Vista City Council
March 24, 2026

ACTION:
____________________________
Clerk/Secretary
Department: Engineering Item No: C13
Prepared by:

Ken Knatz, Sewer Engineering Manager
Erin Adams, Administrative Programs Manager Meeting Date: March 24, 2026 Approved by:

Greg Mayer, Director of Engineering
John Conley, City Manager Agenda Location: Consent Calendar SUBJECT: SEWER RATES PROPOSED FOR FISCAL YEARS 2026/27 THROUGH 2028/29 RECOMMENDATION:

1.Receive and File the City of Vista Wastewater Rate Study from Water Resources Economics.

2.Receive and File the Buena Sanitation District Wastewater Rate Study from Water Resources Economics.

3.Set a Public Hearing for May 26, 2026, to Introduce and Adopt City of Vista and Buena Sanitation District Sewer Service Charges for Fiscal Years 2026/27 through 2028/29.

CORRELATION TO CITY COUNCIL GOALS: Fiscal Responsibility.

PRIOR ACTION: On February 10, 2026, adopted City Council Resolution No. 2026-26, approving collection of all future fiscal year sewer service charges on the San Diego County Property Tax Roll (Vote: 5-0).

On February 10, 2026, adopted Buena Sanitation District Resolution No. 2026-2, approving collection of all future fiscal year sewer service charges on the San Diego County Property Tax Roll (Vote: 5-0).

On November 14, 2017, adopted City Ordinance No. 2017-19, establishing rates for sewer service charges for the Vista Sewer System (Vote: 5-0).

On November 14, 2017, adopted Buena Sanitation District Ordinance 2017-1, establishing rates for sewer service charges for the Buena Sewer System (Vote: 5-0).

STATEMENT ON THE SUBJECT: Wastewater Rate Studies have been completed for the City of Vista and Buena Sanitation District by Water Resources Economics. The studies assess agency service costs in conjunction with evaluating revenue requirements to develop equitable rates for all customer classes in compliance with Proposition 218. Sewer service charges have not been increased since July 1, 2022. The studies recommend increases to sustain Vista and Buena’s sewer program including maintenance, repair, capital improvements, operation, treatment of sewage, debt service, regulations enforcement, and emergency reserves.

Updated sewer rates for all customer classes are shown in Exhibits 3 and 4 as part of Proposition 218 public noticing that will be mailed out in English and Spanish on March 30th. Residential customers are charged a flat fee with a recommended increase between $21 and $53 per year. Commercial and industrial properties are charged based on their allocated (purchased) wastewater flow capacity and the strength of the AGENDA
REPORT

CITY COUNCIL

COMMUNITY DEVELOPMENT COMMISSION

SUCCESSOR AGENCY

BUENA SANITATION DISTRICT

JOINT POWERS FINANCING AUTHORITY
Approved above recommendation. Received and filed the City of Vista and Buena Sanitation District Wastewater Rate Study from Water Resources Economics. Set Public Hearing for May 26, 2026.

Vote: 5-0

MEETING DATE: March 24, 2026 PAGE 2

SUBJECT: SEWER RATES PROPOSED FOR FISCAL YEARS 2026/27 TO 2028/29 wastewater they discharge. Treatment costs at the Encina Wastewater Authority are influenced by the concentration of pollutants in the wastewater, including biochemical oxygen demand (BOD) and total suspended solids (TSS) in the wastewater. Properties that require additional flow capacity beyond their current allocation would see capacity rental charge increases of approximately $107 to $125 per Equivalent Dwelling Unit (EDU).

Next Steps. Customers will be notified of proposed rate changes and the public hearing by mail and invited to submit written protests. The noticing also advises customers of the Lifeline Rebate Program that provides a 30% rebate to qualifying residential customers meeting established income limits from the U.S.

Department of Housing and Urban Development for San Diego County. The City’s webpage has been updated with the proposed rate increase information at vista.gov/SewerRates. The noticing provides a QR code for customers to easily access outreach information.

The proposed schedule for the implementation of new sewer rates is as follows:

• March 30, 2026: Staff Mails Proposition 218 Notices to Sewer Customers. • May 26, 2026: Conduct Proposition 218 Public Hearing. • May 26, 2026: Introduce / Adopt Ordinance.
• June 25, 2026: Updated Sewer Rates Effective.
• July 2026: FY 2026/27 Sewer Bills Provided to County Assessor.

FISCAL IMPACT: FY 2026/27 sewer program total revenues are estimated at $29,407,410 for the City of Vista, and $10,512,359 for the Buena Sanitation District. These revenues fund the operation, maintenance, and capital improvements of the sewer systems and are legally restricted for sewer utility purposes.

EXHIBITS:

1. City of Vista Wastewater Rate Study from Water Resources Economics

2. Buena Sanitation District Wastewater Rate Study from Water Resources Economics

3. City of Vista Proposition 218 Notice to Sewer Customers

4. Buena Sanitation District Proposition 218 Notice to Sewer Customers

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Final Report – March 2026
Prepared by: Water Resources Economics, LLC
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EXHIBIT 1

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March 16, 2026

Ken Knatz, PE
Sewer Engineering Manager
City of Vista | Buena Sanitation District
200 Civic Center Drive
Vista, CA 92084

Subject: City of Vista Wastewater Rate Study Report

Dear Mr. Knatz,

Water Resources Economics, LLC (WRE) is pleased to submit this 2026 Wastewater Rate Study Report to the City of Vista (City). This report documents the results and recommendations of the City’s wastewater rate study. The goal of the study was to develop a three-year schedule of wastewater rates that will sufficiently fund the City’s wastewater system expenses, allow the City to meet its financial goals within the study period, and comply with cost-of-service principles.

This study utilized industry-standard rate-setting methodology and incorporates guidance provided by the City Council. Our project team has a proven track record of developing fair and equitable wastewater rates for numerous public agencies in California over the past 25 years. We are confident in our ability to develop sound wastewater rates that satisfy the requirements of Proposition 218.

It has been a pleasure assisting the City with this engagement, and we appreciate the support provided by yourself, the City Council, and other City staff during this study.

Sincerely,

Sanjay Gaur Hannah Phan
President Principal Consultant

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TABLE OF CONTENTS

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

1.1 System Overview .......................................................................................................................... 1

1.2 Rate Study Overview .................................................................................................................... 1

1.3 Legal Requirements ...................................................................................................................... 1

1.4 Rate-Setting Methodology ........................................................................................................... 1

1.5 Additional Information and Disclaimers ....................................................................................... 2

1.6 Current Wastewater Rates ........................................................................................................... 2

1.7 Financial Plan ................................................................................................................................ 3

1.8 Proposed Wastewater Rates ........................................................................................................ 4

2. Financial Plan ........................................................................................................................... 6

2.1 Financial Plan Methodology ......................................................................................................... 6

2.2 Revenues ....................................................................................................................................... 6

2.3 Operating Expenses ...................................................................................................................... 9

2.4 Debt Service ................................................................................................................................ 10

2.5 Capital Improvement Plan .......................................................................................................... 10

2.6 Financial Policies ......................................................................................................................... 12

2.7 No Revenue Adjustment Financial Plan...................................................................................... 12

2.8 Proposed Financial Plan .............................................................................................................. 18

3. COST-OF-SERVICE ANALYSIS ................................................................................................... 23

3.1 Cost-of-Service Methodology ..................................................................................................... 23

3.2 Revenue Requirement ................................................................................................................ 23

3.3 Mass Balance .............................................................................................................................. 24

3.4 Units of Service ........................................................................................................................... 25

3.5 Functional Categories ................................................................................................................. 26

3.6 Operating Cost Allocation ........................................................................................................... 27

3.7 Capital Cost Allocation ................................................................................................................ 28

3.8 Revenue Requirement Allocation ............................................................................................... 28

3.9 Unit Cost Derivation ................................................................................................................... 28

3.10 Cost-of-Service by Customer Class ............................................................................................. 29

4. Wastewater Rates .................................................................................................................. 30

4.1 Wastewater Rate Overview ........................................................................................................ 30

4.2 Proposed Changes to the Rate Structure ................................................................................... 30

4.3 Revenue Adjustments ................................................................................................................. 31

4.4 wastewater Rate Calculation ...................................................................................................... 31

4.5 Proposed Residential Wastewater Charge ................................................................................. 32

4.6 Proposed Commercial Wastewater Charge ............................................................................... 32

4.7 Proposed Capacity Rental Charge .............................................................................................. 32

4.8 Proposed Wastewater Rate Schedule ........................................................................................ 33 03/24/2026 C13 7 of 99

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4.9 Customer Impacts ....................................................................................................................... 34

5. Appendix ............................................................................................................................... 35

LIST OF TABLES
Table 1-1: Current Wastewater Rates ...................................................................................................... 3 Table 1-2: Proposed Financial Plan Scenario ............................................................................................ 4 Table 1-3: Proposed Three-Year Wastewater Rate Schedule .................................................................. 5 Table 2-1: Current Wastewater Rates ...................................................................................................... 7 Table 2-2: Projected Customer Accounts/Units ....................................................................................... 8 Table 2-3: Calculated Rate Revenues at Current Rates ............................................................................ 8 Table 2-4: Revenue Summary ................................................................................................................... 9 Table 2-5: Operating Expenses Escalation Factors ................................................................................... 9 Table 2-6: Operating Expenses ............................................................................................................... 10 Table 2-7: Existing and Proposed Debt Service ...................................................................................... 10 Table 2-8: Capital Improvement Projects ............................................................................................... 11 Table 2-9: Capital Financing Plan ............................................................................................................ 12 Table 2-10: No Revenue Adjustment Financial Plan Scenario ................................................................ 13 Table 2-11: Projected Cash Flows (No Revenue Adjustment Financial Plan) ......................................... 14 Table 2-12: Projected Fund Balances (No Revenue Adjustment Financial Plan) ................................... 15 Table 2-13: Forecasted Financial Performance (No Revenue Adjustment Financial Plan) .................... 16 Table 2-14: Proposed Financial Plan Scenario ........................................................................................ 18 Table 2-15: Projected Cash Flows (Proposed Financial Plan) ................................................................. 19 Table 2-16: Projected Fund Balances (Proposed Financial Plan) ........................................................... 20 Table 2-17: Forecasted Financial Performance (Proposed Financial Plan) ............................................ 21 Table 3-1: FY 2026 Revenue Requirement ............................................................................................. 24 Table 3-2: Wastewater Flow and Strength Estimates ............................................................................ 24 Table 3-3: Mass Balance ......................................................................................................................... 25 Table 3-4: Units of Service by Customer Class ....................................................................................... 26 Table 3-5: Operating Costs by System Function ..................................................................................... 26 Table 3-6: Capital Expenses by System Function .................................................................................... 27 Table 3-7: Functional Cost Allocation ..................................................................................................... 27 Table 3-8: Operating Cost Allocation ...................................................................................................... 27 Table 3-9: Capital Cost Allocation ........................................................................................................... 28 Table 3-10: Revenue Requirement Allocation ........................................................................................ 28 Table 3-11: Unit Cost Calculations .......................................................................................................... 29 Table 3-12: Cost-of-Service by Customer Class ...................................................................................... 29 Table 4-1: Proposed Revenue Adjustments ........................................................................................... 31 Table 4-2: Residential Rates Calculation ................................................................................................ 31 Table 4-3: Industrial/Commercial Rates Calculation .............................................................................. 31 Table 4-4: Proposed Residential Wastewater Charge after Adjustment ............................................... 32 Table 4-5: Proposed Commercial Wastewater Charge after Adjustment .............................................. 32 03/24/2026 C13 8 of 99

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Table 4-6: Proposed Capacity Rental Charge Calculation ...................................................................... 33 Table 4-7: Proposed Sanitation Rates Schedule ..................................................................................... 34 Table 4-8: Proposed Residential Customer Impacts ............................................................................... 34 Table 5-1: O&M Allocation ..................................................................................................................... 35 Table 5-2: Capital Allocation ................................................................................................................... 36 Table 5-3: Encina Cost Allocation ........................................................................................................... 37

LIST OF FIGURES
Figure 2-1: Revenue Requirements vs. Revenues (No Revenue Adjustment Financial Plan) ................ 17 Figure 2-2: Projected Debt Coverage (No Revenue Adjustment Financial Plan) ................................... 17 Figure 2-3: Projected Fund Balances (No Revenue Adjustment Financial Plan) .................................... 18 Figure 2-4: Revenue Requirements vs. Revenues (Proposed Financial Plan) ........................................ 21 Figure 2-5: Projected Debt Coverage (Proposed Financial Plan) ............................................................ 22 Figure 2-6: Projected Fund Balances (Proposed Financial Plan) ............................................................ 22

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1 1. EXECUTIVE SUMMARY

1.1 SYSTEM OVERVIEW
The City of Vista (City) owns and operates approximately 216 miles of sanitary sewer system that collect wastewater from approximately 17,300 residential, commercial, and industrial accounts. The City contracts with Encina Wastewater Authority (Encina) to provide wastewater treatment services and pump station operations.

1.2 RATE STUDY OVERVIEW
Public retail wastewater agencies in California typically conduct a cost-of-service study every five years to ensure that customers are appropriately charged for wastewater service and to reestablish the cost-of-service nexus that is required by Proposition 218. The City has engaged Water Resources Economics, LLC (WRE) to conduct a comprehensive wastewater rate study, with the following objectives:
• Evaluate a five-year financial plan scenario to meet financial targets for Fiscal Year (FY) 2027 to FY 2031
• Conduct a cost-of-service analysis based on the most recent data and customer characteristics • Develop a three-year wastewater rate schedule for FY 2027 through FY 2029

1.3 LEGAL REQUIREMENTS
Legal considerations relating to retail wastewater rates in California focus heavily on Proposition 218, which was enacted in 1996 and is now reflected in Article XIII C and Article XIII D of the California Constitution. Proposition 218 states that “property related fees and charges” (which include retail wastewater rates) may not exceed the proportional cost of providing the service to the customer and may not be used for any purpose other than providing said service. The practical implication is that public retail wastewater agencies in California must demonstrate a sufficient nexus between the costs incurred by the agency to provide wastewater service and the rates charged to customers. The primary means by which retail wastewater agencies address this requirement is by conducting a “cost-of-service analysis.”

