Bonbright in the Principles of Public Utility Rates2, which outlines pricing policies, theories, and economic concepts along with various rate designs.

The following is a simplified list of the attributes of a sound structure:
• Rates should be easy to understand from the customer’s perspective. • Rates should be easy to administer from the utility’s perspective. • Rates should promote the efficient allocation of the resource.

1 Principles of Water Rates, Fees, and Charges, Manual of Water Supply Practices, M1, AWWA, seventh edition, 2017.
2 James C. Bonbright; Albert L. Danielsen and David R. Kamerschen, Principles of Public Utility Rates, (Arlington, VA:

Public Utilities Report, Inc., Second Edition, 1988), p. 383-384.

FINAL

• Rates should be equitable and non-discriminating (that is, cost-based). • There should be continuity in the ratemaking philosophy over time. • Rates should provide month-to-month and year-to-year revenue stability.

A number of criteria were considered when developing sewer rates for each customer class. The details of the Study are discussed in the following sections.

2. SEWER RATE ANALYSIS
The City’s sewer rate analysis was undertaken with a few specific objectives, including:
• Avoiding operational deficits and depletion of reserves beyond the target minimum reserve level.
• Generating additional revenue needed to meet projected funding requirements. • Ensuring cost-of-service principles are followed.

NBS developed various funding alternatives as requested by City staff over the course of this Study. The rate alternative that will be implemented is ultimately the decision of the City Council. The rates developed in this Study are based on the net revenue requirements, number of customer accounts, and other City-provided information.

2.1 Financial Plan
It is important for municipal utilities to maintain reasonable reserves in order to handle emergencies, fund working capital, maintain a good credit rating, and generally follow sound financial management practices. Rate increases are governed by the need to meet operating and capital costs, maintain adequate debt coverage, and build reasonable reserve funds. The current state of the City, with regard to these objectives, is as follows:
• Meeting Net Revenue Requirements: For FY 2023/24 through FY 2027/28, the projected annual operating and maintenance costs escalate from approximately $28.8 million to $31.1 million.

General cost inflation for good and services are the primary reasons for this increase. Expected inflation of treatment expenses at VVWRA are not included as part of this analysis

3. Including
debt service payments and rate-funded capital projects, total expenditures are approximately $37.2 million annually between FY 2023/24 to FY 2027/28. • Building and Maintaining Reserve Funds: Reserve funds provide a basis for a utility to cope with fiscal emergencies such as revenue shortfalls, asset failure, and natural disasters, among other events. Reserve policies provide guidelines for sound financial management, with an overall long-range perspective to maintain financial solvency and mitigate financial risks associated with revenue instability, volatile capital costs, and emergencies. The City plans to have approximately

3 As will be discussed later, any future increases in VVWRA expenses will be directly passed through to ratepayers in future sewer rate adjustments.

FINAL

$14.0 million in reserves by the end of FY 2027/28. The reserve funds for the Utility are considered unrestricted reserves and consist of the following:
o The Operating Reserve should equal approximately 90 days of operating expenses (approximately $7.8 million for FY 2027/28). An Operating Reserve is intended to promote financial viability in the event of any short-term fluctuation in revenues and/or expenditures. Fluctuations in revenue can be caused by the inflow and outflow of cash during billing cycles, and - particularly in periods of economic distress - changes or trends in age of receivables.
o The Capital Rehabilitation and Replacement Reserve should at a minimum, equal approximately three percent of net capital assets (approximately $1.8 million for FY 2027/28, which is set aside to address long-term capital system replacement and rehabilitation needs. Based on input from City Staff in Public Works, the recommended target for the Capital Rehabilitation and Replacement Reserve is approximately $5 million based on operational needs, as well as the size and age of the existing infrastructure that comprises the City’s wastewater system. • Funding Capital Improvement Projects: The City must also be able to fund necessary capital improvements in order to maintain current service levels. City staff has identified roughly $30.0 million in needed capital expenditures for FY 2023/24 through 2027/28. With the recommended rate increases, these expenditures can be accomplished while maintaining reserves to the minimum recommended target.
• Inflation and Growth Projections – Assumptions regarding cost inflation were made in order to project future revenues and expenses for the study period. The following inflation factors were used in the analysis:
o Customer growth is modeled at 0 percent annually, consistent with the previous sewer rate study and the current solid waste study. Since sewer rates are based on the cost-of- service analysis, if additional customers are added during the projected rate period, those revenues will equal expenses.
o General cost inflation is 4 percent annually.
o Transportation cost is 4 percent annually.
o Utilities cost inflation is 5 percent annually.
o VVWRA cost inflation is currently estimated at 0 percent (VVWRA cannot provide projections of future inflation or cost increases for capital expenses at this point in time beyond those adopted for the next Fiscal Year).
• Impact of Annual Rate Adjustment Date: The financial plan modelling assumes that the first rate adjustments will occur on December 1, 2023 and that future rate adjustments will occur each subsequent year starting on July 1. Rate revenue increases as follows will be needed in order to fully fund all operating expenses, planned capital projects and maintain reserves at the recommended targets by FY 2027/28.

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Figure 2. Rate Revenue Targets

Figure 2 summarizes the rate revenue targets for the City over the next 5 years. Note that the percent increase for FY 2024/25 includes the adopted increase for VVWRA cost inflation. Subsequent years do not include VVWRA cost inflation, as VVWRA stated that they cannot provide cost projections at this time.

Figure 3 summarizes the sources and uses of funds, net revenue requirements, and the recommended annual percent increases in total rate revenue recommended for the next 5 years for the City.

Figure 3. Summary of Sewer Revenue Requirements

Fiscal Year Rate Revenue
Target
Percent
Increase
FY 2023/24 $33,758,095 -
FY 2024/25 $36,310,537 7.0%
FY 2025/26 $38,126,063 4.8%
FY 2026/27 $39,269,845 2.9%
FY 2027/28 $40,447,941 2.9%
FY 2023/24 FY 2024/25 FY 2025/26 F Y 2026/27 FY 2027/28 Sources of Sewer Funds
Rate Revenue Under Prevailing Rates 32,934,727$ 32,934,727$ 32,934,727$ 32,934,727$ 32,934,727$ Additional Revenue from Rate Increases 1 823,368 3,375,810 5,191,336 6,335,118 7,513,214 Total Rate Revenue 33,758,095 36, 310,537 38,126,063 39,269,845 40,447,941 Sewer Use Fee - Capital and Connection Fees 811,632 811, 632 811,632 811,632 811,632 Other Fees 390,628 392, 093 393,617 395,202 396,850 Interest Earnings 42,371 64,621 88,656 125,647 166,134 Total Sources of Funds 35,002,726$ 37,578,882$ 39,419,969$ 40,602,326$ 41,822,557$ Uses of Sewer Funds
IWWTP Expenses 8,123,617$ 8,384,843$ 8,655,121$ 8,934,781$ 9,224,168$ Sewer Expenses 4,879,966 5,079,740 5,287,887 5,504,771 5,730,776 GIS Expenses 313,800 326,352 339,406 352,982 367,101 DEV Expenses 120,631 125,456 130,475 135,694 141,122 Sewer Asphalt Expenses 81,535 84,797 88,189 91,716 95,386 Engineering Expenses 1,873,036 1,948,206 2,026,399 2,107,732 2,192,335 VVWRA Treatment (No Inflation After FY'23/24) 13,414,183 13,414,183 13,414,183 13,414,183 13,414,183 Debt Service 1,852,016 1,834,269 1,816,460 1,798,589 1,780,653 Rate-Funded Capital Expenses 3,838,064 6,131,484 6,475,750 6,004,243 4,349,286 Total Use of Funds 34,496,849$ 37,329,330$ 38,233,870$ 38,344,691$ 37,295,010$ Surplus (Deficiency) before Rate Increase (317,491)$ (3,126,258)$ (4,005,238)$ (4,077,483)$ (2,985,666)$ Surplus (Deficiency) after Rate Increase 505,877 249,552 1,186,098 2,257,635 4,527,547 Net Revenue Requirement2 33,252,218$ 36, 060,985$ 36,939,965$ 37,012,210$ 35,920,393$

1. Assumes new rates are implemented December 1, 2023 and each July 1st thereafter.

2. Total Use of Funds less non-rate revenues and interest earnings. This is the annual amount needed from sewer rates.

Summary of Sources and Uses
of Funds and Net Revenue Requirements
Projected
FINAL

Figure 4 summarizes the projected reserve fund balances and reserve targets. A more detailed version of the utility’s proposed 5-year financial plan is included in Tables 1 and 2 of Appendix A. The appendix tables include revenue requirements, reserve funds, revenue sources, proposed rate increases, and the City’s capital improvement program. Based on input from City staff in Public Works, the recommended goal target for the Capital Rehabilitation and Replacement Reserve is approximately $5 million based on operational needs, as well as the size and age of the existing infrastructure that comprises the City’s wastewater system. As can be seen in Figure 4, given proposed rate increases, reserves will remain above the target recommended minimum levels during the course of the five year rate period. As illustrated by Figure 4, the rate increases were also designed to achieve the City staff recommended reserve goal target levels by FY 2027/28.

Figure 4. Summary of Reserve Funds

Figure 5 summarizes the City’s Capital Improvement Plan, providing the expected cost and timing of capital projects during the 5-year rate period.

Figure 5 Capital Improvement Program

FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 Operating Reserve
Ending Balance 7,202,000$ 7,341,000$ 7,485,000$ 7,635,000$ 7,791,000$ Recommended Minimum Target 7,202,000 7,341,000 7,485,000 7,635,000 7,791,000 Capital Rehabilitation & Replacement Reserve
Ending Balance 1,414,077$ 1,524,629$ 2,566,727$ 3,822,535$ 6,219,047$ Recommended Minimum Target 1,276,200 1,416,300 1,562,300 1,714,900 1,847,500 Recommended Goal Target 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 Total Ending Balance 8,616,077$ 8,865,629$ 10,051,727$ 11,457,535$ 14,010,047$ Total Recommended Minimum Target 8,478,200$ 8,757, 300$ 9,047,300$ 9,349,900$ 9,638,500$ Total Recommended Goal Target 12,202,000$ 12,341, 000$ 12,485,000$ 12,635,000$ 12,791,000$ Reserve Fund Balances and
Recommended Reserve Targets
Projected
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 Pipelines 2,710,000$ 4,821,484$ 3,565,750$ 5,371,070$ 4,864,321$ Lift Station 220,000$ 250,000$ 250,000$ -$ -$ IWWTP & SCLA -$ 1,000,000$ 1,600,000$ 500,000$ 500,000$ Vehicles & Equipment 726,170$ 10,000$ 1,060,000$ 985,000$ 960,000$ Miscelleanous 545,806$ 50,000$ -$ -$ -$ Total 4,201,976$ 6,131,484$ 6,475,750$ 6,856,070$ 6,324,321$ Capital Improvement Program Costs Projected
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2.2 Cost of Service Analysis
Once the net revenue requirements are determined, the cost-of-service analysis proportionately distributes the revenue requirements to each of the customer classes. The cost-of-service analysis consists of two major components: (1) the classification of expenses, and (2) the allocation of costs to customer classes.