Proposition 218 also affects the rate adoption process by requiring agencies to hold a public hearing to adopt rates. The agency must mail public hearing notices to all customers no fewer than 45 days prior to the public hearing. The public hearing notices must clearly show all proposed rate changes, provide information on the public hearing date/time/location, and provide instructions on how customers may protest the proposed rate changes. If a majority of customers submit a protest, the proposed rate changes cannot be adopted.

1.4 RATE-SETTING METHODOLOGY
This study was conducted using industry-standard methodology and includes the following steps:
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2 1. Financial Plan: Annual revenues and expenses are projected over the rate-setting period to determine the magnitude of rate increases needed to maintain financial sufficiency. Financial policies, such as reserve targets, are also evaluated and updated if necessary.

2. Cost-of-Service Analysis: Costs are allocated to customers in proportion to use of and burden on the wastewater system. The overall goal is to establish a robust nexus between the costs incurred by an agency and the rates charged to customers, as required by Proposition 218.

3. Rate Design: The existing rate structure is evaluated, and potential changes are identified. A multi-year proposed rate schedule is then calculated directly from the results of the financial plan and cost-of-service analysis.

4. Rate Study Documentation: A rate study report is developed to document the proposed rate development process. This provides transparency and enhances compliance with Proposition 218 requirements. This document serves as the report for this rate study.

1.5 ADDITIONAL INFORMATION AND DISCLAIMERS
This report summarizes the data, analyses, processes, and results of the City’s wastewater rate study.

Some important information to keep in mind when reading the report includes the following:
• All study projections are based on the best available data as of December 2025. • All table values are rounded to the nearest digit shown unless stated otherwise. However, all calculations are based on precise values. Attempting to manually recreate the calculations described in this report from the values displayed in tables may therefore produce slightly different results.
• All current and proposed rates and charges in this report are shown on an annual basis.

1.6 CURRENT WASTEWATER RATES
The City’s current wastewater rate structure, shown in Table 1-1, is charged annually on the San Diego County Property Tax bill and includes the following components:
• Single Family and Multi-Family Residential rates are based on number of dwelling units • Industrial and Commercial rates include a fixed component based on equivalent dwelling units (EDU), a strength-based component based on hundred cubic feet (hcf) of estimated wastewater flows and strength category, and an extra strength component based on pounds of biochemical oxygen demand (BOD) and suspended solids (SS) • Capacity rental charges are based on excess EDU usage

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3 Table 1-1: Current Wastewater Rates
Line Current Sewer Rates Units Charged All Customers
1 Residential
2 Single Family per unit/year $708
3 Multi-Family per unit/year $495
4 5 Industrial/Commercial
6 Fixed Portion per EDU owned $177
7 8 Strength Portion
9 Low Strength per HCF $6.56
10 Medium Strength per HCF $7.70
11 High Strength per HCF $11.00
12 13 Extra Strength
14 BOD Rate per LB $0.89
15 SS Rate per LB $0.65
16 17 Capacity Rental Charge per excess EDU used $546

1.7 FINANCIAL PLAN
WRE worked closely with City staff and the City Council to determine the financial plan scenario that best suits the City’s needs. The results and recommendations of the wastewater rate study are driven by the City’s financial performance, input from City staff, and feedback and direction from the City Council.

FACTORS AFFECTING FINANCIAL PERFORMANCE
The wastewater system’s financial performance is driven by the ability of the current wastewater rates to meet the City’s funding needs. To maintain financial sufficiency, wastewater rates must fully fund operations and maintenance (O&M) costs, capital improvement plan (CIP) expenditures, and any relevant financial policies, which typically include target reserve balances and debt coverage.

The key factors affecting financial performance include:
• Substantial capital investment needs over the next five years: The cost of planned capital projects over the next five years (FY 2027 through FY 2031) is approximately $81.3 million based on the findings of the 2025 Sewer Master Plan.
• Increases in Encina costs: Encina charges the City operating and capital costs to treat wastewater flows from the City’s customers. The charges have increased by an average of approximately 10 percent per year for the past 10 years. These increases, in addition to aging infrastructure needs, add pressure to the City’s wastewater rates,. 03/24/2026 C13 12 of 99

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4 PROPOSED REVENUE ADJUSTMENTS AND DEBT ISSUANCES
Overall annual increases in wastewater rate revenues resulting from rate increases are referred to as “revenue adjustments.” WRE worked with the City Council and City staff to determine the most appropriate financial plan scenario, which is shown in Table 1-2. The proposed financial plan scenario includes three years of proposed and two years of projected revenue adjustments, which are required to maintain financial sufficiency and resiliency.

Table 1-2: Proposed Financial Plan Scenario
Line Fiscal Year Revenue
Adjustment
Effective
Month
Debt
Proceeds
1 FY 2027 5.5% July $0 Proposed
2 FY 2028 5.5% July $0 Proposed
3 FY 2029 5.5% July $0 Proposed
4 FY 2030 5.5% July $15,000,000 Forecasted
5 FY 2031 5.5% July $0 Forecasted

Under this proposed financial plan, the City will meet its reserve targets and coverage requirements for all years of the planning period.

1.8 PROPOSED WASTEWATER RATES
WRE worked closely with the City Council and City staff to determine the most appropriate wastewater rate structure that meets the City’s needs.

PROPOSED RATE STRUCTURE CHANGES
The main objective of the rate study was to conduct a comprehensive cost-of-service analysis while maintaining as much of the current wastewater rate structure as possible to minimize customer impacts. The City’s current wastewater rate structure includes an annual service charge based on customer class and a variable rate for commercial/industrial customers based on annual usage.

After examining current customer classification and discussion with City staff regarding customer usage patterns, WRE recommends the following changes:
• Reducing the gallons per day (gpd) definition from 200 gpd per EDU to 160 gpd due to reductions in wastewater flow.
• Currently, the City provides laundry and car wash discounts to customers who request a variance due to their water recirculation practices. However, upon further investigation, it is found that all discharge for these facilities would enter the wastewater system. Thus, no discount should be offered.
• Among the commercial customers, some have separate irrigation meters, and some do not.

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5 usage since irrigation is accounted for in a separate meter. For customers without irrigation meters, the City should bill based on the lowest two months of water usage to account for irrigation usage which does not enter the wastewater system.

PROPOSED THREE-YEAR WASTEWATER RATE SCHEDULE
The proposed three-year wastewater rate schedule in this section is based on the proposed rate structure and methodology changes, the updated cost-of-service analysis, and the proposed revenue adjustments. The rate schedule shows the proposed wastewater rates to be implemented in July 2026 through July 2028.

Table 1-3: Proposed Three-Year Wastewater Rate Schedule Line Current Rate 7/1/2026 7/1/2027 7/1/2028
1 Residential
2 Single Family per unit/year $708 $744 $785 $829
3 Multi-Family per unit/year $495 $521 $550 $581
4 5 Industrial/Commercial
6 Fixed Portion per EDU owned $177 $215 $227 $240
7 8 Strength Portion
9 Low Strength per HCF $6.56 $6.07 $6.41 $6.77
10 Medium Strength per HCF $7.70 $7.52 $7.94 $8.38
11 High Strength per HCF $11.00 $12.58 $13.28 $14.02 12 13 Capacity Rental Charge per excess EDU used $546 $671 $671 $671

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6 2. FINANCIAL PLAN

2.1 FINANCIAL PLAN METHODOLOGY
The purpose of a financial plan is to project revenues, expenses, cash flows, reserve balances, and debt coverage over a multi-year period to assess financial sufficiency and performance and to determine the amount of required rate revenue. For this study, the planning period is from FY 2027 through FY 2031; data for FY 2026 are shown when needed to represent actual or budgeted data inputs. The key steps in developing a financial plan for a wastewater enterprise are below:
• Revenue projections: Annual revenues from rates and other miscellaneous sources are projected over the planning period. Rate revenues are projected based on current rates to establish baseline revenues from which the need for additional rate increases can be evaluated.
• Expense projections: Annual expenses are projected over the study period, including O&M expenses, debt service, and CIP costs. CIP funding options (grants, debt, etc.) are evaluated. • Financial policy evaluation: Key financial policies include debt coverage requirements and reserve targets. Debt coverage requirements are typically explicitly stated in official agreements on outstanding debt issuances. Reserve targets are typically set by an agency’s elected officials and may need to be periodically evaluated and updated. • No revenue adjustments financial plan projections: Cash flow, reserve balances, and debt coverage are projected over the study period in the absence of additional rate increases.

Projected reserve balances and debt coverage are then compared to the agency’s financial policy requirements and targets. The no revenue adjustments financial plan provides a baseline for evaluating the need for rate increases.
• Proposed financial plan projections: The magnitude and timing of annual proposed revenue increases over the study period are evaluated and determined based on the agency’s financial policies, financial performance, and policy objectives. Proposed rate increases (referred to as “revenue adjustments”) should generate sufficient revenue to recover the agency’s expenses, maintain adequate reserves, and meet all debt coverage requirements. The proposed financial plan determines the total annual rate revenue requirement over the study period.

2.2 REVENUES

CURRENT WASTEWATER RATES
The City’s current wastewater rate structure (Table 2-1) is charged annually on the San Diego County Property Tax bill and includes the following components:
• Single Family and Multi-Family Residential rates are based on number of dwelling units • Industrial and Commercial rates include a fixed component based on equivalent dwelling units (EDU), a strength-based component based on hundred cubic feet (hcf) of estimated wastewater flows and strength category, and an extra strength component based on pounds of biochemical oxygen demand (BOD) and suspended solids (SS) • Capacity rental charges are based on excess EDU usage 03/24/2026 C13 15 of 99

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7 Table 2-1: Current Wastewater Rates
Line Current Sewer Rates Units Charged All Customers
1 Residential
2 Single Family per unit/year $708
3 Multi-Family per unit/year $495
4 5 Industrial/Commercial
6 Fixed Portion per EDU owned $177
7 8 Strength Portion
9 Low Strength per HCF $6.56
10 Medium Strength per HCF $7.70
11 High Strength per HCF $11.00
12 13 Extra Strength
14 BOD Rate per LB $0.89
15 SS Rate per LB $0.65
16 17 Capacity Rental Charge per excess EDU used $546

CUSTOMER ACCOUNTS AND USAGE
This section details the customer accounts for all years of the study, which are referred to as the units of service. Units of service represent the quantity of billing units that are subject to the City’s wastewater rates and charges.

Table 2-2 shows the projected number of Residential and Industrial/Commercial customer accounts though FY 2031. City staff provided actual customer data for FY 2025. This study assumes an annual growth rate of 0.6% in customer accounts and usage during the study period, which was the average growth between FY 2020 and FY 2024.

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8 Table 2-2: Projected Customer Accounts/Units
Line Customer Data FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Residential EDU
2 Single Family 16,177 16,275 16,372 16,470 16,569 16,669 3 Multi-Family 11,584 11,654 11,724 11,794 11,865 11,936 4 5 Industrial/Commercial
6 Number of EDU 9,136 9,191 9,246 9,302 9,358 9,414 7 8 Number of HCF
9 Low Strength 252,116 253,628 255,150 256,681 258,221 259,770 10 Medium Strength 151,054 151,960 152,872 153,789 154,712 155,640 11 High Strength 150,986 151,892 152,804 153,720 154,643 155,571 12 13 Extra Strength
14 BOD 0 0 0 0 0 0
15 SS 0 0 0 0 0 0
16 17 Excess EDU Used 1,697 1,697 1,697 1,697 1,697 1,697

REVENUES FROM CURRENT RATES
Table 2-3 shows the calculated wastewater rate revenues for the study period based on the current effective wastewater rates (Table 2-1) and the projected customer accounts/units (Table 2-2).

Table 2-3: Calculated Rate Revenues at Current Rates
Line Calculated Revenues FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Residential $17,187,785 $17,290,911 $17,394,657 $17,499,025 $17,604,019 $17,709,643 2 Single Family $11,453,660 $11,522,382 $11,591,516 $11,661,065 $11,731,032 $11,801,418 3 Multi-Family $5,734,125 $5,768,529 $5,803,140 $5,837,959 $5,872,987 $5,908,225 4 Industrial/Commercial $6,095,003 $6,131,573 $6,168,362 $6,205,372 $6,242,604 $6,280,060 5 Fixed Revenue $1,617,159 $1,626,862 $1,636,623 $1,646,443 $1,656,322 $1,666,260 6 Variable Revenue $4,477,843 $4,504,711 $4,531,739 $4,558,929 $4,586,283 $4,613,800 7 Extra Strength $0 $0 $0 $0 $0 $0
8 Total Rate Revenue $23,282,787 $23,422,484 $23,563,019 $23,704,397 $23,846,623 $23,989,703

REVENUE SUMMARY
Table 2-4 shows the summary of projected revenues for the study period. City staff provided the budgeted revenues for FY 2026 and FY 2027; all other years are projected based on the relevant assumptions or calculations.

Sewer Service Charges, or wastewater rate revenue (Line 1), are equal to the Total Rate Revenue from Table 2-3 (Line 8).

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9 Table 2-4: Revenue Summary
Line Revenues FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Sewer Service
Charges $23,282,787 $23,422,484 $23,563,019 $23,704,397 $23,846,623 $23,989,703 2 Capacity Rental
Charge Revenue $926,562 $926,562 $926,562 $926,562 $926,562 $926,562 3 Operating
Revenues $2,932,418 $3,120,134 $2,270,603 $1,857,195 $1,804,908 $1,802,486 4 Capital Revenues $650,000 $650,000 $650,000 $650,000 $650,000 $650,000 5 Total - City of
Vista $27,791,767 $28,119,180 $27,410,184 $27,138,154 $27,228,094 $27,368,751

2.3 OPERATING EXPENSES
WRE worked with City staff to determine the most appropriate escalation factors for various operating expense categories in the City’s budget. Table 2-5 shows the expense escalation factors used to inflate O&M expenses from FY 2026 through FY 2031.

Table 2-5: Operating Expenses Escalation Factors
Line Expense FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Salaries & Benefits 5.5% 5.5% 5.5% 5.5% 5.5% 5.5%
2 Professional Services 3.5% 3.5% 3.5% 3.5% 3.5% 3.5%
3 Operating Expenses 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
4 Utilities 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%
5 Allocated Costs 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
6 Encina 9.0% 9.0% 9.0% 9.0% 9.0% 9.0%
7 Capital 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%
8 Transfers Out -100.0% -100.0% -100.0% -100.0% -100.0% -100.0%

Table 2-6 shows the summary of O&M expenses for the study period. City staff provided the budgeted O&M expenses for FY 2026 and FY 2027. The budgeted values are escalated each year based on the escalation factors in Table 2-5.

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10 Table 2-6: Operating Expenses
Line Operating Expenses FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Salaries & Benefits $4,443,228 $4,627,254 $4,881,753 $5,150,249 $5,433,513 $5,732,356 2 Professional Services $1,348,155 $1,351,756 $1,399,067 $1,448,035 $1,498,716 $1,551,171 3 Encina Treatment
Facility $7,703,572 $8,088,750 $8,816,738 $9,610,244 $10,475,166 $11,417,931 4 Operating Expenses $305,434 $305,560 $314,727 $324,169 $333,894 $343,910 5 Utilities $85,479 $86,742 $91,079 $95,633 $100,415 $105,435 6 Allocated Costs $2,757,444 $2,788,777 $2,872,440 $2,958,614 $3,047,372 $3,138,793 7 Capital Outlay $55,680 $418,860 $435,614 $453,039 $471,161 $490,007 8 Transfers to Other
Funds $10,100,337 $9,588,370 $0 $0 $0 $0
9 Total Operating
Expenses $26,799,329 $27,256,069 $18,811,419 $20,039,982 $21,360,236 $22,779,604

2.4 DEBT SERVICE

EXISTING AND PROPOSED DEBT SERVICE
Table 2-7 shows the City’s annual debt service for the study period. The City has existing debt service payments on a State Revolving Fund (SRF) loan of approximately $1.9 million each year. The proposed financial plan scenario also includes a new debt issuance in FY 2030 of $15.3 million (assuming a 5% interest rate, a 30-year term, and 2% issuance costs).

Table 2-7: Existing and Proposed Debt Service
Line Debt Service FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Existing Debt Service $1,885,347 $1,885,347 $1,885,347 $1,885,347 $1,885,347 $1,885,347 2 Proposed Debt Service $995,685 $995,685
3 Total - Debt Service $1,885,347 $1,885,347 $1,885,347 $1,885,347 $2,881,032 $2,881,032

2.5 CAPITAL IMPROVEMENT PLAN

CAPITAL IMPROVEMENT PROJECTS
Table 2-8 shows the City’s five-year CIP; project costs are inflated by 4% per year starting in FY 2026 (see Table 2-5, Line 7), except for the pipeline rehabilitation costs.

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11 Table 2-8: Capital Improvement Projects
Line Capital Improvement Projects FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Encina Wastewater Authority Capital
Improvement Project $6,422,824 $9,433,408 $9,777,935 $5,196,355 $8,107,189 $8,000,000 2 Vista Pipeline Rehabilitation $500,000 $500,000 $500,000 $500,000 $500,000 $500,000 3 VC2: Vista/Carlsbad Interceptor
Rehab $0 $0 $0 $0 $0 $0
4 OV1: Pipeline Access Improvements $0 $0 $0 $0 $0 $0 5 VC3: Vista/Carlsbad Interceptor
Sewer Upsize $400,000 $0 $0 $2,249,728 $9,358,868 $0 6 Buena Vista Pump Station
Replacement $0 $0 $0 $1,124,864 $4,679,434 $0
7 FOG Abatement Raceway Pump
Station $0 $0 $0 $0 $0 $0
8 Raceway Pump Station Emergency
Overflow Basin Repair $0 $0 $0 $0 $0 $0
9 Sewer Master Plan $0 $0 $0 $0 $0 $0
10 Via Centre Capacity Improvement $800,000 $0 $0 $0 $0 $0 11 South Santa Fe Capacity
Improvement $500,000 $0 $0 $0 $0 $0
12 Public Works Building C
Improvements $186,000 $1,096,160 $0 $0 $0 $0
13 North Santa Fe Ave - East Dr to
Washington St $1,447,992 $6,023,647 $0 $0 $0 $0
14 North Melrose Dr - Copper Dr to
West Vista Way $0 $1,022,112 $4,251,986 $0 $0 $0
15 Hill Dr and Flower Ln up to Tylee St $0 $311,501 $1,295,843 $0 $0 $0 16 North Santa Fe Ave - W Bobier Dr to
W Indian Rock Rd $0 $194,688 $809,902 $0 $0 $0
17 E Broadway - S Citrus Ave to S Santa
Fe Ave/Veterans Park $0 $0 $614,176 $2,554,971 $0 $0 18 Maryland Dr. and Olive Ave. to
Melrose Dr. $0 $0 $524,412 $2,181,552 $0 $0
19 Total - Vista Sewer Capital
Replacement $10,256,816 $18,581,516 $17,774,254 $13,807,470 $22,645,492 $8,500,000

CAPITAL FINANCING PLAN
Table 2-9 shows the capital financing plan. The proposed financial plan scenario includes a debt issuance of $15 million in FY 2030, which will fund $15 million in capital projects in FY 2030 (Line 9).

All other project costs will be funded by wastewater rates (Line 10).

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12 Table 2-9: Capital Financing Plan
Line Capital Financing Plan FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Total CIP $10,256,816 $18,581,516 $17,774,254 $13,807,470 $22,645,492 $8,500,000 2 CIP Execution Rate 100% 100% 100% 100% 100% 100%
3 Executed CIP $10,256,816 $18,581,516 $17,774,254 $13,807,470 $22,645,492 $8,500,000 4 5 New Debt $0 $0 $0 $0 $15,000,000 $0
6 New Debt Balance $0 $0 $0 $0 $15,000,000 $0
7 8 Vista Sewer Capital Replacement
9 Debt Funded $0 $0 $0 $0 $15,000,000 $0
10 Rate Funded $10,256,816 $18,581,516 $17,774,254 $13,807,470 $7,645,492 $8,500,000 11 Total - Vista Sewer Capital Financing
Plan $10,256,816 $18,581,516 $17,774,254 $13,807,470 $22,645,492 $8,500,000

2.6 FINANCIAL POLICIES

RESERVE POLICY
The City’s current reserve policy maintains cash on hand to meet short-term cash imbalances, to execute CIP projects, and to cover unexpected repairs.

The City currently has an adopted reserve policy that consists of the following components:
• Operating Reserve Target: 50% of annual operating expenses • Rate Stabilization: 15% of previous 5-year average of Encina wastewater treatment plant costs • Emergency Capital: $2.9 million

The reserve target for the study period ranges from approximately $12.67 million (FY 2027) to $15.6 million (FY 2031) in the City’s reserve funds.

DEBT COVERAGE REQUIREMENT
The City’s current debt coverage requirement is 125% of annual debt service. To meet coverage requirements, net revenues (revenues less operating expenses) must be 125% or more of annual debt service.

2.7 NO REVENUE ADJUSTMENT FINANCIAL PLAN

NO REVENUE ADJUSTMENT FINANCIAL PLAN SCENARIO
Table 2-10 shows the no revenue adjustment financial plan, which assumes no revenue adjustments and no debt issuance. This scenario is used to evaluate the ability of the current wastewater rates to meet the City’s financial targets and to determine the need for revenue adjustments.

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13 Table 2-10: No Revenue Adjustment Financial Plan Scenario Line Fiscal Year Revenue Adjustment Effective Month
1 FY 2027 0.0% July
2 FY 2028 0.0% July
3 FY 2029 0.0% July
4 FY 2030 0.0% July
5 FY 2031 0.0% July

NO REVENUE ADJUSTMENT CASH FLOW PROJECTIONS
Table 2-11 shows the cash flow projections for the no revenue adjustment financial plan. Revenues (Lines 1-7) are from Table 2-4. Operating expenses (Lines 9-14) are from Table 2-6. Net operating revenue (Line 26) is equal to the difference between total revenues (Line 7) and total operating expenses (Line 14). Debt service (Lines 16-19) is from Table 2-7. Rate funded CIP (Line 23) is the total capital projects (Line 11) from Table 2-9. The no revenue adjustment scenario assumes no new debt; all CIP is expected to be rate funded. Net cash flow (Line 28) is equal to the net operating revenue (Line 26) less debt service (Line 19) and rate-funded capital (Line 23).

The net operating revenue in this scenario is positive for all years of the study period, meaning the City’s current revenues are sufficient to fund its operating expenses. However, the net cash flow in the no revenue adjustment scenario is negative for all years, meaning that the City’s current revenues are not sufficient to fund its debt service and annual CIP. 03/24/2026 C13 22 of 99

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14 Table 2-11: Projected Cash Flows (No Revenue Adjustment Financial Plan) Line Cash Flow Projections FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Revenues
2 Rate Revenues at Existing Rates $23,282,787 $23,422,484 $23,563,019 $23,704,397 $23,846,623 $23,989,703 3 Revenue Adjustments $0 $0 $0 $0 $0 $0
4 Capacity Rental Charge Revenue $926,562 $926,562 $926,562 $926,562 $926,562 $926,562 5 Operating Revenues $2,932,418 $3,120,134 $2,192,007 $1,735,292 $1,442,269 $1,171,917 6 Capital Revenues $409,099 $650,000 $650,000 $650,000 $650,000 $650,000 7 Subtotal - Revenues $27,550,866 $28,119,180 $27,331,588 $27,016,251 $26,865,454 $26,738,182 8 9 Operating Expenses
10 Operating Costs $6,182,296 $6,371,312 $6,686,626 $7,018,086 $7,366,538 $7,732,873 11 Encina Treatment Costs $7,703,572 $8,088,750 $8,816,738 $9,610,244 $10,475,166 $11,417,931 12 Allocated Costs $2,757,444 $2,788,777 $2,872,440 $2,958,614 $3,047,372 $3,138,793 13 All Other Costs, less Transfers $55,680 $418,860 $435,614 $453,039 $471,161 $490,007 14 Subtotal - Operating Expenses $16,698,992 $17,667,699 $18,811,419 $20,039,982 $21,360,236 $22,779,604 15 16 Debt Service
17 Existing Debt $1,885,347 $1,885,347 $1,885,347 $1,885,347 $1,885,347 $1,885,347 18 Proposed Debt $0 $0 $0 $0 $0 $0
19 Subtotal - Debt Service $1,885,347 $1,885,347 $1,885,347 $1,885,347 $1,885,347 $1,885,347 20 21 Capital Projects
22 Debt Funded $0 $0 $0 $0 $0 $0
23 Rate Funded $10,256,816 $18,581,516 $17,774,254 $13,807,470 $22,645,492 $8,500,000 24 Subtotal - Capital Projects $10,256,816 $18,581,516 $17,774,254 $13,807,470 $22,645,492 $8,500,000 25 26 Net Revenue $10,851,874 $10,451,481 $8,520,170 $6,976,268 $5,505,219 $3,958,578 27 Net Revenue Less Debt $8,966,527 $8,566,134 $6,634,823 $5,090,922 $3,619,872 $2,073,232 28 Net Cash Flow ($1,290,289) ($10,015,381) ($11,139,431) ($8,716,549) ($19,025,620) ($6,426,768)

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15 NO REVENUE ADJUSTMENT FUND BALANCE PROJECTIONS
Table 2-12 shows the fund balance projections for the no revenue adjustment financial plan. Based on the sources (Lines 3-10) and uses (Lines 12-16) of funds, the City’s fund balances will be negative by the end of FY 2030. By the end of the study period in FY 2031, the City’s fund balances will be approximately negative $18.2 million, having dropped from a starting balance of $43.9 million in FY 2026. This represents a loss of $62.2 million in five years.

Table 2-12: Projected Fund Balances (No Revenue Adjustment Financial Plan) Line Fund Balance Projections FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Combined Beginning Fund Balance $43,977,260 $41,760,410 $30,818,466 $18,752,474 $9,109,363 ($10,842,819) 2 3 Sources of Funds
4 Rate Revenues at Existing Rates $23,282,787 $23,422,484 $23,563,019 $23,704,397 $23,846,623 $23,989,703 5 Revenue Adjustments $0 $0 $0 $0 $0 $0
6 Operating Revenues $1,416,092 $1,459,432 $1,459,432 $1,459,432 $1,459,432 $1,459,432 7 Capital Revenues $409,099 $650,000 $650,000 $650,000 $650,000 $650,000 8 Debt Proceeds $0 $0 $0 $0 $0 $0
9 Investment Earnings $1,516,326 $1,660,702 $732,575 $275,860 ($17,163) ($287,515) 10 Subtotal - Sources of Funds $26,624,304 $27,192,618 $26,405,026 $26,089,689 $25,938,892 $25,811,620 11 12 Uses of Funds
13 Operating Expenses $16,698,992 $17,667,699 $18,811,419 $20,039,982 $21,360,236 $22,779,604 14 Debt Service $1,885,347 $1,885,347 $1,885,347 $1,885,347 $1,885,347 $1,885,347 15 Capital Projects $10,256,816 $18,581,516 $17,774,254 $13,807,470 $22,645,492 $8,500,000 16 Subtotal - Uses of Funds $28,841,155 $38,134,561 $38,471,019 $35,732,799 $45,891,074 $33,164,951 17 18 Ending Balance $41,760,410 $30,818,466 $18,752,474 $9,109,363 ($10,842,819) ($18,196,149)

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16 NO REVENUE ADJUSTMENT FINANCIAL PERFORMANCE
The City’s financial performance is evaluated based on its reserve targets and debt coverage requirements, as shown in Table 2-13. Under the no revenue adjustment financial plan, the City will not meet its reserve targets from FY 2029 to FY 2031. The City will, however, be able to meet its debt coverage requirements throughout the study period without revenue adjustments.