Costs were classified corresponding to the function they serve. All costs in the City’s budget are allocated to each component of the rate structure in proportion to the level of service required by customers. The levels of service are related to volumes of flow and pounds treated at the wastewater treatment facilities, process treatment, and customer service. Ultimately, a cost-of-service analysis is intended to result in rates that are proportional to the cost of providing service to each customer class.

2.2.1 Functionalization and Classification
Budgeted costs were classified into the following categories to develop the basis for allocating costs to various customer classes in this analysis:
• Flow Costs (“Volume”) – Flow based costs are primarily related to the collection and distribution system which gather effluent from customers and transports it to the two treatment facilities.
• Strength Based Costs (“BOD”, “TSS”) – Strength based costs are related to the treatment of effluent at the IWWTP. Two factors, Biochemical Oxygen Demand (BOD) and Total Suspended Solids (TSS) measure different aspects of the treatment process. • Process Treatment Costs (“Process Treatment”) – Process Treatment costs are those related to the Upflow Anaerobic Sludge Blanket (UASB) Reactor and the Ion Exchange treatment system which are needed to process effluent from the Keurig Dr. Pepper facility (KDP). • VVWRA Treatment Costs (“VVWRA Treatment”) – Treatment costs for the VVWRA facility. • Customer Related Costs (“Customer”) – Customer based costs are related to the billing of customers (such as mailing and staff time committed to customer service).

All projected expenses from FY 2023/24 are allocated by percentage, to each of the cost factors.

Additionally, all costs associated with Process Treatment, which is primarily the UASB Reactor, were allocated as such.

The summary for each Sewer division is shown in Figure 6. The details of how each budget item was allocated can be found in Appendix A.

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Figure 6. Classification of Expenses

The percentage of costs allocated to each category are then applied to the revenue target for FY 2023/24. This is the Adjusted Net Revenue Requirement and shown in Figure 7.

Figure 7. Adjusted Net Revenue Requirement

2.2.2 Customer Classes
Customers were grouped into four primary categories: single family residential, multi-family residential, commercial and industrial/user-specific. The City uses two different treatment locations to provide service to customers. However, for the purposes of this analysis, residential customers were not differentiated based upon which site was providing treatment.

The cost components used in this analysis and allocated to each customer class are as follows:
• Flow Costs (“Volume”) – Costs related to flow are allocated based upon anticipated volume into the collection system. For Single Family Residential customers, volume is based upon average Total
Revenue
Re
q't.

Flow Process
Treatment
VVWRA
Treatment Customer
FY 2023/24 (VOL) ( BOD) (TSS) (PT) (VVWRA) (CA)
IWWTP 8,123,617$ 2,998,016$ 2,126,730 $ 2,126,730 $ 872,140$ -$ -$ Sewer 4,879,966 4,596,658 - - - - 283,308 GIS 313,800 313,800 - - - - - Sewer DEV 120,631 120,631 - - - - - Engineering 1,873,036 1,873,036 - - - - - VVWRA Treatment 13,414,183 - - - - 13,414,183 - Debt Service Payments 1,852,016 685,246 481,524 481,524 203,722 - - Total Revenue Requirement 34,496,849$ 13, 739,373$ 2,992,061 $ 2,992,061 $ 1,075,862 $ 13,414,183$ 283,308$ Less: Non-Rate Revenues (1,244,631) (495,710) (107,952) (107,952) (38,817) (483,978) (10,222) 33,252,218$ 13, 243,663$ 2,884,109 $ 2,884,109 $ 1,037,046 $ 12,930,205$ 273,087$ 100.0% 39.8% 8. 7% 8.7% 3.1% 38.9% 0.8%
Budget Categories Strength
Net Revenue Requirements
Adjusted Net Revenue Requirements
Projected Rate Revenue at Current Rates 32,934,727$
Projected Rate Increase 5.0%
Adjusted Net Revenue Requirement 34,581,463$
By Cost Category: % of Total
Volume 13,773,073 39.8%
BOD 2,999,400 8.7%
TSS 2,999,400 8.7%
Process Treatment 1,078,501 3.1%
VVWRA Treatment 13,447,086 38.9%
Customer 284,003 0.8%
Total 34,581,463$ 100%
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winter water consumption (metered consumption from Nov through February). For all other customer classes, flow is based upon the total amount of water consumed, annually4. • Strength Based Costs (“BOD”, “TSS”) – Costs related to strength are allocated to each customer class based on either the estimated strength of influent treated5 or actual measured flow to the IWWTP. Strength characteristics from the three industrial customers were measured as part of the City’s pre-treatment program and used for this analysis. • Process Treatment Costs (“Process Treatment”) – Costs related to Process treatment are allocated to KDP because this is entirely for the Keurig Dr. Pepper facility. • VVWRA Treatment Costs (“VVWRA Treatment”) – Costs related to VVWRA treatment are allocated based upon anticipated flow to the VVWRA treatment plant. • Customer Related Costs (“Customer”) – Costs related to billing and customer service are allocated based upon number of customers within a given customer class.

The percentage allocations for each customer class are summarized in Figure 8.

Figure 8. Customer Allocation

Figure 9 applies the allocation from Figure 8 to the net revenue requirement from Figure 7 and shows the total amount of rate revenue which should be collected from each customer class in FY 2023/24.

4 Water consumption records for Fiscal Year 2021/22 were used as the basis for this analysis. 5 Strength factors developed based on State Water Resources Control Board Revenue Program Guidelines Appendix G Strength Factors by customer class.

Volume BOD TSS PT VVWRA Customer
Sanitary Flow
Single Family Residential 60.6% 64.8% 62.8% 0.0% 60.5% 94.9% Multi-Family Residential 8.0% 7.6% 7.4% 0.0% 8.0% 1.3%
Commercial 22.0% 0.0% 0.0% 0.0% 26.8% 3.8%
Industrial Flow
FC
C 5.9% 11.1% 10.8% 0.0% 4.7% 0.0%
KDP 3.0% 14.5% 14.0% 100.0% 0.0% 0.0%
PlastiPack 0.1% 0.2% 0.9% 0.0% 0.0% 0.0%
Hydration Source 0.5% 1.6% 4.1% 0.0% 0.0% 0.0%
Total 100% 100% 100% 100% 100% 100%

1. Volume - Percentage of Total Adjusted Volume, BOD & TSS - Percentage of Total LBS, Process Treatment - All Allocated to KDP VVWRA - Percentage of Adjusted Volume at VVWRA, Customer Related - Percentage of Total Accounts Percentage Allocated by Each Factor (1)Customer Class
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Figure 9. Cost of Service Allocation to Each Customer Class

2.3 Current and Proposed Sewer Rates
The proposed rates are designed to capture the cost of service from each customer class. The details on how the costs allocated each customer class were used to develop the rates can be found in Appendix A.

For Single Family and Multi-Family Residential customers, rates are fixed based on the number of dwelling units6 per account. As the average volume estimated for Multi-Family customers (per dwelling unit) is approximately half of Single Family volume based on the analysis of winter water consumption data, Multi-Family rates have been adjusted to properly show the difference in the impact to the sewer system, which is why Multi-Family rates are not increasing in the same proportion as Single-family residential customers.

For Commercial customers a variable component (based upon water consumption) is included in the rate structure to demonstrate equity between customers within this class. All commercial accounts will continue to pay a fixed charge that is the same as the single-family residential charge, plus a variable component that collects the remaining commercial revenue requirements from volumetric charges.

For Industrial customers, the monthly minimum service charge per account was set to be equal to the monthly fixed serve charge for Commercial customers. The Study added three variable components to standardize rates and demonstrate equity between all industrial customers: (1) Volumetric charge, per hcf (2) BOD charge, per lb., and (3) TSS charge, per lb. The Study also included two user-specific industrial rates for the Federal Corrections Complex and Keurig Dr. Pepper, respectively. The two user-specific rates are discussed below.

For the Federal Corrections Complex (FCC), the fixed sewer rate is based on the number of calculated EDU’s on a monthly basis. One EDU is estimated to be equal to 200 gallons per day of volume contributed to the sewer system. FCC surcharges for BOD and TSS apply to concentrations above 200 mg/l for BOD and 250 mg/l for TSS.

6 A dwelling unit is an individual living unit; for single-family residential customers, this is a single-family home and for multi-family customers, this would be an individual unit (for example, an apartment unit, or one of the living units in a duplex or triplex building).

Volume BOD T SS Process
Treatment
VVWRA
Treatment
Customer
Related
Net Revenue Requirements 1 13,651,202$ 2,995,376$ 2,995,376$ 1,087,962$ 13,565,053$ 286,495$ 34,581,463$ --

39.5% 8.7% 8. 7% 3.1% 39.2% 0.8% 100.0%
SINGLE FAMILY RESIDENTIAL 8,274,090$ 1, 941,978$ 1,879,669$ -$ 8,211,257$ 271,936$ 20,578,931$ 59.5% MULTI-FAMILY RESIDENTIAL 1,092,818 228,705 221,367 - 1,084,519 3,687 2,631,097 7.6% COMMERCIAL 3,001,195 - - - 3,637,067 10,824 6,649,087 19.2%

INDUSTRIAL
FCC 804,921$ 333,650$ 322,945$ -$ 632,210$ 19$ 2,093,744$ 6.1% KDP 403,344 434,600 420,656 1,087,962 - 9 2,346,572 6.8% Plastipak 9,873 7,447 27,184 - - 9 44,514 0.1%
Hydration Source 64,960 48,995 123,554 - - 9 237,519 0.7% GRAND TOTAL 13,651,202$ 2,995,376$ 2,995,376$ 1,087,962$ 13,565,053$ 286,495$ 34,581,463$ 100%

1. Determined by multiplying the revenue requirement from each cost classification by the allocation factors for each customer class.

Volume - Percentage of Total Adjusted Volume, BOD & TSS - Percentage of Total LBS, Process Treatment - All Allocated to KDP VVWRA - Percentage of Adjusted Volume at VVWRA, Customer Related - Percentage of Total Accounts Cost Classification Components
Customer Class
Cost-of-Service
Net Revenue
R
eqts.
% of COS
Net Revenue
R
eqts.

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Finally, in accordance with the existing contract, Keurig Dr. Pepper has been assigned a minimum monthly charge. Per the existing contract agreement, (1) volumetric charges, per 1,000 gallons, as well as wastewater strength charges for (2) COD, per lb and (3) FDS, per lb remain in place per the terms of the Wastewater Capacity and Treatment Agreement. Keurig Dr. Pepper is also assessed a monthly fixed charge for ion exchange treatment services as determined by the Woodard and Curran study.

As noted earlier, VVWRA costs are expected to increase, but that inflation is not included in this rate design, primarily because VVWRA is not able to project future cost increases at this time. Should VVWRA costs increase, those increases will be collected from City customers through a “pass-through” rate adjustment, except for industrial customers. Since none of the City’s Industrial customer participate in VVWRA treatment, their rates will not be adjusted if and when VVWRA’s rates are updated in the future.

Figure 10 provides a comparison of the current and proposed rates through FY 2027/28.

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Figure 10. Current and Proposed Sewer Rates

FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Residential Customers 1
Monthly Fixed Service Charge, per Dwelling Unit:

Single-Family Residential 51.89$ 59.62$ 62.60$ 65.73$ 69.01$ 72.46$ Multi-Family Residential 38.09$ 31.32$ 32.89$ 34.53$ 36.26$ 38.07$ Commercial Customers
Monthly Fixed Service Charge, per Account: 51.89$ 59.62$ 62.60$ 65.73$ 69.01$ 72.46$ Volumetric Charge, per hcf 2 4.41 4.54$ 4.77$ 5.01$ 5.26$ 5.52$ Industrial Customers 3
Monthly Fixed Service Charge, per Account: 51.89$ 59.62$ 62.60$ 65.73$ 69.01$ 72.46$ Volumetric Charge, per hcf 2 4.41 4.54 4.77 5.01 5.26 5.52 BOD Charge, per lb - 2.10$ 2.21$ 2.32$ 2.43$ 2.55$ TSS Charge, per lb - 2.03$ 2.14$ 2.24$ 2.35$ 2.47$ User-Specific Rates
Federal Corrections Complex (FCC)
Monthly Fixed Charge Per EDU 4 52.22$ 64.32$ 67.54$ 70.92$ 74.46$ 78.18$ BOD Charge, per lb 5 2.19$ 2.10$ 2.21$ 2.32$ 2.43$ 2.55$ TSS Charge, per lb 5 2.20$ 2.03$ 2.14$ 2.24$ 2.35$ 2.47$ Kuerig Dr. Pepper (KDP) 6
Monthly Min Charge (excluding capital recovery) 7 162,500$ 162,500$ 162,500$ 162,500$ 162,500$ 162,500$ Monthly Fixed Charge (Ion Exchange Service) 8 10,200$ 10,200$ 10,200$ 10,200$ 10,200$ 10,200$ Volumetric Charge, per 1,000 gal 6 0.37$ 0.37$ 0.37$ 0.37$ 0.37$ 0.37$ COD Charge, per lb 6 0.13$ 0.13$ 0.13$ 0.13$ 0.13$ 0.13$ FDS Charge, per lb 9 2.91$ 2.99$ 3.07$ 3.15$ 3.24$ 3.32$ BOD Charge, per lb 10 N/A - - - - -
TSS Charge, per lb 10 N/A - - - - -

1. Residential customers are assessed on the basis of their number of dwelling units.

2. Volumetric charge will apply to monthly water consumption.

3. All industrial dischargers that discharge wastewater of unusual strength or character are required to obtain a wastewater discharge permit from IWWTP or VVWRA, respectively. Additional surcharges may apply based on wastewater characteristics.

Plastipak and Hydration Source included in this customer category.

4. FCC will be billed based on a flow estimate of 200 gallons per day, per EDU.

5. FCC surcharges for BOD and TSS apply to concentrations above 200 mg/l for BOD and 250 mg/l for TSS.

6. Volumetric charges (per 1,000 gal or lbs) for KDP shall apply accordingly if discharge exceeds 585,000 gpd, 28,100 lbs/day of COD or 1,400 lbs/day of SS in accordance with Wastewater Capacity and Treatment Agreement.

Volumetric charges for KDP listed in rate table are in accordance with the Wastewater Capacity and Treatment Agreement.

7. Monthly minimum charge for KDP in accordance with Wastewater Capacity and Treatment Agreement.

8. Monthly fixed charge per Woodard and Curran operational expenses.

9. The FDS surcharge was calculated by Woodard & Curran and is subject to a 2.7% general cost inflation factor in FY 2019/20 and beyond.

This will apply to all pound of FDS treated. Source:2018.03.21 FDS Surcharge Limit Table.xlsx

10. BOD and TSS charges not applicable to KDP due to wastewater strength characteristics.

Sewer Rate Schedule Recommended Sewer RatesCurrent
Rates
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2.4 Comparison of Current and Proposed Sewer Bills

Figure 11 and Figure 12 compare monthly sewer bills for the current and proposed sewer rates as a result of the planned rate adjustment for single-family residential customers and non-single family residential customers.

Figure 11. Monthly Sewer Bill Comparison for Single Family Customers

Figure 12. Monthly Sewer Bill Comparison for Commercial Customers

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3. CONSULTANT RECOMMENDATIONS
The City’s sewer rates need to incorporate historical and projected cost increases. This Study has evaluated the various factors that are a part of the rate adjustment process, and the recommended rates are those that are necessary to adequately fund the City’s sewer utility.

The following are the actions that NBS, in consultation with City staff, recommend the City take regarding the sewer rates:
• Review the results of this Study and consider proceeding with the adoption process to implement these recommended rates.
• Formally approve of this Study and a pprove the proposed new rates , including adopting the recommended reserve fund level.
• Have the City’s legal counsel review the proposed rates and Prop 218 notices to ensure that they comply with existing statutes and legal requirements.
• Direct City staff to proceed with sending out Prop 218 public hearing notices , which must be mailed at least forty-five (45) days in advance of the public hearing, and must describe the amount of the fee or charge proposed to be imposed upon each parcel; the basis upon which the amount of the proposed fee or charge was calculated; the reason for the fee or charge; together with the date, time, and location of the public hearing.
• At the October 3, 2023 Public Hearing, the City Council will hear test imony and consider all valid written protests against the proposed Sewer Service Rates received by the City Clerk prior to the close of the Public Hearing. If valid written protests are presented by a majority of owners of the identified parcels (50% plus one, a “Majority Protest”), the City Council will not impose the proposed Sewer Service Rates. If there is no Majority Protest, the City Council may consider for introduction and first reading a Sewer Rate Ordinance to impose the proposed Sewer Service Rates up to the maximum amounts proposed.
• If introduced for first reading on October 3, 2023, the Sewer Rate Ordinance would brought back to the City Council for second reading and final adoption/passage at its regularly scheduled meeting to be held on Oct ober 17, 2023. If finally passed on October 17, 2023 by the requisite two-thirds vote, the new Sewer Service Rates would become effective for all billings made on or after December 1, 2023 and on each July 1 thereafter, for fiscal years 2025, 2026, 2027, and 2028. • Whenever a utility adopts new rates, it is advisable to closely monitor the rate revenue generated from those new rates in the next few years to ensure adequate revenues are being collected.

Changing economic and usage patterns underscore the need for this review, as well as potential and unseen changing revenue requirements —particularly those related to environmental regulations that can significantly affect capital improvements and repair and replacement costs.

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4. NBS’ PRINCIPAL ASSUMPTIONS AND CONSIDERATIONS
In preparing this memo and the findings included herein, NBS has relied on several principal assumptions and considerations regarding financial and operational matters, including Victorville’s billing records, accounting reports, City program cost analyses, and other conditions and events projected to occur in the future. We have assumed this information and these assumptions were provided by sources that are reliable; NBS has not independently verified this data.

While we believe NBS’ use of such information and assumptions is reasonable for the purpose of this Study, memo and its findings, some assumptions will invariably not materialize as stated herein or may vary significantly due to unanticipated events and circumstances. Therefore, the actual results can be expected to vary from those projected to the extent that actual future conditions differ from those assumed by us or provided to us by others.

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Appendix A: Detailed Sewer Study Tables and Figures

1 2

TABLE 2 : RESERVE FUND SUMMARY, UN-RESTRICTED RESERVES
FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 Total Beginning Cash 1 12,684,627$
Un-Restricted Reserves:

Operating Reserve
Beginning Reserve Balance 5,000,000$ 6,834,000$ 7,202,000$ 7,341,000$ 7,485,000$ 7,635,000$ Plus: Net Cash Flow (After Rate Increases) 2,049,012 505,877 249,552 1,186,098 2,257,635 4,527,547 Plus: Transfer of Debt Reserve Surplus - - - - - - Plus: Adjustment to Cash Reserves - - - - - - Net: Transfer To/From Capital Replacement Reserve (215,012) (137,877) (110,552) (1,042,098) (2,107,635) (4,371,547) Ending Operating Reserve Balance 6,834,000$ 7,202,000$ 7,341,000$ 7,485,000$ 7,635,000$ 7,791,000$ Target Ending Balance (90-days of O&M) 6,834,000$ 7,202,000$ 7,341,000$ 7,485,000$ 7,635,000$ 7,791,000$ Capital Rehabilitation & Replacement Reserve
Beginning Reserve Balance 7,684,627$ 1,640,112$ 1,414,077$ 1,524,629$ 2,566,727$ 3,822,535$ Plus: Grant Proceeds - - - - - - Plus: Transfer of Operating Reserve Surplus 215,012 137,877 110,552 1,042,098 2,107,635 4,371,547 Less: Use of Reserves for Capital Projects (6,259,527) (363,912) - - (851,827) (1,975,035) 1,640,112$ 1,414,077$ 1,524,629$ 2,566,727$ 3,822,535$ 6,219,047$ Target Ending Balance (3% of Assets) 2 1,276,200$ 1,276,200$ 1,416,300$ 1,562,300$ 1,714,900$ 1,847,500$ 8,474,112$ 8,616,077$ 8,865,629$ 10,051,727$ 11,457,535$ 14,010,047$ 8,110,200$ 8,478,200$ 8,757,300$ 9,047,300$ 9,349,900$ 9,638,500$ 363,912$ 137,877$ 108,329$ 1,004,427$ 2,107,635$ 4,371,547$ Annual Interest Earnings Rate 3 0.25% 0.50% 0.75% 1.00% 1.25% 1.45%

1. Total beginning cash balance for FY 2022/23 from Source File: Source File: Fund 425 FY 2022-2023 Trial Balance_9-19-22.xlsx

2. The Capital Rehabilitation & Replacement Reserve target is set to 3% of net assets. This is based on a net capital asset value of $39 million.

Source file: 20202021 Comprehensive Ann.pdf, page 31.