Table 2-13: Forecasted Financial Performance (No Revenue Adjustment Financial Plan) Line Financial Performance FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Debt Coverage Target
2 Required Debt Coverage 125% 125% 125% 125% 125% 125%
3 Calculated Debt Coverage 576% 554% 452% 370% 292% 210% 4 Meets Coverage? Yes Yes Yes Yes Yes Yes
5 6 Reserve Target
7 Operating Cash Flow $8,349,496 $8,833,850 $9,405,709 $10,019,991 $10,680,118 $11,389,802 8 Rate Stabilization $876,876 $932,608 $1,026,820 $1,136,913 $1,235,907 $1,340,834 9 Capital Repairs and
Replacement
10 Emergency Capital
Replacement $2,900,000 $2,900,000 $2,900,000 $2,900,000 $2,900,000 $2,900,000 11 Total Reserve Target $12,126,372 $12,666,458 $13,332,530 $14,056,904 $14,816,025 $15,630,636 12 Total Reserves $41,760,410 $30,818,466 $18,752,474 $9,109,363 ($10,842,819) ($18,196,149) 13 Meets Reserve Target? Yes Yes Yes No No No

Figure 2-1 shows the comparison of revenues and the revenue requirement for the no revenue adjustment financial plan. The stacked bars represent the revenue requirements, or costs: blue for O&M expenses, gray for debt service, and green for rate funded CIP. The City will not be adding to its reserves (light blue) in this scenario. The current revenue, shown as a solid line, is lower than the revenue requirements, meaning that revenues are insufficient to fund necessary costs.

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17 Figure 2-1: Revenue Requirements vs. Revenues (No Revenue Adjustment Financial Plan)

Figure 2-2 shows the debt coverage projections in the no revenue adjustment financial plan. The required debt coverage (dashed line) is equal to 125%. The City will meet its debt coverage requirements for the entirety of the study period without any rate adjustments. This is also reflected in Line 4 of Table 2-13.

Figure 2-2: Projected Debt Coverage (No Revenue Adjustment Financial Plan)

Figure 2-3 shows the fund balance projections in the no revenue adjustment financial plan. The City’s ending balance (green bars) will not meet reserve targets (dashed line) starting in FY 2029. The City’s fund balances will be negative by FY 2030.

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Required Debt Coverage Calculated Debt Coverage Alert Coverage 03/24/2026 C13 26 of 99

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18 Figure 2-3: Projected Fund Balances (No Revenue Adjustment Financial Plan)

2.8 PROPOSED FINANCIAL PLAN

PROPOSED FINANCIAL PLAN SCENARIO
The proposed financial plan includes three years of proposed revenue adjustments, two years of forecasted adjustments, and a debt issuance in FY 2030, as shown in Table 2-14. These adjustments are needed to maintain the City’s financial sufficiency and were developed based on direction from the City Council.

Table 2-14: Proposed Financial Plan Scenario
Line Fiscal Year Revenue
Adjustment
Effective
Month
Debt
Proceeds
1 FY 2027 5.5% July $0 Proposed
2 FY 2028 5.5% July $0 Proposed
3 FY 2029 5.5% July $0 Proposed
4 FY 2030 5.5% July $15,000,000 Forecasted
5 FY 2031 5.5% July $0 Forecasted

PROPOSED CASH FLOW PROJECTIONS
Table 2-15 shows the cash flow projections for the proposed financial plan. Revenues (Lines 1-7) are from Table 2-4. Operating expenses (Lines 9-14) are from Table 2-6. Net operating revenue (Line 26) is equal to the difference between total revenues (Line 7) and total operating expenses (Line 14).

Debt service (Lines 16-19) is from Table 2-7. Rate funded CIP (Line 23) is from Table 2-9. The proposed financial plan assumes debt proceeds of $15 million in FY 2030. All remaining CIP is expected to be rate funded. Net cash flow (Line 28) is equal to the net operating revenue (Line 26) less debt service (Line 19) and rate-funded capital (Line 23). ($30.0)
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19 Table 2-15: Projected Cash Flows (Proposed Financial Plan) Line Cash Flow Projections FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Revenues
2 Rate Revenues at Existing Rates $23,282,787 $23,422,484 $23,563,019 $23,704,397 $23,846,623 $23,989,703 3 Revenue Adjustments $0 $1,288,237 $2,663,210 $4,130,287 $5,695,161 $7,363,879 4 Capacity Rental Charge Revenue $926,562 $926,562 $926,562 $926,562 $926,562 $926,562 5 Operating Revenues $2,932,418 $3,120,134 $2,270,603 $1,857,195 $1,804,908 $1,802,486 6 Capital Revenues $409,099 $650,000 $650,000 $650,000 $650,000 $650,000 7 Total - Revenues $27,550,866 $29,407,416 $30,073,394 $31,268,441 $32,923,255 $34,732,631 8 9 Operating Expenses
10 Operating Costs $6,182,296 $6,371,312 $6,686,626 $7,018,086 $7,366,538 $7,732,873 11 Encina Treatment Costs $7,703,572 $8,088,750 $8,816,738 $9,610,244 $10,475,166 $11,417,931 12 Allocated Costs $2,757,444 $2,788,777 $2,872,440 $2,958,614 $3,047,372 $3,138,793 13 All Other Costs, less Transfers $55,680 $418,860 $435,614 $453,039 $471,161 $490,007 14 Total - Operating Expenses $16,698,992 $17,667,699 $18,811,419 $20,039,982 $21,360,236 $22,779,604 15 16 Debt Service
17 Existing Debt $1,885,347 $1,885,347 $1,885,347 $1,885,347 $1,885,347 $1,885,347 18 Proposed Debt $0 $0 $0 $0 $995,685 $995,685
19 Total - Debt Service $1,885,347 $1,885,347 $1,885,347 $1,885,347 $2,881,032 $2,881,032 20 21 Capital Projects
22 Debt Funded $0 $0 $0 $0 $15,000,000 $0
23 Rate Funded $10,256,816 $18,581,516 $17,774,254 $13,807,470 $7,645,492 $8,500,000 24 Total - Capital Projects $10,256,816 $18,581,516 $17,774,254 $13,807,470 $22,645,492 $8,500,000 25 26 Net Revenue $10,851,874 $11,739,717 $11,261,975 $11,228,459 $11,563,019 $11,953,027 27 Net Revenue Less Debt $8,966,527 $9,854,371 $9,376,628 $9,343,112 $8,681,987 $9,071,995 28 Net Cash Flow ($1,290,289) ($8,727,145) ($8,397,625) ($4,464,358) $1,036,496 $571,995

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20 PROPOSED FUND BALANCE PROJECTIONS
Table 2-16 shows the fund balance projections for the proposed financial plan. Based on the sources (Lines 3-10) and uses (Lines 12-16) of funds, the City’s fund balances will be approximately $17.15 million at the end of the study period in FY 2031.

Table 2-16: Projected Fund Balances (Proposed Financial Plan) Line Fund Balance Projections FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Combined Beginning Fund Balance $43,977,260 $41,760,410 $32,106,703 $22,782,516 $17,391,596 $17,501,529 2 3 Sources of Funds
4 Rate Revenues at Existing Rates $23,282,787 $23,422,484 $23,563,019 $23,704,397 $23,846,623 $23,989,703 5 Revenue Adjustments $0 $1,288,237 $2,663,210 $4,130,287 $5,695,161 $7,363,879 6 Operating Revenues $1,416,092 $1,459,432 $1,459,432 $1,459,432 $1,459,432 $1,459,432 7 Capital Revenues $409,099 $650,000 $650,000 $650,000 $650,000 $650,000 8 Debt Proceeds $0 $0 $0 $0 $15,000,000 $0
9 Investment Earnings $1,516,326 $1,660,702 $811,171 $397,763 $345,476 $343,054 10 Subtotal - Sources of Funds $26,624,304 $28,480,854 $29,146,832 $30,341,879 $46,996,693 $33,806,069 11 12 Uses of Funds
13 Operating Expenses $16,698,992 $17,667,699 $18,811,419 $20,039,982 $21,360,236 $22,779,604 14 Debt Service $1,885,347 $1,885,347 $1,885,347 $1,885,347 $2,881,032 $2,881,032 15 Capital Projects $10,256,816 $18,581,516 $17,774,254 $13,807,470 $22,645,492 $8,500,000 16 Subtotal - Uses of Funds $28,841,155 $38,134,561 $38,471,019 $35,732,799 $46,886,759 $34,160,636 17 18 Ending Balance $41,760,410 $32,106,703 $22,782,516 $17,391,596 $17,501,529 $17,146,962

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21 PROPOSED FINANCIAL PERFORMANCE
Table 2-17 shows the forecasted financial performance for the proposed financial plan. Under this plan, the City will meet its reserve targets in all years of the planning period. The City will also meet its debt coverage requirements in all years with the proposed revenue adjustments.

Table 2-17: Forecasted Financial Performance (Proposed Financial Plan) Line Financial Performance FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Debt Coverage Target
2 Required Debt Coverage 125% 125% 125% 125% 125% 125%
3 Calculated Debt Coverage 576% 623% 597% 596% 401% 415% 4 Meets Coverage? Yes Yes Yes Yes Yes Yes
5 6 Reserve Target
7 Operating Cash Flow $8,349,496 $8,833,850 $9,405,709 $10,019,991 $10,680,118 $11,389,802 8 Rate Stabilization $876,876 $932,608 $1,026,820 $1,136,913 $1,235,907 $1,340,834 9 Capital Repairs and Replacement
10 Emergency Capital Replacement $2,900,000 $2,900,000 $2,900,000 $2,900,000 $2,900,000 $2,900,000 11 Total Reserve Target $12,126,372 $12,666,458 $13,332,530 $14,056,904 $14,816,025 $15,630,636 12 Total Reserves $41,760,410 $32,106,703 $22,782,516 $17,391,596 $17,501,529 $17,146,962 13 Meets Reserve Target? Yes Yes Yes Yes Yes Yes

Figure 2-4 shows the comparison of revenues and the revenue requirement for the proposed financial plan scenario. The stacked bars represent the revenue requirements, or costs, while the dotted line represents the proposed revenue. By FY 2030, the proposed revenue will be sufficient to fund operating expenses, debt service, and rate funded CIP.

Figure 2-4: Revenue Requirements vs. Revenues (Proposed Financial Plan)

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22 Figure 2-5 shows the debt coverage projections in the proposed financial plan. The required debt coverage (solid line) is equal to 125%. The City is expected to meet its debt coverage requirements for all years of this scenario.

Figure 2-5: Projected Debt Coverage (Proposed Financial Plan)

Figure 2-6 shows the fund balance projections in the proposed financial plan. The City’s ending balance (green bars) will meet the reserve target (dashed line) in all five years of the study period.

Figure 2-6: Projected Fund Balances (Proposed Financial Plan)

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23 3. COST-OF-SERVICE ANALYSIS

3.1 COST-OF-SERVICE METHODOLOGY
A cost-of-service (COS) analysis is a technical process used to determine the cost of providing wastewater service to the City’s customers based on each customer’s use of and burden on the wastewater system. The COS analysis is the basis of the nexus between the costs incurred by the utility to provide wastewater service and the wastewater rates charged to customers, which is a requirement of Proposition 218.

The COS methodology is based on industry standards set forth by the Water Environment Federation (WEF). The overall goal of the cost-of-service analysis is to develop “unit costs,” which provide the basis from which proposed rates are calculated. Note that although the study period spans multiple years, the cost-of-service analysis is limited to a single representative year referred to as the “test year.” The test year in this study is FY 2026.

The key steps in conducting a cost-of-service analysis are outlined below:
• Revenue requirement determination: The revenue requirement for the test year is determined based on the results of the proposed financial plan and divided into primary sub- components (operating, capital, etc.).
• Cost functionalization: Operating and capital costs are evaluated and assigned to “functional categories” in the wastewater system (e.g., flow, treatment, billing, etc.). This provides a proportional breakdown of system costs by functional category. • Revenue requirement allocation to cost causation components: Functionalized costs are allocated to “cost causation components” (e.g., flow, BOD, TSS, billing, etc.), which are used to attribute customers’ use of the system to the City’s functional costs. • Unit cost development: The allocation of revenue requirements for each individual cost causation component is divided by the appropriate units of service to establish unit costs for the test year. Unit costs provide the basis from which proposed rates are calculated.

3.2 REVENUE REQUIREMENT
The total rate revenue requirement for the test year, FY 2026, is based on the financial plan projections (Table 2-15) and is allocated between the Operating, Capital and Revenue Offset components, as shown in Table 3-1. The Operating revenue requirement consists of operating expenses (Line 2). The Capital revenue requirement includes debt service (Line 3), rate-funded CIP (Line 4), capital revenue (Line 8), capacity rental charge revenue (Line 9), and adjustments for cash from reserves (Line 15; from Table 2-15, Line 28). The Revenue Offset includes all other revenues and interest income (Lines 10-11). The total revenue requirement (Line 18) is equal to the amount of rate revenue collected in FY 2026 (Table 2-15, Line 2).