3. Interest earnings conservatively estimated through the planning period and increase to 10-year LAIF average by FY 2022/23.

SUMMARY OF CASH ACTIVITY

GENERAL WATER FUND RESERVES
Minimum Reserve Target
Ending Cash Balance
Budget 5-Year Adopted Rate Period
Ending Capital R&R Reserve Balance
Ending Surplus/(Deficit) Compared to Target
3 4

5 6

TABLE 3 : REVENUE FORECAST 1
Budget
FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28

INDUSTRIAL WASTEWATER TREATMENT REVENUE
44450 I WWTP-Sewer Use Fee - O & M 1 9,166,768$ 9,050,000 9,050,000 9,050,000 9,050,000 9,050,000 44452 IWWTP-Sewer Use Fee - Capital 1 586,632 586,632 586,632 586,632 586,632 586,632 45110 IWWTP-Interest Income 1 1,500 30,000 30,000 30,000 30,000 30,000 41280 Water Permit 2 36,628 36,628 38,093 39,617 41,202 42,850

SEWER REVENUE
42150 San/Swrt-Late Fee 1 210,000 354,000 354,000 354,000 354,000 354,000 44450 Sewer Use Fee 1 20,906,722 23,884,727 23,884,727 23,884,727 23,884,727 23,884,727 45110 Sewer -Interest Income 1 45,963
44540 Sewer - Sewer Cnctn 1 300,000 225,000 225,000 225,000 225,000 225,000 TOTAL: REVENUE 31,254,213$ 34,166,987$ 34,168,452$ 34,169,976$ 34,171,561$ 34,173,209$ OBJECT DESCRIPTION Basis 5-Year Adopted Rate Period
TABLE 4 : REVENUE SUMMARY
Budget
FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 Rate Revenue 30,073,490$ 32,934,727$ 32,934,727$ 32,934,727$ 32,934,727$ 32,934,727$ Sewer Use Fee - Capital & Connection Fees 886,632 811,632 811,632 811,632 811,632 811,632 Late Fee 210,000 354,000 354,000 354,000 354,000 354,000 Water Permit 36,628 36,628 38,093 39,617 41,202 42,850 Interest Income 47,463 30,000 30,000 30,000 30,000 30,000 TOTAL: REVENUE 31,254,213$ 34,166,987$ 34,168,452$ 34,169,976$ 34,171,561$ 34,173,209$ OBJECT DESCRIPTION Basis 5-Year Adopted Rate Period
7 TABLE 5 : OPERATING EXPENSE FORECAST 1,2
Budget
FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 WASTEWATER TREATMENT EXPENSES (IWWTP) - 4120710
51100 I WWTP-Full Time Wages 2 133,440$ 119,373$ 124,148$ 129,114$ 134,279$ 139,650$ 51200 IWWTP-Fringe Benefits 2 51,522 47,153 49,039 51,001 53,041 55,163 51220 IWWTP-Retiree Exp 2 2,500 2,498 2,598 2,702 2,810 2,922 51300 IWWTP-Payroll Taxes 2 3,360 3,031 3,153 3,279 3,410 3,546 52010 IWWTP-Electricity 5 885,000 850,000 892,500 937,125 983,981 1,033,180 52020 IWWTP-Water Use 5 1,150 1,200 1,260 1,323 1,389 1,458 52030 IWWTP-Natural Gas 5 150,000 165,000 173,250 181,913 191,009 200,559 52040 IWWTP-Sanitation 5 15,000 22,800 23,940 25,137 26,394 27,714 52130 IWWTP-Subs/Pubs/Dues 2 1,019 519 540 562 584 607 52140 IWWTP-Training & Education 2 - - - - - 52150 IWWTP-Travel & Meetings 2 - - - - - 52160 IWWTP-Marketing & Promotions 8 50,500 50,500 50,500 50,500 50,500 50,500 52202 IWWTP-Equipment Fuel 3 13,000 10,000 10,875 11,827 12,862 13,987 52220 IWWTP-Equipment Exp 2 2,500 2,500 2,600 2,704 2,812 2,924 52300 IWWTP-Contract Services 6 5,808,602 6,463,013 6,656,903 6,856,610 7,062,308 7,274,177 52340 IWWTP-Insurance 2 1,875 2,000 2,080 2,163 2,250 2,340 52350 IWWTP-Legal 2 35,000 15,000 15,600 16,224 16,873 17,548 52360 IWWTP-Fed/Stat/Local Fees 2 35,000 35,000 36,400 37,856 39,370 40,945 52440 IWWTP-Infrastructure Repairs 2 3,000 3,000 3,120 3,245 3,375 3,510 54020 I
WWTP-Cost Allocations Paid 8 198,468 168,737 168,737 168,737 168,737 168,737 54050 IWWTP-Uncollectible Write Offs 8 12,000 12,000 12,000 12,000 12,000 12,000 54120 Interest Expense-Inter-Fund Loan-IWWTP To Water Exh 3 - - - - - - 51100 Full time Wages 2 30,000 56,420 58, 677 61,024 63,465 66,004 51200 Fringe Benefits 2 21,606 22,064 22,947 23,865 24,820 25,813 51300 Payroll Taxes 2 600 1,439 1,496 1,556 1,618 1,683 52300 Contract Services 6 70,369 70,369 72,480 74,654 76,894 79,201 SUBTOTAL: WASTEWATER TREATMENT EXPENSES 7,525,511$ 8,123,617$ 8,384,843$ 8,655,121$ 8,934,781$ 9,224,168$ 5-Year Adopted Rate PeriodBasisDESCRIPTIONOBJECT
8 TABLE 6 : OPERATING EXPENSE FORECAST, cont. 1
Budget
FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 SEWER EXPENSES - 4250700
51100 Sewer-Full Time Wages 2 1,353,149$ 1,438,162$ 1,495,688$ 1,555,516$ 1,617,737$ 1,682,446$ 51100 Sewer-Added Staff 2 - - - - - 51110 Sewer-Overtime Wages 2 36,668 45,000 46,800 48,672 50,619 52,644 51200 Sewer-Fringe Benefits 2 605,026 665,746 692,376 720,071 748,874 778,829 51200 Sewer-Added Staff 2 - - - - - 51220 Sewer-Retiree Expense 2 25,000 12,335 12,828 13,341 13,875 14,430 51300 Sewer-Payroll Taxes 2 34,439 36,534 37,995 39,515 41,096 42,740 51300 Sewer-Added Staff 2 - - - - - 52010 Sewer-Electricity 5 25,000 25,000 26,250 27,563 28,941 30,388 52020 Sewer-Water Use 5 4,800 4,800 5,040 5,292 5,557 5,835 52030 Sewer-Natural Gas 5 4,300 9,000 9,450 9,923 10,419 10,940 52060 Sewer-Telephone 5 15,000 15,000 15,750 16,538 17,365 18,233 52110 Sewer-Supplies 2 79,075 86,475 89,934 93,531 97,272 101,163 52130 Sewer-Subs/Pubs/Dues 2 6,550 6,550 6,812 7,084 7,367 7,662 52140 Sewer-Training & Education 2 31,000 31,000 32,240 33,530 34,871 36,266 52150 Sewer-Travel & Meetings 4 1,800 1,800 1,872 1,947 2,025 2,106 52170 Sewer-Advertg/Notices 2 1,000 1,000 1,040 1,082 1,125 1,170 52180 Sewer-Recruitment 2 4,000 4,000 4,160 4,326 4,499 4,679 52201 Sewer-Vehicle Fuel 3 40,000 40,000 43,500 47,306 51,445 55,946 52202 Sewer-Equipment Fuel 3 45, 000 45,000 48,938 53,220 57,877 62,941 52220 Sewer-Equipment Exp 2 82,750 84,500 87,880 91,395 95,051 98,853 52230 Sewer-Vehicle Exp 2 19,000 21,500 22,360 23,254 24,184 25,151 52240 Sewer-Frnt/Small Tools 2 11,200 11,200 11,648 12,114 12,599 13,103 52250 Sewer-Rentals 2 5,000 5,000 5,200 5,408 5,624 5,849 52260 Sewer-Computer Equip 2 18,100 18,100 18,824 19,577 20,360 21,174 52300 Sewer-Contract Services 2 327,470 434,470 451,849 469,923 488,720 508,269 52300 Sewer-Contract Services Cctv 7 - - - - - 52350 Sewer-Legal 2 15,000 7,500 7,800 8,112 8,436 8,773 52350 Potential Regulatory Compliance 2 - - - - - 52360 Sewer-Fed/State/Local Fees 2 26,600 26,600 27,664 28,771 29,922 31,119 52410 Sewer-Building Maintenance 2 18,000 18,000 18,720 19,469 20,248 21,058 52420 Sewer-Grounds Maintenance 2 3,500 3,500 3,640 3,786 3,937 4,094 52440 Sewer-Infrastructure Repairs 2 722,000 722,000 750,880 780,915 812,152 844,638 52450 Sewer-Vandalism 2 20,000 20,000 20,800 21,632 22,497 23,397 54020 Sewer-Cost Allocations 2 1,020,194 1,020,194 1,061,002 1,103,442 1,147,580 1,193,483 54050 Sewer-Uncollectible Write-Offs 2 20,000 20,000 20,800 21,632 22,497 23,397 SUBTOTAL: SEWER SYSTEM EXPENSES 4,620,621$ 4,879,966$ 5,079,740$ 5,287,887$ 5,504,771$ 5,730,776$ OBJECT DESCRIPTION Basis 5-Year Adopted Rate Period
9 TABLE 7 : OPERATING EXPENSE FORECAST, cont. 1,2
Budget
FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 SEWER GIS EXPENSES - 4251510
52300 IT GIS-Sewer Network Mapping 2 -$ -$ -$ -$ 52300 IT GIS-Sewer 2 - - - - 51100 Sewer GIS-Full Time Wages 2 100,621 90,640 94,265 98,036 101,957 106,035 51200 Sewer GIS-Fringe Benefits 2 37,891 34,949 36,347 37,801 39,313 40,886 51300 Sewer GIS-Payroll Taxes 2 2,566 2,311 2,404 2,500 2,600 2,704 52300 Sewer Network Mapping 2 185,900 185,900 193,336 201,069 209,112 217,476 SEWER DEV EXPENSES - 4254000 - - - - - 51100 Sewer Dev-Full Time Wages 2 100,090 78,964 82,122 85,407 88,823 92,376 51200 Sewer Dev-Fringe Benefits 2 47,806 39,654 41,240 42,890 44,606 46,390 51300 Sewer Dev-Payroll Taxes 2 2,552 2,014 2,094 2,178 2,265 2,356 SEWER ENGINEER EXPENSES - 4254500 - - - - - 51100 Sewer Engineering-Full Time Wages 2 1,062,258 1,104,748 1,148,938 1,194,896 1,242,692 1,292,400 51110 Sewer Engineering-Overtime Wages 2 - - - - - - 51200 Sewer Engineering-Fringe Benefits 2 411,613 428,078 445,201 463,009 481,529 500,790 51220 Sewer Engineering-Retiree Expense 2 30,674 31,901 33,177 34,504 35,884 37,319 51300 Sewer Engineering-Payroll Taxes 2 27,024 28,105 29,229 30,398 31,614 32,879 52010 Sewer Engineering-Electricity 5 16,000 16,800 17,640 18,522 19,448 20,420 52020 Sewer Engineering-Water Use 5 1,000 1,050 1,103 1,158 1,216 1,277 52030 Sewer Engineering-Natural Gas 5 1,500 1,575 1,654 1,737 1,824 1,915 52060 Sewer Engineering-Telephone 5 1,300 1,365 1,433 1,505 1,580 1,659 52110 Sewer Engineering-Supplies 2 4,300 4,472 4,651 4,837 5,030 5,231 52140 Sewer Engineering-Training & Education 2 4,200 4,368 4,543 4,725 4,914 5,111 52150 Sewer Engineering-Travel & Meetings 4 1,000 1,040 1,082 1,125 1,170 1,217 52201 Sewer Engineering-Vehicle Fuel 3 800 870 946 1,029 1,119 1,217 52220 Sewer Engineering-Equipment Exp 2 900 936 973 1,012 1,052 1,094 52230 S
ewer Engineering-Vehicle Exp 2 23,400 24,336 25,309 26,321 27,374 28,469 52240 Sewer Engineering-Frnt/Small Tools 2 800 832 865 900 936 973 52240 Sewer Engineering-Manhole Covers 2 - - - - - 52260 Sewer Engineering-Computer Equip 2 4,000 4,160 4,326 4,499 4,679 4,866 52300 Sewer Engineering-Contract Services 2 200,000 208,000 216,320 224,973 233,972 243,331 52350 Sewer Engineering-Legal 2 10,000 10,400 10,816 11,249 11,699 12,167 52300 Sewer VVWRA-Contract Services 9 $12,830,000 13,414,183 13,414,183 13,414,183 13,414,183 13,414,183 SEWER ASPHALT EXPENSES - 4255001 - - - - - 51100 Sewer Asphalt-Full Time Wages 2 43,625 43,621 45,366 47,181 49,068 51,031 51110 Sewer Asphalt-Overtime Wages 2 1,569 1,569 1,632 1,697 1,765 1,836 51200 Sewer Asphalt-Fringe Benefits 2 23,138 24,108 25,072 26,075 27,118 28,203 51200 Sewer Asphalt-Payroll Taxes 2 1,112 1,112 1,157 1,203 1,251 1,301 52201 Sewer Asphalt-Vehicle 2 50 - - - - - 52202 Sewer Asphalt-Equipment 2 100 - - - - - 52240 Sewer Asphalt-Frnt/Small Tools 2 450 - - - - - 52440 Sewer Asphalt-Infrastructure 2 11,125 11,125 11,570 12,033 12,514 13,015 SUBTOTAL: SEWER SYSTEM EXPENSES 15,189,366$ 15,803,185$ 15,898,994$ 15,998,652$ 16, 102,307$ 16,210,127$ GRAND TOTAL: IWWTP & SEWER OPERATING EXPENSES 27,335,498$ 28,806,768$ 29,363,577$ 29,941,660$ 30,541,859$ 31,165,071$ BasisDESCRIPTIONOBJECT 5-Year Adopted Rate Period
10 TABLE 8 : FORECASTING ASSUMPTIONS:

COST INFLATION FACTORS 2 Basis FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 No growth 1 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
General Cost inflation 2 4. 00% 4.00% 4.00% 4.00% 4.00% 4.00% Fuel cost 3 8.75% 8.75% 8.75% 8.75% 8.75% 8.75%
Transportation 4 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
Utilities 5 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
Woodard and Curran Costs 6 7.00% 3.00% 3.00% 3.00% 3.00% 3.00% CCTV Rate 7 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
No Inflation 8 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
VVWRA cost Increase + Customer Growth 9 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

1. Revenue and expenses for were provided by District Staff. Source File: Fund 425 - Sanitary_Sewer O & M Budget Status Reports FY 2022-2023_9-19-22, Fund 412-IWWTP_OM Budget Status Reports FY 2022-2023_9-19-22.pdf, FY 2023-24 - FUND 412 & 425.xlsx

2. Inflation Factors based on Bureau of Labor Statistics average of the last 5 years.

TABLE 9 : CAPITAL FUNDING SUMMARY
FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 Funding Sources:

Grants -$ -$ -$ -$ -$ -$ Use of Capacity Fee Reserves - - - - - - SRF Loan Funding - - - - - - Use of New Revenue Bond Proceeds - - - - - - Use of Capital Rehabilitation and Replacement Reserve 6,259,527 363,912 - - 851,827 1,975,035 Rate Revenue - 3,838,064 6,131,484 6,475,750 6,004,243 4,349,286 Total Sources of Capital Funds 6,259,527$ 4,201,976$ 6,131,484$ 6,475,750$ 6,856,070$ 6,324,321$ BudgetCAPITAL FUNDING FORECAST 5-Year Adopted Rate Period 11 TABLE 10 : CAPITAL IMPROVEMENT PROGRAM COSTS1
Project No. Description FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 Pipelines
1 Sewer Main Lining - Phase 2 1,650,000$
2 Sewer Main Lining - Phase 3, 4, 5 $ - 1,731,240$ $ - 1,669,070$ 2,383,595$ 3 MH Rehab $ - $ - $ - 680,726$ 4 Sewer Re-Alignment East of Cobalt St. $ - $ - 665,750$ $ - $ - 5 Santa Fe Wash Sewer Re-Alignment Design 500,000$ 190,244$ 6 Santa Fe Wash Sewer Re-Alignment Construction $ - $ - $ - 3,702,000$ $ - 7 Sewer Capacity C2 $ - $ - 2,000,000$ $ - $ - 8 Sewer Capacity C3 $ - 2,000,000$ $ - $ - $ - 9 Old Town Septic to Sewer Conversion 460,000$
10 Citywide CCTV Inspections & Rehabilitations 100,000$ 900,000$ 900,000$ 1,800,000$ Lift Station
11 SCADA - Stoddard Wells Pump/Lift Station 200,000$
12 Replace VFD-Stoddard Wells Station 20,000$
13 Perimeter Block Wall/Security $ - 250,000$ 14 Replace Aerator System Stoddard Wells Sewer Pump $ - 250,000$

IWWTP & SCLA
15 IWWTP to VWRA Sewer System Improvements $ - $ - $ - 500,000$ 500,000$ 16 Repairs & Replacements at IWWTP 1,000,000$ 1,500,000$ 17 SCLA Lift Station Rehab 100,000$
Vehicles & Equipment
18 Pickup Truck Utility Services Vehicle 70,000$
19 New Vacuum Trailer 45,000$
20 SKD Steer Rubber Tire with Trailer 48,000$
21 Replace GPS Unit 15,750$
22 New Patch Truck 137,420$
23 2007 sterling 10 Yard Dump Truck 150,000$
24 Combo Van 950,000$
25 CAT Motor Grader 700,000$
26 Replace 2002 Chevy 2500 with Utility Bed 100,000$
27 Replace (1) Expedition with SUV 60,000$
28 Replace 6" Sewer Bypass Pump 75,000$
29 Replacement of 2009 Combo Vac Truck 950,000$
30 Tow Behind Arrow board 15,000$
31 Replace Dodge Truck with Utility Bed 125,000$
32 Sanitary Related Equipment 10,000$ 10,000$ 10,000$ 10,000$ 10,000$ 33 Work Order System & Software 250,000$
Miscelleanous
34 Sewer Master Plan Update 350,000$
35 Sanitary Sewer Management Plan (SSMP) Update 50,000$ 50,000$ 36 Palmdale Corp Yard Improvements 145,806$
Placeholder for Future Year Capital Projects 2 -$ -$ -$ -$ -$ Sub-Total: CIP Program Costs 6,900,000$ 4,201,976$ 6,131,484$ 6,475,750$ 6,856,070$ 6,324,321$ Total: CIP Program Costs 6,900,000$ 4,201,976$ 6,131,484$ 6,475,750$ 6,856,070$ 6,324,321$

1. Capital project costs from Source File: 5 Year Sewer CIP Rate Study Plan_Final_SN 2.3.2023.xlsx, Fund 425 - Sanitary_Sewer O & M Budget Status Reports FY 2022-2023_9-19-22.p

2. Future year projects based upon the annual average CIP cost for 2023/24 through 2027/28. 12 TABLE 11 : OUTSTANDING DEBT OBLIGATIONS

OUTSTANDING DEBT OBLIGATIONS
Annual Repayment Schedules: 1 FY 2022/23 FY 2023/24 FY 2024/25 F Y 2025/26 FY 2026/27 FY 2027/28 Inter Agency Loan - $35,320581 2
Principal Payment 1,190,798$ 1,202,881$ 1,215,206$ 1,227,777$ 1,240,600$ 1,253,679$ Interest Payment 678,905 649,135 619,063 588,683 557,989 526,974 Subtotal: Annual Debt Service 1,869,703$ 1,852,016$ 1,834,269$ 1,816,460$ 1,798,589$ 1,780,653$ Coverage Requirement ($-Amnt above annual payment) -$ -$ -$ -$ -$ -$ Reserve Requirement (total fund balance) -$ -$ -$ -$ -$ -$ Budget 5-Year Adopted Rate Period
TABLE 12 : CURRENT WASTEWATER RATE SCHEDULE

13 TABLE 13 : O&M BUDGET LINE ITEM EXPENSE:

O&M Budget Line Item Expense Expenses
WASTEWATER TREATMENT EXPENSES (IWWTP) - 4120710
IWWTP-Electricity 850,000$
IWWTP-Natural Gas 165,000
SEWER EXPENSES - 4250700
Sewer-Natural Gas 9,000
Sewer-Supplies 86,475
SEWER ENGINEER EXPENSES - 4254500
Sewer Engineering-Electricity 16,800
Sewer Engineering-Natural Gas 1,575
Total 1,128,850$
14 TABLE 14 : CLASSIFICATION OF EXPENSES FOR COST OF SERVICE ANALYSIS:

Classification of Expenses
Total
Revenue Requirements Flow Process
Treatment
VVWRA
Treatment Customer
FY 2023/24 (VOL) (BOD) (TSS) (PT) (VVWRA) (CA) (VOL) (BOD) (TSS) (PT) (VVWRA) (CA) WASTEWATER TREATMENT EXPENSES (IWWTP) - 4120710
IWWTP-Full Time Wages 119,373$ 41,781$ 38,796$ 38,796$ -$ -$ -$ 35% 33% 33% 0% 0% 0% IWWTP-Fringe Benefits 47,153 16,504 15,325 15,325 - - - 35% 33% 33% 0% 0% 0% IWWTP-Retiree Exp 2,498 874 812 812 - - - 35% 33% 33% 0% 0% 0% IWWTP-Payroll Taxes 3,031 1,061 985 985 - - - 35% 33% 33% 0% 0% 0% IWWTP-Electricity 850,000 510,000 85,000 85,000 170,000 - - 60% 10% 10% 20% 0% 0% IWWTP-Water Use 1,200 420 390 390 - - - 35% 33% 33% 0% 0% 0% IWWTP-Natural Gas 165,000 - 61,875 61,875 41,250 - - 0% 38% 38% 25% 0% 0% IWWTP-Sanitation 22,800 7,980 7,410 7,410 - - - 35% 33% 33% 0% 0% 0% IWWTP-Subs/Pubs/Dues 519 182 169 169 - - - 35% 33% 33% 0% 0% 0% IWWTP-Training & Education - - - - - - - 35% 33% 33% 0% 0% 0% IWWTP-Travel & Meetings - - - - - - - 35% 33% 33% 0% 0% 0% IWWTP-Marketing & Promot 50,500 17,675 16,413 16,413 - - - 35% 33% 33% 0% 0% 0% IWWTP-Equipment Fuel 10,000 3,500 3,250 3,250 - - - 35% 33% 33% 0% 0% 0% IWWTP-Equipment Exp 2,500 875 813 813 - - - 35% 33% 33% 0% 0% 0% IWWTP-Contract Services 6,463,013 2,262,055 1,770,034 1,770,034 660,890 - - 35% 27% 27% 10% 0% 0% IWWTP-Insurance 2,000 700 650 650 - - - 35% 33% 33% 0% 0% 0% IWWTP-Legal 15,000 5,250 4,875 4,875 - - - 35% 33% 33% 0% 0% 0% IWWTP-Fed/Stat/Local Fees 35,000 12,250 11,375 11,375 - - - 35% 33% 33% 0% 0% 0% IWWTP-Infrastructure Repair 3,000 1,050 975 975 - - - 35% 33% 33% 0% 0% 0% IWWTP-Cost Allocations Paid 168,737 59,058 54,840 54,840 - - - 35% 33% 33% 0% 0% 0% IWWTP-Uncollectible Write O 12,000 4,200 3,900 3,900 - - - 35% 33% 33% 0% 0% 0% Interest Expense-Inter-Fund - - - - - - - 35% 33% 33% 0% 0% 0% Full time Wages 56,420 19,747 18,337 18,337 - - - 35% 33% 33% 0% 0% 0% Fringe Benefits 22,064 7,723 7,171 7,171 - - - 35% 33% 33% 0% 0% 0% Payroll Taxes 1,439 504 468 468 - - - 35% 33% 33% 0% 0% 0% Contract Services 70,369 24,629 22,870 22,870 - - - 35% 33% 33% 0% 0% 0% Sub-Total IWWTP 8,123,617$ 2,998,016$ 2,126,730 $ 2,126,730 $ 872,140$ -$ -$ 37% 26% 26% 11% 0% 0% Budget Categories Strength Basis of Classification
15 TABLE 15 : CLASSIFICATION OF EXPENSES FOR COST OF SERVICE ANALYSIS, cont.

Classification of Expenses, continued
Total
Revenue Requirements Flow Process
Treatment
VVWRA
Treatment Customer
FY 2023/24 (VOL) (BOD) ( TSS) (PT) (VVWRA) (CA) (VOL) (BOD) (TSS) (PT) (VVWRA) (CA) SEWER EXPENSES - 4250700
Sewer-Full Time Wages 1, 438,162$ 1,366,254$ -$ -$ -$ -$ 71,908$ 95% 0% 0% 0% 0% 5% Sewer-Overtime Wages 45,000 42,750 - - - - 2,250 95% 0% 0% 0% 0% 5% Sewer-Fringe Benefits 665,746 632,459 - - - - 33,287 95% 0% 0% 0% 0% 5% Sewer-Retiree Expense 12,335 11,718 - - - - 617 95% 0% 0% 0% 0% 5% Sewer-Payroll Taxes 36,534 34,707 - - - - 1,827 95% 0% 0% 0% 0% 5% Sewer-Added Staff - - - - - - - 95% 0% 0% 0% 0% 5% Sewer-Electricity 25,000 23,750 - - - - 1,250 95% 0% 0% 0% 0% 5% Sewer-Water Use 4,800 4,560 - - - - 240 95% 0% 0% 0% 0% 5% Sewer-Natural Gas 9,000 8,550 - - - - 450 95% 0% 0% 0% 0% 5% Sewer-Telephone 15,000 14,250 - - - - 750 95% 0% 0% 0% 0% 5% Sewer-Supplies 86,475 82,151 - - - - 4,324 95% 0% 0% 0% 0% 5% Sewer-Subs/Pubs/Dues 6,550 4,913 - - - - 1,638 75% 0% 0% 0% 0% 25% Sewer-Training & Education 31,000 29,450 - - - - 1,550 95% 0% 0% 0% 0% 5% Sewer-Travel & Meetings 1,800 1,710 - - - - 90 95% 0% 0% 0% 0% 5% Sewer-Advertg/Notices 1,000 950 - - - - 50 95% 0% 0% 0% 0% 5% Sewer-Recruitment 4,000 3,800 - - - - 200 95% 0% 0% 0% 0% 5% Sewer-Vehicle Fuel 40,000 - - - - - 40,000 0% 0% 0% 0% 0% 100% Sewer-Equipment Fuel 45,000 42,750 - - - - 2,250 95% 0% 0% 0% 0% 5% Sewer-Equipment Exp 84,500 80,275 - - - - 4,225 95% 0% 0% 0% 0% 5% Sewer-Vehicle Exp 21,500 20,425 - - - - 1,075 95% 0% 0% 0% 0% 5% Sewer-Frnt/Small Tools 11,200 10,640 - - - - 560 95% 0% 0% 0% 0% 5% Sewer-Rentals 5,000 4,750 - - - - 250 95% 0% 0% 0% 0% 5% Sewer-Computer Equip 18,100 17,195 - - - - 905 95% 0% 0% 0% 0% 5% Sewer-Contract Services 434,470 412,747 - - - - 21,724 95% 0% 0% 0% 0% 5% Sewer-Contract Services Cctv - - - - - - - 95% 0% 0% 0% 0% 5% Sewer-Legal 7,500 7,125 - - - - 375 95% 0% 0% 0% 0% 5% Potential Regulatory Complia - - - - - - - 95% 0% 0% 0% 0% 5% Sewer-Fed/State/Local Fees 26,600 25,270 - - - - 1,330 95% 0% 0% 0% 0% 5% Sewer-Building Maintenance 18,000 17,100 - - - - 900 95% 0% 0% 0% 0% 5% Sewer-Grounds Maintenance 3,500 3,325 - - - - 175 95% 0% 0% 0% 0% 5% Sewer-Infrastructure Repairs 722,000 685, 900 - - - - 36,100 95% 0% 0% 0% 0% 5% Sewer-Vandalism 20,000 19,000 - - - - 1,000 95% 0% 0% 0% 0% 5% Sewer-Cost Allocations 1,020,194 969,184 - - - - 51,010 95% 0% 0% 0% 0% 5% Sewer-Uncollectible Write-Of 20,000 19,000 - - - - 1,000 95% 0% 0% 0% 0% 5% Sub-Total Sewer 4,879,966$ 4,596,658$ -$ -$ -$ -$ 283,308$ 94% 0% 0% 0% 0% 6% Budget Categories Strength Basis of Classification
16 TABLE 16 : CLASSIFICATION OF EXPENSES FOR COST OF SERVICE ANALYSIS, cont.

Classification of Expenses, continued
Total
Revenue Requirements Flow Process
Treatment
VVWRA
Treatment Customer
FY 2023/24 (VOL) (BOD) (TSS) (PT) (VVWRA) (CA) (VOL) (BOD) (TSS) (PT) (VVWRA) (CA) SEWER GIS EXPENSES - 4251510
IT GIS-Sewer Network Mapping -$ -$ -$ -$ -$ -$ -$ 100% 0% 0% 0% 0% 0% IT GIS-Sewer - - - - - - - 100% 0% 0% 0% 0% 0% Sewer GIS-Full Time Wages 90,640 90,640 - - - - - 100% 0% 0% 0% 0% 0% Sewer GIS-Fringe Benefits 34,949 34,949 - - - - - 100% 0% 0% 0% 0% 0% Sewer GIS-Payroll Taxes 2,311 2,311 - - - - - 100% 0% 0% 0% 0% 0% Sewer Network Mapping 185,900 185,900 - - - - - 100% 0% 0% 0% 0% 0% Sub-Total GIS 313,800$ 313,800$ -$ -$ -$ -$ -$ 100% 0% 0% 0% 0% 0% SEWER DEV EXPENSES - 4254000
Sewer Dev-Full Time Wages 78,964$ 78,964$ -$ -$ -$ -$ -$ 100% 0% 0% 0% 0% 0% Sewer Dev-Fringe Benefits 39,654 39,654 - - - - - 100% 0% 0% 0% 0% 0% Sewer Dev-Payroll Taxes 2,014 2,014 - - - - - 100% 0% 0% 0% 0% 0% Sub-Total DEV 120,631$ 120,631$ -$ -$ -$ -$ -$ 100% 0% 0% 0% 0% 0% SEWER ENGINEER EXPENSES - 4254500
Sewer Engineering-Full Time Wages 1,104,748$ 1,104,748$ -$ -$ -$ -$ -$ 100% 0% 0% 0% 0% 0% Sewer Engineering-Overtime Wages - - - - - - - 100% 0% 0% 0% 0% 0% Sewer Engineering-Fringe Benefits 428,078 428,078 - - - - - 100% 0% 0% 0% 0% 0% Sewer Engineering-Retiree Expense 31,901 31,901 - - - - - 100% 0% 0% 0% 0% 0% Sewer Engineering-Payroll Taxes 28,105 28,105 - - - - - 100% 0% 0% 0% 0% 0% Sewer Engineering-Electricity 16,800 16,800 - - - - - 100% 0% 0% 0% 0% 0% Sewer Engineering-Water Use 1,050 1,050 - - - - - 100% 0% 0% 0% 0% 0% Sewer Engineering-Natural Gas 1,575 1,575 - - - - - 100% 0% 0% 0% 0% 0% Sewer Engineering-Telephone 1,365 1,365 - - - - - 100% 0% 0% 0% 0% 0% Sewer Engineering-Supplies 4,472 4,472 - - - - - 100% 0% 0% 0% 0% 0% Sewer Engineering-Training & Educa 4,368 4,368 - - - - - 100% 0% 0% 0% 0% 0% Sewer Engineering-Travel & Meeting 1,040 1,040 - - - - - 100% 0% 0% 0% 0% 0% Sewer Engineering-Vehicle Fuel 870 870 - - - - - 100% 0% 0% 0% 0% 0% Sewer Engineering-Equipment Exp 936 936 - - - - - 100% 0% 0% 0% 0% 0% Sewer Engineering-Vehicle Exp 24,336 24,336 - - - - - 100% 0% 0% 0% 0% 0% Sewer Engineering-Frnt/Small Tools 832 832 - - - - - 100% 0% 0% 0% 0% 0% Sewer Engineering-Manhole Covers - - - - - - - 100% 0% 0% 0% 0% 0% Sewer Engineering-Computer Equip 4,160 4,160 - - - - - 100% 0% 0% 0% 0% 0% Sewer Engineering-Contract Services 208,000 208,000 - - - - - 100% 0% 0% 0% 0% 0% Sewer Engineering-Legal 10,400 10,400 - - - - - 100% 0% 0% 0% 0% 0% Sewer VVWRA-Contract Services 13,414,183 - - - - 13,414,183 - 0% 0% 0% 0% 100% 0% SEWER ASPHALT EXPENSES - 4255001
Sewer Asphalt-Full Time Wages 43,621 43,621 - - - - - 100% 0% 0% 0% 0% 0% Sewer Asphalt-Overtime Wages 1,569 1,569 - - - - - 100% 0% 0% 0% 0% 0% Sewer Asphalt-Fringe Benefits 24,108 24,108 - - - - - 100% 0% 0% 0% 0% 0% Sewer Asphalt-Payroll Taxes 1,112 1,112 - - - - - 100% 0% 0% 0% 0% 0% Sewer Asphalt-Vehicle - - - - - - - 100% 0% 0% 0% 0% 0% Sewer Asphalt-Equipment - - - - - - - 100% 0% 0% 0% 0% 0% Sewer Asphalt-Frnt/Small Tools - - - - - - - 100% 0% 0% 0% 0% 0% Sewer Asphalt-Infrastructure 11,125 11,125 - - - - - 100% 0% 0% 0% 0% 0% Sub-Total Engineering 15,368,754$ 1,954,571$ -$ -$ -$ 13,414,183$ -$ 13% 0% 0% 0% 87% 0% Budget Categories Strength Basis of Classification
17 TABLE 17 : CLASSIFICATION OF EXPENSES FOR COST OF SERVICE ANALYSIS, cont.