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24 Table 3-1: FY 2026 Revenue Requirement
Line FY 2026 Revenue Requirement Operating Capital Rev. Offset Total 1 Revenue Requirements
2 Operating Expenses $16,698,992 $0 $0 $16,698,992
3 Debt Service $0 $1,885,347 $0 $1,885,347
4 Rate Funded CIP $0 $10,256,816 $0 $10,256,816
5 Subtotal - Revenue Requirements $16,698,992 $12,142,163 $0 $28,841,155 6 7 Revenue Offsets
8 Capital Revenue $0 ($409,099) $0 ($409,099)
9 Capacity Rental Charge Revenue $0 ($926,562) $0 ($926,562) 10 All Other Revenues ($1,416,092) ($1,416,092)
11 Interest Income ($1,516,326) ($1,516,326)
12 Subtotal - Revenue Offsets $0 ($1,335,661) ($2,932,418) ($4,268,079) 13 14 Adjustments
15 Cash to/(from) Reserves $0 ($1,290,289) $0 ($1,290,289) 16 Subtotal - Adjustments $0 ($1,290,289) $0 ($1,290,289) 17 18 Total - Revenue Requirement $16,698,992 $9,516,213 ($2,932,418) $23,282,787

3.3 MASS BALANCE
The next step in the cost-of-service analysis is to complete a mass balance, which is detailed in this section. Wastewater flow data is not typically metered, which means that a mass balance must be completed in order to estimate the wastewater flow and strength for each customer class.

Wastewater flow and strength estimates are based on known data (such as total flows into the treatment plant, inflow and infiltration, commercial users water use data and strength factors) and relevant assumptions (residential wastewater use per person). Mass balances are typically used to verify the assumed flow and strength units for each customer class.

Table 3-2 shows the wastewater flow for the industrial and commercial class in FY 2025, which is the latest full year of actual data. The strength estimates are based on the current definition for each customer type in the City.

Table 3-2: Wastewater Flow and Strength Estimates
Line FY 2025 Flow BOD TSS
1 hcf mg/L mg/L
2 Industrial/Commercial
3 Low Strength 250,612 200 200
4 Medium Strength 150,153 450 240
5 High Strength 150,086 1,000 600

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25 Table 3-3 shows the mass balance calculations. The total treatment plant influent flow (Line 2) is the total amount of wastewater flow and strength that entered the treatment plant in FY 2025, based on Encina’s records. Based on historical records, the inflow and infiltration (Line 3) is estimated at 4 percent. The total non-residential flow and strength data are from Table 3-2 (Lines 3-5), converted into lbs/year. The residential flow and strength estimates (Lines 11-13) are calculated by subtracting the total non-residential flow and strength (Lines 7-9) from the net treatment plant flow and strength (Line 4). This calculation is compared with the assumed residential flow and strength from Table 3-4 (Lines 3-4) to see if the assumptions are consistent with influent data. In this case, the difference is minimal, meaning that the flow and strength assumptions are reasonable.

Table 3-3: Mass Balance
Line FY 2025 Flow BOD TSS
1 hcf/year lbs/year lbs/year
2 Total Treatment Plant Influent Flow 2,548,198 5,367,724 3,743,936 3 Less Inflow & Infiltration 101,928 95,441 95,441
4 Net Treatment Plant Influent Flow 2,446,270 5,272,284 3,648,495 5 6 Industrial/Commercial 550,851 1,671,561 1,099,970 7 Low Strength 250,612 312,882 312,882
8 Medium Strength 150,153 421,789 224,954
9 High Strength 150,086 936,889 562,134
10 11 Residential 1,895,419 3,600,723 2,548,525
12 Single Family 1,255,522 2,385,112 1,688,138
13 Multi-Family 629,322 1,195,522 846,169

3.4 UNITS OF SERVICE
Table 3-4 shows the units of service by customer class. The industrial and commercial flow and strength is taken from Table 3-3. The residential flow is calculated by multiplying the number of EDU (from Table 2-2) by 160 gpd. This number is most aligned with the results from the mass balance, indicating that the flow definition per EDU has reduced from the current assumed 200 gpd per EDU.

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26 Table 3-4: Units of Service by Customer Class
Line Customer Class Flow BOD TSS EDU
1 hcf/year lbs/year lbs/year
2 Residential 1,896,153 3,602,118 2,549,513 27,762
3 Single Family 1,263,055 2,399,423 1,698,267 16,177 4 Multi-Family 633,098 1,202,696 851,246 11,584
5 6 Industrial/Commercial 554,156 1,681,590 1,106,570 9,136 7 Low Strength 252,116 314,759 314,759
8 Medium Strength 151,054 424,320 226,304
9 High Strength 150,986 942,511 565,506

3.5 FUNCTIONAL CATEGORIES
After determining the revenue requirement and units of service, the next step in the cost-of-service analysis is to allocate the City’s costs into various functional categories. These categories represent the main functions of the City’s wastewater system and include:
• Collection: costs related to the wastewater collection system • Treatment: costs related to treating wastewater
• Water Quality Protection: costs related to stormwater services • General: costs that are not directly attributable to any other functional category • Revenue Offset: non-rate revenue that can be used to offset a portion of the rate

WRE evaluated and allocated the operating expenses for FY 2026 (Table 2-6) to the most closely associated functional categories within the wastewater system, as shown in Table 3-5. The detailed allocation of the operating expense budget to the functional categories is included in the Appendix.

Table 3-5: Operating Costs by System Function
Line Cost Function Operating Expenses Percent of Total
1 Collection $6,182,296 37.0%
2 Treatment $7,703,572 46.1%
3 General $2,813,124 16.8%
4 Total $16,698,992 100.0%

WRE evaluated and allocated the City’s CIP (Table 2-8) to the most closely associated functional categories within the wastewater system, as shown in Table 3-6. The detailed allocation of the capital assets to the functional categories is included in the Appendix.

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27 Table 3-6: Capital Expenses by System Function
Line Cost Function Capital Expenses Percent of Total
1 Collection $43,345,676 47.3%
2 Treatment $46,937,711 51.3%
3 General $1,282,160 1.4%
4 Total - Capital $91,565,547 100.0%

Table 3-7 shows the percentage cost allocation for each functional category into the various cost components. The City’s wastewater system has five main functions: Flow, BOD, TSS, General, and Water Quality Protection. WRE worked with City staff to determine the cost allocation for each of the system functions. Collection costs (Line 1) are allocated entirely to Flow. Treatment costs (Line 2) are allocated partially to Flow with the remainder split between BOD and TSS. General costs (Line 3) are entirely allocated to General, and Water Quality Protection costs (Line 4) are allocated entirely to Water Quality Protection.

Table 3-7: Functional Cost Allocation
Line Cost Function Flow BOD TSS General
Water
Quality
Protection
Total
1 Collection 100% 0% 0% 0% 0% 100%
2 Treatment 24% 38% 38% 0% 0% 100%
3 General 0% 0% 0% 100% 0% 100%
4 Water Quality Protection 0% 0% 0% 0% 100% 100%

3.6 OPERATING COST ALLOCATION
Table 3-8 shows the operating cost allocation by cost component. The functionalized operating expenses from Table 3-5 are allocated based on the cost component allocation factors in Table 3-7.

The operating allocation (Line 5) is derived from the total operating expenses by cost component (Line 4) and represents the proportion of the Operating revenue requirement that will be allocated to each cost component.

Table 3-8: Operating Cost Allocation
Line Operating Expenses Flow BOD TSS General Water Quality Protection Total
1 Collection $6,182,296 $0 $0 $0 $0 $6,182,296
2 Treatment $1,820,369 $2,941,601 $2,941,601 $0 $0 $7,703,572 3 General $0 $0 $0 $2,813,124 $0 $2,813,124
4 Total - Operating $8,002,665 $2,941,601 $2,941,601 $2,813,124 $0 $16,698,992 5 Operating Cost Allocation 47.9% 17.6% 17.6% 16.8% 0.0% 100.0%

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28 3.7 CAPITAL COST ALLOCATION
Table 3-9 shows the capital cost allocation by cost component. The functionalized capital assets from Table 3-6 are allocated based on the cost component allocation factors in Table 3-7. The capital allocation (Line 5) is derived from the total CIP by cost component (Line 4) and represents the proportion of the Capital revenue requirement that will be allocated to each cost component.

Table 3-9: Capital Cost Allocation
Line Capital Expenses Flow BOD TSS General Water Quality Protection Total
1 Collection $43,345,676 $0 $0 $0 $0 $43,345,676
2 Treatment $11,091,473 $17,923,119 $17,923,119 $0 $0 $46,937,711 3 General $0 $0 $0 $1,282,160 $0 $1,282,160
4 Total - Capital $54,437,149 $17,923,119 $17,923,119 $1,282,160 $0 $91,565,547 5 Capital Cost Allocation 59.5% 19.6% 19.6% 1.4% 0.0% 100.0%

3.8 REVENUE REQUIREMENT ALLOCATION
Table 3-10 shows the cost-of-service allocation prior to any adjustments and the adjusted cost-of- service allocations after the General cost reallocation. The Operating costs (Line 1) are equal to the total Operating revenue requirements (Table 3-1, Line 18) allocated to each cost component based on the Operating allocation (Table 3-8, Line 5). The Capital costs (Line 2) are equal to the total Capital revenue requirements (Table 3-1, Line 18) allocated to each cost component based on the Capital allocation (Table 3-9, Line 5). The Revenue offset (Line 3) is equal to the total Revenue Offset revenue requirements (Table 3-1, Line 18). Note that the total cost-of-service (Line 4) is equal to the total rate revenue requirement for FY 2026 (Table 3-1, Line 18).

The next step is to reallocate General costs (Line 5) based on the proportion of costs in each cost component (except General and Revenue Offset) in the initial allocation. The total revenue requirement (Line 6) stays the same after the General cost reallocation.

Table 3-10: Revenue Requirement Allocation
Line Revenue Requirement Flow BOD TSS General
Water
Quality
Protection
Revenue
Offset Total
1 Operating Costs $8,002,665 $2,941,601 $2,941,601 $2,813,124 $0 $0 $16,698,992 2 Capital Costs $5,657,538 $1,862,712 $1,862,712 $133,252 $0 $0 $9,516,213 3 Revenue Offsets $0 $0 $0 $0 $0 ($2,932,418) ($2,932,418) 4 Total - COS (Initial) $13,660,203 $4,804,313 $4,804,313 $2,946,376 $0 ($2,932,418) $23,282,787 5 General Cost Allocation $1,729,700 $608,338 $608,338 ($2,946,376) $0 $0 $0 6 Total - COS (General) $15,389,903 $5,412,651 $5,412,651 $0 $0 ($2,932,418) $23,282,787

3.9 UNIT COST DERIVATION
Table 3-11 shows the unit cost calculations for each cost component based on the revenue requirement allocation results (Table 3-10). The Final COS (Line 1) is divided by the units of service for 03/24/2026 C13 37 of 99

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29 each cost component (Line 3) to arrive at the unit cost per component (Line 6). Units of service are from Table 3-4. Flow and Revenue Offset costs are divided by total hcf of estimated wastewater flow for all classes. BOD costs are divided by total lbs of BOD per year for all classes, and TSS costs are divided by total lbs of TSS per year for all classes.

Table 3-11: Unit Cost Calculations
Line Unit Cost Flow BOD TSS Revenue
Offset
1 Final COS $15,389,903 $5,412,651 $5,412,651 ($2,932,418) 2 3 Units of Service 2,450,309 5,283,708 3,656,082 2,450,309 4 Units hcf lbs/yr lbs/yr hcf
5 6 Unit Cost $6.28 $1.02 $1.48 ($1.20)
7 Units hcf lbs/yr lbs/yr hcf

3.10 COST-OF-SERVICE BY CUSTOMER CLASS
Table 3-12 shows the total COS by customer class and cost component. The unit costs for each cost component (Table 3-11) are multiplied by the units of service (Table 3-4) to determine the total cost for each class. Note that the total COS (Line 10) is equal to the total rate revenue requirement (Table 3-1, Line 18).

Table 3-12: Cost-of-Service by Customer Class
Line Customer Class Flow BOD TSS Revenue Offsets Total 1 Residential
2 Single Family $7,932,996 $2,457,978 $2,514,201 ($1,511,566) $11,393,609 3 Multi-Family $3,976,364 $1,232,046 $1,260,228 ($757,663) $5,710,975 4 5 Industrial/Commercial
6 Low Strength $1,583,488 $322,441 $465,986 ($301,720) $2,070,194 7 Medium Strength $948,739 $434,675 $335,032 ($180,774) $1,537,672 8 High Strength $948,315 $965,512 $837,205 ($180,694) $2,570,338 9 10 Total $15,389,903 $5,412,651 $5,412,651 ($2,932,418) $23,282,787

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30 4. WASTEWATER RATES

4.1 WASTEWATER RATE OVERVIEW
The proposed wastewater rate schedule was developed based on the results of the proposed financial plan and cost-of-service analysis. The key steps in developing the proposed rate schedule are outlined below:
• Test year rate development: Rates are calculated under the proposed rate structure for the cost-of-service test year (FY 2026). Rate calculations directly incorporate the unit costs developed in the cost-of-service analysis. The test year rates are first calculated on a revenue neutral basis and are then increased based on the proposed financial plan revenue adjustments. Although total rate revenues in the first year of adjustments (FY 2027) are designed to increase by the proposed revenue adjustment percentage (5.5% in FY 2027), the proposed percentage increase to each rate/charge varies due to the updated cost-of-service allocations.
• Rate schedule development: Proposed rates for the full study period are calculated by increasing the cost-of-service rates by the proposed annual revenue adjustment percentages from the proposed financial plan.

4.2 PROPOSED CHANGES TO THE RATE STRUCTURE
The main objective of the rate study was to conduct a comprehensive cost-of-service analysis while maintaining as much of the current wastewater rate structure as possible to minimize customer impacts. The City’s current wastewater rate structure includes an annual service charge based on customer class and a variable rate for commercial/industrial customers based on annual usage.

After examining current customer classification and discussion with City staff regarding customer usage patterns, WRE recommends the following changes:
• Reducing the gallons per day (gpd) definition from 200 gpd per EDU to 160 gpd due to reductions in wastewater flow.
• Currently, the City provides laundry and car wash discounts to customers who request a variance due to their water recirculation practices. However, upon further investigation, it was found that all discharge for these facilities enters the wastewater system. Thus, no discount should be offered.
• Among the commercial customers, some have separate irrigation meters, and some do not.

For customers with separate irrigation meters, the City should bill based on the actual water usage since irrigation is accounted for in a separate meter. For customers without irrigation meters, the City should bill based on the lowest two months of water usage to account for irrigation usage which does not enter the wastewater system.

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31 4.3 REVENUE ADJUSTMENTS
Table 4-1 shows the annual revenue adjustments based on the proposed financial plan scenario. The revenue neutral COS charges are increased by the revenue adjustments to determine the proposed wastewater rates.

Table 4-1: Proposed Revenue Adjustments
Line Fiscal Year Revenue
Adjustments
Effective
Date
1 FY 2027 5.5% 7/1/2026 Proposed
2 FY 2028 5.5% 7/1/2027 Proposed
3 FY 2029 5.5% 7/1/2028 Proposed
4 FY 2030 5.5% 7/1/2029 Forecasted
5 FY 2031 5.5% 7/1/2030 Forecasted

4.4 WASTEWATER RATE CALCULATION
Table 4-2 shows the revenue-neutral residential annual service charge rate calculation based on the revenue requirement (Table 3-12) and the number of EDUs in each customer class (Table 3-4).

Table 4-2: Residential Rates Calculation
Line Customer Class Revenue
Requirement
Number of
EDUs
Revenue Neutral
Rate ($/EDU)
1 Residential
2 Single Family $11,393,609 16,177 $704.29
3 Multi-Family $5,710,975 11,584 $493.00

Table 4-3 shows the revenue-neutral industrial/commercial annual service charge rate calculation based on the revenue requirement (Table 3-12) and the number of EDUs and amount of flow in each customer class (Table 3-4). The current fixed charge represents approximately 30 percent of the total rate revenue. To minimize changes, WRE retained the 30 percent allocation for the fixed charge. The variable rate recovers the remaining 70 percent of the revenue requirement.

Table 4-3: Industrial/Commercial Rates Calculation
Line Customer Class Revenue
Requirement Fixed Charge Variable Rate # of EDUs Flow (hcf) Revenue Neutral Rate
1 Industrial/
Commercial $6,178,204 $1,853,461 $4,324,742 9,136 $202.86 2 Low Strength $2,070,194 $621,058 $1,449,136 252,116 $5.75 3 Medium
Strength $1,537,672 $461,302 $1,076,370 151,054 $7.13 4 High Strength $2,570,338 $771,101 $1,799,236 150,986 $11.92

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32 4.5 PROPOSED RESIDENTIAL WASTEWATER CHARGE
Table 4-4 shows the proposed residential annual service charges for FY 2027 based on the results of the proposed financial plan and the COS analysis. The revenue neutral rate (Table 4-2) is increased by the FY 2027 revenue adjustment in Table 4-1 to arrive at the proposed FY 2027 wastewater rate.

Table 4-4: Proposed Residential Wastewater Charge after Adjustment Line Customer Class Revenue Neutral Rate
($/EDU) FY 2027 Adjustment Proposed Wastewater
Charge ($/EDU)
1 Residential - City
2 Single Family $704 5.5% $744
3 Multi-Family $493 5.5% $521

4.6 PROPOSED COMMERCIAL WASTEWATER CHARGE
Table 4-5 shows the proposed industrial/commercial annual service charges for FY 2027 based on the results of the proposed financial plan and the COS analysis. The revenue neutral rate (Table 4-3) is increased by the FY 2027 revenue adjustment in Table 4-1 to arrive at the proposed FY 2027 wastewater rate.

Table 4-5: Proposed Commercial Wastewater Charge after Adjustment Line Industrial/
Commercial Unit Revenue Neutral
Rate ($/EDU)
FY 2027
Adjustment
Proposed
Wastewater
Charge ($/EDU)
1 Fixed Portion
2 City Limits per EDU owned $203 5.5% $215
3 4 Strength Portion
5 Low Strength per HCF $5.75 5.5% $6.07
6 Medium Strength per HCF $7.13 5.5% $7.52
7 High Strength per HCF $11.92 5.5% $12.58

4.7 PROPOSED CAPACITY RENTAL CHARGE
Table 4-6 shows the capacity rental charge calculation, which is applied to all commercial/industrial customers who exceeded their owned capacity based on their wastewater flow.

WRE retained the same methodology as the previous rate study as it is based on industry accepted methodology for a capacity rental charge calculation.

Currently, customers who exceed their owned EDU capacity are renting additional capacity from the City. Thus, the capacity rental charge is calculated on the “utility basis approach”, which includes a weighted average cost of capital (WACC).

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33 The Rate of Return (Line 4) is calculated by multiplying the WACC (Line 1) by the total assets owned by the City (Lines 2-3). Annual depreciation of those assets is added to the Rate of Return (Line 4) to arrive at the Total Rate of Return (Line 8).

The Total Rate of Return (Line 8) is divided by the total number of EDUs in the system to arrive at the annual rate of return per EDU (Line 11). Finally, the FY 2025 annual rate of return per EDU is inflated to FY 2027 dollars using the projected ENR annual construction cost index.

Table 4-6: Proposed Capacity Rental Charge Calculation
Line FY 2025 Values
1 Weighted Average Cost of Capital (WACC) 4.92%
2 City of Vista Fixed Assets $164,008,229
3 Encina Wastewater Authority Assets $46,434,126
4 Rate of Return $10,353,764
5 Annual Depreciation
6 City of Vista $8,677,120
7 Encina Wastewater Authority $3,866,165
8 Total Rate of Return $22,897,049
9 10 Total Number of EDUs 36,678
11 Annual Rate of Return per EDU $624.27
12 Projected ENR Index Increase (2026 - 2027) 107.4%
13 Annual Rate of Return per EDU (FY 2027) $671.00

4.8 PROPOSED WASTEWATER RATE SCHEDULE
The proposed three-year sanitation rate schedule is based on the updated COS analysis and the proposed revenue adjustments in the three-year period. Table 4-7 shows the proposed wastewater rates to be implemented in July 2026 through July 2028.

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34 Table 4-7: Proposed Sanitation Rates Schedule
Line Current Rate 7/1/2026 7/1/2027 7/1/2028
1 Residential
2 Single Family per unit/year $708 $744 $785 $829
3 Multi-Family per unit/year $495 $521 $550 $581
4 5 Industrial/Commercial
6 Fixed Portion per EDU owned $177 $215 $227 $240
7 8 Strength Portion
9 Low Strength per HCF $6.56 $6.07 $6.41 $6.77
10 Medium Strength per HCF $7.70 $7.52 $7.94 $8.38
11 High Strength per HCF $11.00 $12.58 $13.28 $14.02 12 13 Capacity Rental Charge per excess EDU used $546 $671 $671 $671

4.9 CUSTOMER IMPACTS
Table 4-8 shows the monthly residential customer impacts based on the first year of proposed wastewater rates. Residential single-family customers will see an annual increase of $36 or $3 per month and multi-family customers will see an annual increase of $26 or $2.17 per month.

Table 4-8: Proposed Residential Customer Impacts
Line Customer Class Current Bill Proposed Bill Difference ($) Difference (%)
1 Residential - Vista
2 Single Family $708 $744 $36 5.08%
3 Multi-Family $495 $521 $26 5.25%
4 Weighted Average 5.14%

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35 5. APPENDIX

Table 5-1: O&M Allocation
Line O&M Allocation FY 2026 Collection Treatment General Water
Quality
Protection
1 Vista Sewer Operations & Maintenance
2 Salaries & Benefits $4,443,228 100%
3 Professional Services $1,348,155 100%
4 Encina Treatment Facility $7,703,572 100%
5 Operating Expenses $305,434 100%
6 Utilities $85,479 100%
7 Allocated Costs $2,757,444 100%
8 Capital Outlay $55,680 100%
9 Transfers to Other Funds
10 Total - Vista Sewer Operations & Maintenance $16,698,992 $6,182,296 $7,703,572 $2,813,124 $0

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36 Table 5-2: Capital Allocation
Line CIP Allocation 6-year Total Collection Treatment General Water
Quality
Protection
1 Vista Sewer Capital Replacement (Fund 503)
2 Encina Wastewater Authority Capital
Improvement Project $46,937,711 100%
3 Vista Pipeline Rehabilitation $3,000,000 100%
4 VC2: Vista/Carlsbad Interceptor Rehab $0 100%
5 OV1: Pipeline Access Improvements $0 100%
6 VC3: Vista/Carlsbad Interceptor Sewer Upsize $12,008,596 100% 7 Buena Vista Pump Station Replacement $5,804,298 100% 8 FOG Abatement Raceway Pump Station $0 100%
9 Raceway Pump Station Emergency Overflow
Basin Repair $0 100%
10 Sewer Master Plan $0 100%
11 Via Centre Capacity Improvement $800,000 100%
12 South Santa Fe Capacity Improvement $500,000 100%
13 Public Works Building C Improvements $1,282,160 100% 14 North Santa Fe Ave - East Dr to Washington St $7,471,639 100% 15 North Melrose Dr - Copper Dr to West Vista
Way $5,274,098 100%
16 Hill Dr and Flower Ln up to Tylee St $1,607,344 100% 17 North Santa Fe Ave - W Bobier Dr to W Indian
Rock Rd $1,004,590 100%
18 E Broadway - S Citrus Ave to S Santa Fe
Ave/Veterans Park $3,169,147 100%
19 Maryland Dr. and Olive Ave. to Melrose Dr. $2,705,964 100% 20 Total - Vista Sewer Capital Replacement $91,565,547 $43,345,676 $46,937,711 $1,282,160 $0

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37 Table 5-3: Encina Cost Allocation
Line Encina Cost Allocation FY 2026 Flow BOD TSS
1 Vista
2 Encina Water Pollution Control Facility $5,403,604 50% 50% 3 Source Control $440,000 50% 50%
4 Agua Hedionda Lift Station $505,457 100%
5 Buena Vista Pump Station $930,235 100%
6 Raceway Basin Pump Station $328,328 100%
7 Total Vista $7,607,624 $1,764,020 $2,921,802 $2,921,802 8 23.2% 38.4% 38.4%
9 Buena
10 Encina Water Pollution Control Facility $2,069,694 50% 50% 11 Source Control $147,285 50% 50%
12 Buena Creek Pump Station $702,898 100%
13 Total Buena $2,919,877 $702,898 $1,108,490 $1,108,490 14 24.1% 38.0% 38.0%
15 16 Encina Treatment Allocation (Average) 24% 38% 38%

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Buena Sanitation
District
2026 Wastewater Rate Study
Final Report – March 2026
Prepared by: Water Resources Economics, LLC
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EXHIBIT 2

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March 16, 2026

Ken Knatz, PE
Sewer Engineering Manager
City of Vista | Buena Sanitation District
200 Civic Center Drive
Vista, CA 92084

Subject: Buena Sanitation District Wastewater Rate Study Report

Dear Mr. Knatz,

Water Resources Economics, LLC (WRE) is pleased to submit this 2026 Wastewater Rate Study Report to the Buena Sanitation District (District). This report documents the results and recommendations of the District’s wastewater rate study. The goal of the study was to develop a three-year schedule of wastewater rates that will sufficiently fund the District’s wastewater system expenses, allow the District to meet its financial goals within the study period, and comply with cost-of-service principles.

This study utilized industry-standard rate-setting methodology and incorporates guidance provided by the Buena Sanitation District Board. Our project team has a proven track record of developing fair and equitable wastewater rates for numerous public agencies in California over the past 25 years. We are confident in our ability to develop sound wastewater rates that satisfy the requirements of Proposition 218.

It has been a pleasure assisting the District with this engagement, and we appreciate the support provided by yourself, the District Board, and other District staff during this study.