Classification of Expenses, continued
Total
Revenue Requirements Flow Process
Treatment
VVWRA
Treatment Customer
FY 2023/24 (VOL) (BOD) ( TSS) (PT) (VVWRA) (CA) (VOL) (BOD) (TSS) (PT) (VVWRA) (CA) Debt Service Payments
Inter Agency Loan - Principal Paymen 1,202,881$ 445,066$ 312,749$ 312,749$ 132,317$ -$ -$ 37% 26% 26% 11% 0% 0% Inter Agency Loan - Interest Paymen 649,135$ 240, 180$ 168,775$ 168,775$ 71,405$ -$ -$ 37% 26% 26% 11% 0% 0% New Debt Service -$ -$ -$ -$ -$ -$ -$ 37% 26% 26% 11% 0% 0% Total Debt Service Payments 1,852,016$ 685,246$ 481,524$ 481,524$ 203,722$ -$ -$ 37% 26% 26% 11% 0% 0% Capital Expenditures
Rate Funded Capital Expenses 3,838,064$ 3,070,451$ 383,806$ 383,806$ -$ -$ -$ 80% 10% 10% 0% 0% 0% TOTAL REVENUE REQUIREMENTS 34,496,849$ 13,739,373$ 2,992,061 $ 2,992,061 $ 1,075,862 $ 13,414,183$ 283,308$ 40% 9% 9% 3% 39% 1% Less: Non-Rate Revenues
Sewer Use Fee - Capital & Connectio (811,632)$ ( 323,256)$ (70,396)$ (70,396)$ (25,313)$ (315,605)$ (6,666)$ 40% 9% 9% 3% 39% 1% Late Fee (354,000)$ (140,991)$ (30,704)$ (30,704)$ (11,040)$ (137,654)$ (2,907)$ 40% 9% 9% 3% 39% 1% Water Permit (36,628)$ (14,588)$ (3,177)$ (3,177)$ (1,142)$ (14,243)$ (301)$ 40% 9% 9% 3% 39% 1% Interest Income (42,371)$ (16,875)$ (3,675)$ (3,675)$ (1,321)$ (16,476)$ (348)$ 40% 9% 9% 3% 39% 1% NET REVENUE REQUIREMENTS 33,252,218$ 13,243,663$ 2,884,109 $ 2,884,109 $ 1,037,046 $ 12,930,205$ 273,087$ Allocation of Revenue Requirements 100.0% 39.8% 8.7% 8.7% 3.1% 38.9% 0.8% Budget Categories Strength Basis of Classification
TABLE 18 : ADJUSTMENT TO CLASSIFICATION FOR COST OF SERVICE ANALYSIS, cont.

Adjustment to Current Rate Level: Total (VOL) (BOD) (TSS) (PT) (VVWRA) (CA) Target Rate Rev. After Rate Increases 34,581,463$
Projected Rate Revenue at Current Ra 32,934,727
Projected Rate Increase 5.0%
Adjusted Net Revenue Req'ts 34,581,463$ 13,773,073$ 2,999,400 $ 2,999,400 $ 1,078,501 $ 13,447,086$ 284,003$ Percent of Revenue 100.0% 39.8% 8.7% 8.7% 3.1% 38.9% 0.8% 18 TABLE 19 : ADJUSTED NET REVENUE REQUIREMENTS
Adjusted Net Revenue Requirements
Projected Rate Revenue at Current Rates 32,934,727$
Projected Rate Increase 5.0%
Adjusted Net Revenue Requirement 34,581,463$
By Cost Category: % of Total
Volume 13,651,202 39.5%
BOD 2,995,376 8.7%
TSS 2,995,376 8.7%
Process Treatment 1,087,962 3.1% VVWRA Treatment 13,565,053 39.2% Customer 286,495 0.8%
Total 34,581,463$ 100%
TABLE 20 : ADJUSTED NET REVENUE REQUIREMENTS
Total
Revenue Req't. Flow Process
Treatment
VVWRA
Treatment Customer
FY 2023/24 (VOL) (BOD) (TSS) (PT) (VVWRA) (CA)
IWWTP 8,123,617$ 2,998,016$ 2,126,730 $ 2,126,730 $ 872,140$ -$ -$ Sewer 4,879,966 4,596,658 - - - - 283,308 GIS 313,800 313,800 - - - - - Sewer DEV 120,631 120,631 - - - - - Engineering 1,873,036 1,873,036 - - - - - VVWRA Treatment 13,414,183 - - - - 13,414,183 - Debt Service Payments 1,852,016 685,246 481,524 481,524 203,722 - - Total Revenue Requirement 34,496,849$ 13,739,373$ 2,992,061 $ 2,992,061 $ 1,075,862 $ 13,414,183$ 283,308$ Less: Non-Rate Revenues (1,244,631) (495,710) (107,952) (107,952) (38,817) (483,978) (10,222) 33,252,218$ 13,243,663$ 2,884,109 $ 2,884,109 $ 1,037,046 $ 12,930,205$ 273,087$ 100.0% 39.8% 8.7% 8.7% 3.1% 38.9% 0.8%
Budget Categories Strength
Net Revenue Requirements
19 TABLE 21 : DEVELOPMENT OF THE COMMODITY ALLOCATION FACTOR Development of the Volume Allocation Factor 1
Customer Class
Annual Water
Consumption/
(hcf)
Annualized
Winter Average
Consumption
(hcf)4
Estimated
Annual
Volume Total
(hcf)5
Adjusted
Annual Sewer
Volume Total
(hcf)
Percentage
of Adjusted
Volume by
Treatment
Location
Percentage
of Total
Adjusted
Volume
IWWTP
SINGLE FAMILY RESIDENTIAL 846,741 641,160 641,160 492,777 61.0% 11.0% MULTI-FAMILY RESIDENTIAL 99,720 84,683 84,683 65,085 8.1% 1.4% INDUSTRIAL6
FCC7,8 - Nevada n/a n/a 93,148 93,148 11.5% 2.1%
KDP9
n/a n/a 132,646 132,646 16.4% 3.0%
PlastiPak10
n/a n/a 3,247 3,247 0.4% 0.1%
Hydration Source n/a n/a 21,363 21,363 2.6% 0.5%
Sub-Total IWWTP 946,461 -- 976,247 808,267 100% 18%
VVWRA
SINGLE FAMILY RESIDENTIAL 3,828,869 2,899,256 2,899,256 2,228,286 60.5% 49.6% MULTI-FAMILY RESIDENTIAL 450,923 382,925 382,925 294,306 8.0% 6.6% COMMERCIAL (ALL USERS) 1,284,187 677,432 1,284,187 986,990 26.8% 22.0% INDUSTRIAL 171,563 n/a 171,563 171,563 4.7% 3.8%
Sub-Total VVWRA 5,735,542 -- 4,737,931 3,681,145 100% 82% Total: 6,682,003 -- 5,714,178 4,489,411 100.0%
Estimated Combined WWTP Flow (hcf/yr.) 11 4,489,411
Estimated Combined WWTP Flow (mgd) (11) 9.20
Flow Adj. Factor (Non-Industrial) 0.77
20 TABLE 22 :DEVELOPMENT OF THE CUSTOMER ALLOCATION FACTORS Development of the Customer Allocation Factor
Customer Class Number of
Accounts1
Number of
Dwelling
Units
Percent of
Total Accounts
SINGLE FAMILY RESIDENTIAL 28,766 28,766 95%
MULTI-FAMILY RESIDENTIAL 390 7,000 1%
COMMERCIAL 1,145 -- 4%
INDUSTRIAL:

FCC 2 -- 0%
KDP 1 -- 0%
PlastiPak 1 -- 0%
Hydration Source 1 0%
Total 30,306 35,766 100%
Notes for Customer Allocation Factor Table:

1. Number of accounts is based on the number of sewer customers billed a charge in May 2023.

Source file: Water_FY22-23-Data_nbs.xlsx
TABLE 23 : ESTIMATED FLOW PER DWELLING UNIT
Estimated Flow Per Dwelling Unit
Customer Class
Est. Annual
Wastewater
Flow (hcf)
Est. Flow/DU/
Day (gallons) % of SFR Flow
SINGLE FAMILY RESIDENTIAL 2,721,064 194 --
MULTI-FAMILY RESIDENTIAL 359,390 105 54%
21 TABLE 24: N/A

TABLE 25 :DEVELOPMENT OF THE CUSTOMER ALLOCATION FACTORS Development of Allocation Factors - Biochemical Oxygen Demand (BOD) / Chemical Oxygen Demand (COD) 1 at IWWTP (Sanitary Flow) Customer Annual
Flow (hcf)
Average
Strength Factor
(BOD mg/l)
Calculated
Strength BOD
(lbs./yr.)
Average
Strength Factor
(COD mg/l)
Calculated
Strength COD
(lbs./yr.)
Adjusted
Strength COD
(lbs./yr.)
Percent of
Total

BOD / COD
Sanitary Flow
Single Family Residential 846,741 175 924,392 495 2,615,083 498 64.8% Multi-Family Residential 99, 720 175 108,865 495 307,976 59 7.6% Commercial 0 175 0 495 0 0 0.0%
Industrial Flow
FCC3 93,148 273 158,819 661 384,116 73 11.1%
Dr. Pepper/Snapple 4 132,646 250 206,872 622 514,428 98 14.5% PlastiPack5 3,247 175 3,545 495 10,028 2 0.2%
Hydration Source 21,363 175 23,322 495 65,978 13 1.6%
Total 1,196,865 1, 398 1,425,815 3,758 3,897,609 742 100% Total Annual COD Treated at IWWTP (lbs) 742
Adjustment Facto 0.00
22 TABLE 26 :DEVELOPMENT OF THE CUSTOMER ALLOCATION FACTORS Customer Annual Flow
(hcf)
Average
Strength Factor
Calculated TSS
(lbs./yr.)
Percent of Total
TSS
Sanitary Flow
Single Family Residential 846,741 175 924,392 62.8%
Multi-Family Residential 99,720 175 108,865 7.4%
Commercial 0 175 0 0.0%
Industrial Flow
FCC2 93,148 273 158,819 10.8%
KDP3 132,646 250 206,872 14.0%
PlastiPack4 3,247 660 13,369 0.9%
Hydration Source 21,363 456 60,762 4.1%
Total 1,196,865 197 1,473,079 100.0%
23 TABLE 28 : ALLOCATION OF REVENUE REQUIREMENTS BY CUSTOMER CLASS Volume BOD TSS Process
Treatment
VVWRA
Treatment
Customer
Related
Net Revenue Requirements 1 13,651,202$ 2,995,376$ 2, 995,376$ 1,087,962$ 13,565,053$ 286,495$ 34,581,463$ --

39.5% 8.7% 8.7% 3.1% 39.2% 0.8% 100.0%
SINGLE FAMILY RESIDENTIAL 8,274,090$ 1,941,978$ 1, 879,669$ -$ 8,211,257$ 271,936$ 20,578,931$ 59.5% MULTI-FAMILY RESIDENTIAL 1,092,818 228,705 221,367 - 1,084,519 3,687 2,631,097 7.6% COMMERCIAL 3,001,195 - - - 3,637,067 10,824 6,649,087 19.2%

INDUSTRIAL
FCC 804,921$ 333,650$ 322,945$ -$ 632,210$ 19$ 2,093,744$ 6.1% KDP 403,344 434,600 420,656 1,087,962 - 9 2,346,572 6.8% Plastipak 9,873 7,447 27,184 - - 9 44,514 0.1%
Hydration Source 64,960 48,995 123,554 - - 9 237,519 0.7% GRAND TOTAL 13,651,202$ 2,995,376$ 2,995,376$ 1,087,962$ 13,565,053$ 286,495$ 34,581,463$ 100%

1. Determined by multiplying the revenue requirement from each cost classification by the allocation factors for each customer class.

Volume - Percentage of Total Adjusted Volume, BOD & TSS - Percentage of Total LBS, Process Treatment - All Allocated to KDP VVWRA - Percentage of Adjusted Volume at VVWRA, Customer Related - Percentage of Total Accounts Cost Classification Components
Customer Class
Cost-of-Service
Net Revenue
Reqts.
% of COS
Net Revenue
Reqts.

TABLE 29 : RESIDENTIAL SEWER RATES:

Residential
SINGLE FAMILY RESIDENTIAL 28,766 20,584,159$ $59.63 MULTI-FAMILY RESIDENTIAL 7,000 2,631,994 $31.33 Subtotal: Residential 35,766 23,216,153$ --

1. Number of dwelling units/accounts used from most recent month of billing data for May 2023.

Mo. Fixed Charge
Per Dwelling UnitCustomer Class No. of Dwelling
Units (1)
Total Annual
Revenue
24 TABLE 30 : COMMERCIAL SEWER RATES:

Customer Class No. of
Accounts (1)
Annual Volume
(hcf)
Total Annual
Revenue
Requirement
Monthly Fixed
Charge Per
Account
Volumetric
Charge
Per hcf
Commercial
COMMERCIAL 1,145 1,284,187 6,644,156$ $59.63 $4.54

1. Number of dwelling units/accounts used from most recent month of billing data for May 2023.

TABLE 31 : INDUSTRIAL SEWER RATES:

Industrial Customer
Annual
Revenue
Requirement
Annual Volume
(hcf)
Volumetric
Charge
Per hcf
BOD ($/lb)
(COD $/lb. for
KDP)
TSS
(per lbs)
Monthly
Minimum
Charge
(Other)
FCC1 2,093,744$ 264,711 $3.04 $2.10 $2.03 N.A. N.A.

Monthly Fixed Charge Per EDU $64.32
Approx. # EDU Equiv. (200 gal/day) 2 2,713
KDP 2,346,572$ 132,646 $3.04 $2.10 $2.03 $195,548 BOD Charge, lbs $0.84
Volumetric Charge (1,000 gal) $2.27
Plastipak 44,514$ 3,247 $3.04 2.10$ 2.03$ $3,710 Monthly Fixed Charge Per Account $0.79
Hydration Source 237,519$ 21,363 $3.04 2.10$ 2.03$ $19,793 Volumetric Charge (1,000 gal) $0.79

1. Rates assume that FCC will be billed for all consumption and not adjusted as is currently the case.

2. FCC was previously charged based on # EDU's using 250 gpd/EDU estimate that totalled 3,344 EDUs. 25 TABLE 32 : CURRENT vs PROPOSED SEWER RATES
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Residential Customers 1
Monthly Fixed Service Charge, per Dwelling Unit:

Single-Family Residential 51.89$ 59.62$ 62.60$ 65.73$ 69.01$ 72.46$ Multi-Family Residential 38.09$ 31.32$ 32.89$ 34.53$ 36.26$ 38.07$ Commercial Customers
Monthly Fixed Service Charge, per Account: 51.89$ 59.62$ 62.60$ 65.73$ 69.01$ 72.46$ Volumetric Charge, per hcf 2 4.41 4.54$ 4.77$ 5.01$ 5.26$ 5.52$ Industrial Customers 3
Monthly Fixed Service Charge, per Account: 51.89$ 59.62$ 62.60$ 65.73$ 69.01$ 72.46$ Volumetric Charge, per hcf 2 4.41 4.54 4.77 5.01 5.26 5.52 BOD Charge, per lb - 2.10$ 2.21$ 2.32$ 2.43$ 2.55$ TSS Charge, per lb - 2.03$ 2.14$ 2.24$ 2.35$ 2.47$ User-Specific Rates
Federal Corrections Complex (FCC)
Monthly Fixed Charge Per EDU 4 52.22$ 64.32$ 67.54$ 70.92$ 74.46$ 78.18$ BOD Charge, per lb 5 2.19$ 2.10$ 2.21$ 2.32$ 2.43$ 2.55$ TSS Charge, per lb 5 2.20$ 2.03$ 2.14$ 2.24$ 2.35$ 2.47$ Kuerig Dr. Pepper (KDP) 6
Monthly Min Charge (excluding capital recovery) 7 162,500$ 162,500$ 162,500$ 162,500$ 162,500$ 162,500$ Monthly Fixed Charge (Ion Exchange Service) 8 10,200$ 10,200$ 10,200$ 10,200$ 10,200$ 10,200$ Volumetric Charge, per 1,000 gal 6 0.37$ 0.37$ 0.37$ 0.37$ 0.37$ 0.37$ COD Charge, per lb 6 0.13$ 0.13$ 0.13$ 0.13$ 0.13$ 0.13$ FDS Charge, per lb 9 2.91$ 2.99$ 3.07$ 3.15$ 3.24$ 3.32$ BOD Charge, per lb 10 N/A - - - - -
TSS Charge, per lb 10 N/A - - - - -

1. Residential customers are assessed on the basis of their number of dwelling units.

2. Volumetric charge will apply to monthly water consumption.

3. All industrial dischargers that discharge wastewater of unusual strength or character are required to obtain a wastewater discharge permit from IWWTP or VVWRA, respectively. Additional surcharges may apply based on wastewater characteristics.

Plastipak and Hydration Source included in this customer category.

4. FCC will be billed based on a flow estimate of 200 gallons per day, per EDU.

5. FCC surcharges for BOD and TSS apply to concentrations above 200 mg/l for BOD and 250 mg/l for TSS.

6. Volumetric charges (per 1,000 gal or lbs) for KDP shall apply accordingly if discharge exceeds 585,000 gpd, 28,100 lbs/day of COD or 1,400 lbs/day of SS in accordance with Wastewater Capacity and Treatment Agreement.

Volumetric charges for KDP listed in rate table are in accordance with the Wastewater Capacity and Treatment Agreement.

7. Monthly minimum charge for KDP in accordance with Wastewater Capacity and Treatment Agreement.

8. Monthly fixed charge per Woodard and Curran operational expenses.

9. The FDS surcharge was calculated by Woodard & Curran and is subject to a 2.7% general cost inflation factor in FY 2019/20 and beyond.

This will apply to all pound of FDS treated. Source:2018.03.21 FDS Surcharge Limit Table.xlsx

10. BOD and TSS charges not applicable to KDP due to wastewater strength characteristics.

Sewer Rate Schedule Recommended Sewer RatesCurrent
Rates
26 27

28 City of Victorville Sewer Rate Comparison
$31.00
$37.18
$51.64 $51.89
$59.81 $59.89 $61.06 $63.09
$0
$10
$20
$30
$40
$50
$60
$70
Barstow Apple Valley Helendale
CSD
Victorville,
Current
Lake
Arrowhead
CSD
Victorville,
Proposed
Adelanto Hesperia
Regional SFR Monthly Sewer Bill Comparison