Sincerely,

Sanjay Gaur Hannah Phan
President Principal Consultant

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Buena Sanitation District
2026 Wastewater Rate Study

Wastewater Resources Economics
i

TABLE OF CONTENTS

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

1.1 System Overview .......................................................................................................................... 1

1.2 Rate Study Overview .................................................................................................................... 1

1.3 Legal Requirements ...................................................................................................................... 1

1.4 Rate-Setting Methodology ........................................................................................................... 1

1.5 Additional Information and Disclaimers ....................................................................................... 2

1.6 Current Wastewater Rates ........................................................................................................... 2

1.7 Financial Plan ................................................................................................................................ 3

1.8 Proposed Wastewater Rates ........................................................................................................ 4

2. Financial Plan ........................................................................................................................... 6

2.1 Financial Plan Methodology ......................................................................................................... 6

2.2 Revenues ....................................................................................................................................... 6

2.3 Operating Expenses .................................................................................................................... 10

2.4 Debt Service ................................................................................................................................ 11

2.5 Capital Improvement Plan .......................................................................................................... 11

2.6 Financial Policies ......................................................................................................................... 12

2.7 No Revenue Adjustment Financial Plan...................................................................................... 12

2.8 Proposed Financial Plan .............................................................................................................. 18

3. COST-OF-SERVICE ANALYSIS ................................................................................................... 23

3.1 Cost-of-Service Methodology ..................................................................................................... 23

3.2 Revenue Requirement ................................................................................................................ 23

3.3 Mass Balance .............................................................................................................................. 24

3.4 Units of Service ........................................................................................................................... 26

3.5 Functional Categories ................................................................................................................. 27

3.6 Operating Cost Allocation ........................................................................................................... 28

3.7 Capital Cost Allocation ................................................................................................................ 29

3.8 Revenue Requirement Allocation ............................................................................................... 29

3.9 Unit Cost Derivation ................................................................................................................... 30

3.10 Cost-of-Service by Customer Class ............................................................................................. 30

4. Wastewater Rates .................................................................................................................. 32

4.1 Rate Design Methodology .......................................................................................................... 32

4.2 Proposed Changes to the Rate Structure ................................................................................... 32

4.3 Revenue Adjustments ................................................................................................................. 33

4.4 wastewater Rate Calculation ...................................................................................................... 33

4.5 Proposed Residential Wastewater Charge ................................................................................. 34

4.6 Proposed Commercial Wastewater Charge ............................................................................... 34

4.7 Proposed Capacity Rental Charge .............................................................................................. 35

4.8 Proposed Sanitation Rate Schedule............................................................................................ 36 03/24/2026 C13 51 of 99

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ii

4.9 Customer Impacts ....................................................................................................................... 37

5. Appendix ............................................................................................................................... 39

LIST OF TABLES
Table 1-1: Current Wastewater Rates ...................................................................................................... 3 Table 1-2: Proposed Financial Plan Scenario ............................................................................................ 4 Table 1-3: Proposed Three-Year Wastewater Rate Schedule .................................................................. 5 Table 2-1: Current Wastewater Rates ...................................................................................................... 7 Table 2-2: Projected Customer Accounts/Units ....................................................................................... 8 Table 2-3: Calculated Rate Revenues at Current Rates ............................................................................ 9 Table 2-4: Revenue Summary ................................................................................................................. 10 Table 2-5: Operating Expenses Escalation Factors ................................................................................. 10 Table 2-6: Operating Expenses ............................................................................................................... 10 Table 2-7: Capital Improvement Projects ............................................................................................... 11 Table 2-8: Capital Financing Plan ............................................................................................................ 12 Table 2-9: No Revenue Adjustment Financial Plan Scenario .................................................................. 12 Table 2-10: Projected Cash Flows (No Revenue Adjustment Financial Plan) ......................................... 14 Table 2-11: Projected Fund Balances (No Revenue Adjustment Financial Plan) ................................... 15 Table 2-12: Forecasted Financial Performance (No Revenue Adjustment Financial Plan) .................... 16 Table 2-13: Proposed Financial Plan Scenario ........................................................................................ 18 Table 2-14: Projected Cash Flows (Proposed Financial Plan) ................................................................. 19 Table 2-15: Projected Fund Balances (Proposed Financial Plan) ........................................................... 20 Table 2-16: Forecasted Financial Performance (Proposed Financial Plan) ............................................ 21 Table 3-1: FY 2026 Revenue Requirement ............................................................................................. 24 Table 3-2: Wastewater Flow and Strength Estimates ............................................................................ 25 Table 3-3: Mass Balance ......................................................................................................................... 26 Table 3-4: Units of Service Summary by Customer Class ....................................................................... 27 Table 3-5: Operating Costs by System Function ..................................................................................... 28 Table 3-6: Capital Expenses by System Function .................................................................................... 28 Table 3-7: Functional Cost Allocation ..................................................................................................... 28 Table 3-8: Operating Cost Allocation ...................................................................................................... 29 Table 3-9: Capital Cost Allocation ........................................................................................................... 29 Table 3-10: Revenue Requirement Allocation ........................................................................................ 30 Table 3-11: Unit Cost Calculations .......................................................................................................... 30 Table 3-12: Cost-of-Service by Customer Class ...................................................................................... 31 Table 4-1: Proposed Revenue Adjustments ........................................................................................... 33 Table 4-2: Residential Rates Calculation ................................................................................................ 33 Table 4-3: Industrial/Commercial Rates Calculation .............................................................................. 34 Table 4-4: Proposed Residential Wastewater Charge after Adjustment ............................................... 34 Table 4-5: Proposed Commercial Wastewater Charge after Adjustment .............................................. 35 Table 4-6: Proposed Capacity Rental Charge Calculation ...................................................................... 36 03/24/2026 C13 52 of 99

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Table 4-7: Proposed Sanitation Rates Schedule ..................................................................................... 37 Table 4-8: Proposed Residential Customer Impacts ............................................................................... 38 Table 5-1: O&M Allocation ..................................................................................................................... 39 Table 5-2: Capital Allocation ................................................................................................................... 40 Table 5-3: Encina Cost Allocation ........................................................................................................... 41

LIST OF FIGURES
Figure 2-1: Revenue Requirements vs. Revenues (No Revenue Adjustment Financial Plan) ................ 17 Figure 2-2: Projected Fund Balances (No Revenue Adjustment Financial Plan) .................................... 17 Figure 2-3: Revenue Requirements vs. Revenues (Proposed Financial Plan) ........................................ 21 Figure 2-4: Projected Fund Balances (Proposed Financial Plan) ............................................................ 22

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1 1. EXECUTIVE SUMMARY

1.1 SYSTEM OVERVIEW
Buena Sanitation District (District) owns and operates approximately 101 miles of sanitary sewer system that collect wastewater from approximately 6,700 residential, commercial, and industrial accounts. The District contracts with Encina Wastewater Authority (Encina) to provide wastewater treatment services and pump station operations.

1.2 RATE STUDY OVERVIEW
Public retail wastewater agencies in California typically conduct a cost-of-service study every five years to ensure that customers are appropriately charged for wastewater service and to reestablish the cost-of-service nexus that is required by Proposition 218. The District has engaged Water Resources Economics, LLC (WRE) to conduct a comprehensive wastewater rate study, with the following objectives:
• Evaluate a five-year financial plan scenario to meet financial targets for Fiscal Year (FY) 2027 to FY 2031
• Conduct a cost-of-service analysis based on the most recent data and customer characteristics • Develop a three-year wastewater rate schedule for FY 2027 through FY 2029

1.3 LEGAL REQUIREMENTS
Legal considerations relating to retail wastewater rates in California focus heavily on Proposition 218, which was enacted in 1996 and is now reflected in Article XIII C and Article XIII D of the California Constitution. Proposition 218 states that “property related fees and charges” (which include retail wastewater rates) may not exceed the proportional cost of providing the service to the customer and may not be used for any purpose other than providing said service. The practical implication is that public retail wastewater agencies in California must demonstrate a sufficient nexus between the costs incurred by the agency to provide wastewater service and the rates charged to customers. The primary means by which retail wastewater agencies address this requirement is by conducting a “cost-of-service analysis.”

Proposition 218 also affects the rate adoption process by requiring agencies to hold a public hearing to adopt rates. The agency must mail public hearing notices to all customers no fewer than 45 days prior to the public hearing. The public hearing notices must clearly show all proposed rate changes, provide information on the public hearing date/time/location, and provide instructions on how customers may protest the proposed rate changes. If a majority of customers submit a protest, the proposed rate changes cannot be adopted.

1.4 RATE-SETTING METHODOLOGY
This study was conducted using industry-standard methodology and includes the following steps:
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2 1. Financial Plan: Annual revenues and expenses are projected over the rate-setting period to determine the magnitude of rate increases needed to maintain financial sufficiency. Financial policies, such as reserve targets, are also evaluated and updated if necessary.

2. Cost-of-Service Analysis: Costs are allocated to customers in proportion to use of and burden on the wastewater system. The overall goal is to establish a robust nexus between the costs incurred by an agency and the rates charged to customers, as required by Proposition 218.

3. Rate Design: The existing rate structure is evaluated, and potential changes are identified. A multi-year proposed rate schedule is then calculated directly from the results of the financial plan and cost-of-service analysis.

4. Rate Study Documentation: A rate study report is developed to document the proposed rate development process. This provides transparency and enhances compliance with Proposition 218 requirements. This document serves as the report for this rate study.

1.5 ADDITIONAL INFORMATION AND DISCLAIMERS
This report summarizes the data, analyses, processes, and results of the District’s wastewater rate study. Some important information to keep in mind when reading the report includes the following:
• All study projections are based on the best available data as of December 2025. • All table values are rounded to the nearest digit shown unless stated otherwise. However, all calculations are based on precise values. Attempting to manually recreate the calculations described in this report from the values displayed in tables may therefore produce slightly different results.
• All current and proposed rates and charges in this report are shown on an annual basis.

1.6 CURRENT WASTEWATER RATES
The District’s current wastewater rate structure, shown in Table 1-1, is charged annually on the San Diego County Property Tax bill and includes the following components:
• Single Family and Multi-Family Residential rates based on number of dwelling units • Industrial and Commercial rates include a fixed component based on equivalent dwelling units (EDUs), a strength-based component based on hundred cubic feet (hcf) of estimated wastewater flows and strength category, and an extra strength component based on pounds of biochemical oxygen demand (BOD) and suspended solids (SS) • Capacity rental charges are based on excess EDU usage • Rates are differentiated between customers within City limits and within the County/San Marcos service area

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3 Table 1-1: Current Wastewater Rates
Line Current Sewer Rates Units Charged City Limits County/San Marcos
1 Residential
2 Single Family per unit/year $663 $621
3 Multi-Family per unit/year $463 $434
4 5 Industrial/Commercial
6 Fixed Portion per EDU owned $200 $158
7 8 Strength Portion
9 Low Strength per HCF $5.83 $5.83
10 Medium Strength per HCF $6.68 $6.68
11 High Strength per HCF $9.21 $9.21
12 13 Extra Strength
14 BOD Rate per LB $0.69 $0.69
15 SS Rate per LB $0.56 $0.56
16 17 Capacity Rental Charge per excess EDU used $506 $464

1.7 FINANCIAL PLAN
WRE worked closely with District staff and the District Board to determine the financial plan scenario that best suits the District’s needs. The results and recommendations of the wastewater rate study are driven by the District’s financial performance, input from District staff, and feedback and direction from the District Board.

FACTORS AFFECTING FINANCIAL PERFORMANCE
The wastewater system’s financial performance is driven by the ability of the current wastewater rates to meet the District’s funding needs. To maintain financial sufficiency, wastewater rates must fully fund operations and maintenance (O&M) costs, capital improvement plan (CIP) expenditures, and any relevant financial policies, which typically include target reserve balances and debt coverage.

The key factors affecting financial performance include:
• Substantial capital investment needs over the next five years: The cost of planned capital projects over the next five years (FY 2027 through FY 2031) is approximately $28.9 million based on the findings of the 2025 Sewer Master Plan.
• Increases in Encina costs: Encina charges the District operating and capital costs to treat wastewater flows from the District’s customers. The charges have increased by an average of approximately 10 percent per year for the past 10 years. These increases, in addition to aging infrastructure needs, add pressure to the District’s wastewater rates. 03/24/2026 C13 56 of 99

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4 PROPOSED REVENUE ADJUSTMENTS AND DEBT ISSUANCES
Overall annual increases in wastewater rate revenues resulting from rate increases are referred to as “revenue adjustments.” WRE worked with the District Board and District staff to determine the most appropriate financial plan scenario, which is shown in Table 1-2. The proposed financial plan scenario includes three years of proposed and two years of projected revenue adjustments, which are required to maintain financial sufficiency and resiliency.

Table 1-2: Proposed Financial Plan Scenario
Line Fiscal Year Revenue
Adjustment
Effective
Month
1 FY 2027 4.0% July Proposed
2 FY 2028 4.0% July Proposed
3 FY 2029 4.0% July Proposed
4 FY 2030 5.0% July Forecasted
5 FY 2031 5.0% July Forecasted

Under this proposed financial plan, the District will meet its reserve targets and meet coverage requirements for all years of the planning period.

1.8 PROPOSED WASTEWATER RATES
WRE worked closely with the District Board and District staff to determine the most appropriate wastewater rate structure that meets the District’s needs.

PROPOSED RATE STRUCTURE CHANGES
The main objective of the rate study was to conduct a comprehensive cost-of-service analysis while maintaining as much of the current wastewater rate structure as possible to minimize customer impacts. The District’s current wastewater rate structure includes an annual service charge based on customer class and a variable rate for commercial/industrial customers based on annual usage.

After examining current customer classification and discussion with District staff regarding customer usage patterns, WRE recommends the following changes:
• Reducing the gallons per day (gpd) definition from 200 gpd per EDU to 160 gpd due to reductions in wastewater flow.
• Currently, the District provides laundry and car wash discounts to customers who request a variance due to their water recirculation practices. However, upon further investigation, it was found that all discharge from these facilities enters the wastewater system. Thus, no discount should be offered.
• Among the commercial customers, some have separate irrigation meters, and some do not.

For customers with separate irrigation meters, the District should bill based on the actual water usage since irrigation is accounted for in a separate meter. For customers without 03/24/2026 C13 57 of 99

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5 irrigation meters, the District should bill based on the lowest two months of water usage to account for irrigation usage which does not enter the wastewater system. • During the mass balance process, the District’s BOD readings showed high strength readings.

We recommend that the District conduct an audit of residential water use in the District to pinpoint the source of high strength readings.

PROPOSED THREE-YEAR WASTEWATER RATE SCHEDULE
The proposed three-year wastewater rate schedule in this section is based on the proposed rate structure and methodology changes, the updated cost-of-service analysis, and the proposed revenue adjustments. The rate schedule shows the proposed wastewater rates to be implemented in July 2026 through July 2028.

Table 1-3: Proposed Three-Year Wastewater Rate Schedule Line Current Rate 7/1/2026 7/1/2027 7/1/2028
1 City Limits
2 Residential
3 Single Family per unit/year $663 $716 $745 $775
4 Multi-Family per unit/year $463 $501 $522 $543
5 6 Industrial/Commercial
7 Fixed Portion per EDU owned $200 $186 $194 $202
8 9 Strength Portion
10 Low Strength per HCF $5.83 $5.25 $5.46 $5.68
11 Medium Strength per HCF $6.68 $6.53 $6.80 $7.08
12 High Strength per HCF $9.21 $10.98 $11.42 $11.88
13 14 Capacity Rental Charge per excess EDU used $506 $613 $613 $613 15 16 County/San Marcos
17 Residential
18 Single Family per unit/year $621 $650 $676 $704
19 Multi-Family per unit/year $434 $455 $474 $493
20 21 Industrial/Commercial
22 Fixed Portion per EDU owned $158 $120 $125 $130
23 24 Strength Portion
25 Low Strength per HCF $5.83 $5.25 $5.46 $5.68
26 Medium Strength per HCF $6.68 $6.53 $6.80 $7.08
27 High Strength per HCF $9.21 $10.98 $11.42 $11.88
28 29 Capacity Rental Charge per excess EDU used $464 $613 $613 $613 03/24/2026 C13 58 of 99

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6 2. FINANCIAL PLAN

2.1 FINANCIAL PLAN METHODOLOGY
The purpose of a financial plan is to project revenues, expenses, cash flows, reserve balances, and debt coverage over a multi-year period to assess financial sufficiency and performance and to determine the amount of required rate revenue. For this study, the planning period is from FY 2027 through FY 2031. The key steps in developing a financial plan for a wastewater enterprise are below:
• Revenue projections: Annual revenues from rates and other miscellaneous sources are projected over the planning period. Rate revenues are projected based on current rates to establish baseline revenues from which the need for additional rate increases can be evaluated.
• Expense projections: Annual expenses are projected over the study period, including O&M expenses, debt service, and CIP costs. CIP funding options (grants, debt, etc.) are evaluated. • Financial policy evaluation: Key financial policies include debt coverage requirements and reserve targets. Debt coverage requirements are typically explicitly stated in official agreements on outstanding debt issuances. Reserve targets are typically set by an agency’s elected officials and may need to be periodically evaluated and updated. • No revenue adjustments financial plan projections: Cash flow, reserve balances, and debt coverage are projected over the study period in the absence of additional rate increases.

Projected reserve balances and debt coverage are then compared to the agency’s financial policy requirements and targets. The no revenue adjustments financial plan provides a baseline for evaluating the need for rate increases.
• Proposed financial plan projections: The magnitude and timing of annual proposed revenue increases over the study period are evaluated and determined based on the agency’s financial policies, financial performance, and policy objectives. Proposed rate increases (referred to as “revenue adjustments”) should generate sufficient revenue to recover the agency’s expenses, maintain adequate reserves, and meet all debt coverage requirements. The proposed financial plan determines the total annual rate revenue requirement over the study period.

2.2 REVENUES

CURRENT WASTEWATER RATES
The District’s current wastewater rate structure (Table 2-1) is charged annually on the San Diego County Property Tax bill and includes the following components:
• Single Family and Multi-Family Residential rates based on number of dwelling units (EDUs) • Industrial and Commercial rates include a fixed component based on equivalent dwelling units (EDUs), a strength-based component based on hundred cubic feet (hcf) of estimated wastewater flows and strength category, and an extra strength component based on pounds of biochemical oxygen demand (BOD) and suspended solids (SS) • Capacity rental charges are based on excess EDU usage 03/24/2026 C13 59 of 99

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7 • Rates are differentiated between customers within City limits and within the County/San Marcos service area

Table 2-1: Current Wastewater Rates
Line Current Sewer Rates Units Charged City Limits County/San Marcos
1 Residential
2 Single Family per unit/year $663 $621
3 Multi-Family per unit/year $463 $434
4 5 Industrial/Commercial
6 Fixed Portion per EDU owned $200 $158
7 8 Strength Portion
9 Low Strength per HCF $5.83 $5.83
10 Medium Strength per HCF $6.68 $6.68
11 High Strength per HCF $9.21 $9.21
12 13 Extra Strength
14 BOD Rate per LB $0.69 $0.69
15 SS Rate per LB $0.56 $0.56
16 17 Capacity Rental Charge per excess EDU used $506 $464

CUSTOMER ACCOUNTS AND USAGE
This section details the customer accounts for all years of the study, which are referred to as the units of service. Units of service represent the quantity of billing units that are subject to the District’s wastewater rates and charges.

Table 2-2 shows the projected number of Residential and Industrial/Commercial customer accounts for the study period. District staff provided actual customer data for FY 2025. This study assumes an annual growth rate of 0.5% in customer accounts and usage during the study period, which was the average growth between FY 2020 and FY 2024.

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8 Table 2-2: Projected Customer Accounts/Units
Line Customer Data FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 City Limits
2 3 Residential EDU
4 Single Family 3,344 3,362 3,380 3,398 3,417 3,435 5 Multi-Family 2,580 2,594 2,608 2,622 2,636 2,650 6 7 Industrial/Commercial
8 Number of EDU 3,951 3,973 3,994 4,016 4,037 4,059 9 10 Number of HCF
11 Low Strength 57,566 57,877 58,190 58,504 58,820 59,137 12 Medium Strength 55,110 55,408 55,707 56,008 56,310 56,614 13 High Strength 33,825 34,007 34,191 34,376 34,561 34,748 14 15 Extra Strength
16 BOD 0 0 0 0 0 0
17 SS 0 0 0 0 0 0
18 19 Excess EDU Used 282 282 282 282 282 282
20 21 County/San Marcos
22 23 Residential EDU
24 Single Family 3,128 3,145 3,162 3,179 3,196 3,213 25 Multi-Family 1,830 1,840 1,850 1,860 1,870 1,880 26 27 Industrial/Commercial
28 Number of EDU 492 494 497 500 502 505
29 30 Number of HCF
31 Low Strength 25,451 25,588 25,726 25,865 26,005 26,145 32 Medium Strength 5,601 5,631 5,662 5,692 5,723 5,754 33 High Strength 3,629 3,649 3,669 3,689 3,709 3,729 34 35 Extra Strength
36 BOD 0 0 0 0 0 0
37 SS 0 0 0 0 0 0
38 39 Excess EDU Used 158 158 158 158 158 158
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9 REVENUES FROM CURRENT RATES
Table 2-3 shows the calculated wastewater rate revenues for the study period based on the current effective wastewater rates (Table 2-1) and the projected customer accounts/units (Table 2-2).

Table 2-3: Calculated Rate Revenues at Current Rates
Line Calculated Revenue FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 City Limits
2 3 Residential $3,411,519 $3,429,941 $3,448,463 $3,467,085 $3,485,807 $3,504,630 4 Single Family $2,217,046 $2,229,018 $2,241,054 $2,253,156 $2,265,323 $2,277,556 5 Multi-Family $1,194,474 $1,200,924 $1,207,409 $1,213,929 $1,220,484 $1,227,074 6 Industrial/Commercial $1,805,515 $1,815,265 $1,825,067 $1,834,923 $1,844,831 $1,854,794 7 Fixed Revenue $790,244 $794,512 $798,802 $803,116 $807,452 $811,813 8 Variable Revenue $1,015,271 $1,020,753 $1,026,265 $1,031,807 $1,037,379 $1,042,981 9 Extra Strength $0 $0 $0 $0 $0 $0
10 Total Rate Revenue $5,217,035 $5,245,207 $5,273,531 $5,302,008 $5,330,639 $5,359,424 11 12 County/San Marcos
13 14 Residential $2,736,509 $2,751,286 $2,766,143 $2,781,080 $2,796,098 $2,811,197 15 Single Family $1,942,363 $1,952,852 $1,963,398 $1,974,000 $1,984,660 $1,995,377 16 Multi-Family $794,145 $798,434 $802,745 $807,080 $811,438 $815,820 17 Industrial/Commercial $296,900 $298,503 $300,115 $301,735 $303,365 $305,003 18 Fixed Revenue $77,679 $78,099 $78,520 $78,944 $79,371 $79,799 19 Variable Revenue $219,220 $220,404 $221,594 $222,791 $223,994 $225,204 20 Extra Strength $0 $0 $0 $0 $0 $0
21 Total Rate Revenue $3,033,408 $3,049,789 $3,066,258 $3,082,815 $3,099,463 $3,116,200

REVENUE SUMMARY
Table 2-4 shows the summary of projected revenues for the study period. District staff provided the budgeted revenues for FY 2026 and FY 2027; all other years are projected based on the relevant assumptions or calculations.

Sewer Service Charges, or wastewater rate revenue (Line 1), are equal to the sum of the City Limits Total Rate Revenue from Table 2-3 (Line 10) and the County/San Marcos Total Rate Revenue (Line 21).

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10 Table 2-4: Revenue Summary
Line Revenue Summary FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Sewer Service Charges $8,250,443 $8,294,995 $8,339,788 $8,384,823 $8,430,101 $8,475,624 2 Capacity Rental Charge
Revenue $216,004 $216,004 $216,004 $216,004 $216,004 $216,004 3 Operating Revenues $1,256,146 $1,369,560 $481,676 $268,259 $220,221 $200,686 4 Capital Revenues $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 5 Total - Buena Sanitation
District $10,022,593 $10,180,559 $9,337,468 $9,169,086 $9,166,327 $9,192,314

2.3 OPERATING EXPENSES
WRE worked with District staff to determine the most appropriate escalation factors for various operating expense categories in the District’s budget. Table 2-5 shows the expense escalation factors used to inflate O&M expenses from FY 2026 through FY 2031.

Table 2-5: Operating Expenses Escalation Factors
Line Expense Escalation FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Salaries & Benefits 5.5% 5.5% 5.5% 5.5% 5.5% 5.5%
2 Professional Services 3.5% 3.5% 3.5% 3.5% 3.5% 3.5%
3 Operating Expenses 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
4 Utilities 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%
5 Allocated Costs 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
6 Encina 9.0% 9.0% 9.0% 9.0% 9.0% 9.0%
7 Capital 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%
8 Transfers Out -100.0% -100.0% -100.0% -100.0% -100.0% -100.0%

Table 2-6 shows the summary of O&M expenses for the study period. District staff provided the budgeted O&M expenses for FY 2026 and FY 2027. The budgeted values are escalated each year based on the escalation factors in Table 2-5.

Table 2-6: Operating Expenses
Line Operating Expenses FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Salaries & Benefits $1,921,360 $1,999,114 $2,109,065 $2,225,064 $2,347,442 $2,476,552 2 Professional Services $249,694 $240,990 $249,425 $258,155 $267,190 $276,542 3 Encina Treatment Facility $2,961,997 $3,110,097 $3,390,006 $3,695,106 $4,027,666 $4,390,156 4 Operating Expenses $110,760 $110,502 $113,817 $117,232 $120,749 $124,371 5 Utilities $53,536 $59,809 $62,799 $65,939 $69,236 $72,698 6 Allocated Costs $920,555 $929,122 $956,996 $985,706 $1,015,277 $1,045,735 7 Capital Outlay $34,127 $207,503 $215,803 $224,435 $233,413 $242,749 8 Transfers to Other Funds $2,250,059 $1,996,087 $0 $0 $0 $0 9 Stormwater Expenses $575,338 $617,583 $636,110 $655,194 $674,850 $695,095 10 Total Operating Expenses $9,077,426 $9,270,807 $7,734,021 $8,226,830 $8,755,822 $9,323,897 03/24/2026 C13 63 of 99

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11 2.4 DEBT SERVICE

EXISTING AND PROPOSED DEBT SERVICE
Currently, the District has no existing debt service payments. The proposed financial plan does not recommend any additional debt issuance.

2.5 CAPITAL IMPROVEMENT PLAN

CAPITAL IMPROVEMENT PROJECTS
Table 2-7 shows the District’s five-year CIP; project costs are inflated by 4% per year (Table 2-5, Line 7) starting in FY 2026, except for the pipeline rehabilitation costs.

Table 2-7: Capital Improvement Projects
Line Capital Improvement Projects FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Buena Outfall Force Main Extension $0 $0 $0 $0 $0 $0 2 Encina Wastewater Authority Capital
Improvement Project $1,886,985 $2,772,004 $2,873,243 $1,526,947 $2,382,295 $2,500,000 3 B1: Green Oak Road Trunk Sewer
Replacement $726,200 $5,100,992 $0 $0 $0 $0
4 Buena Yard Improvements $232,000 $1,880,320 $0 $0 $0 $0 5 Buena Sewer Pipeline Rehabilitation $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 6 FOG Abatement Buena Creek Pump Station $0 $0 $0 $0 $0 $0 7 Sewer Master Plan $0 $0 $0 $0 $0 $0
8 Buena Creek Pump Station Mechanical
Modifications $0 $0 $0 $0 $0 $0
9 Vallecitos Failsafe Outfall $0 $0 $0 $0 $0 $0
10 Vallecitos Land Outfall Rehabilitation $0 $0 $0 $0 $0 $0 11 Public Works Building C Improvements $114,000 $671,840 $0 $0 $0 $0 12 Buena Outfall CIPP $0 $0 $0 $0 $0 $0
13 El Valle Opulento Phase 1 - to Creek
Crossing $1,263,600 $0 $0 $0 $0 $0
14 Sycamore Ave. under 78 Freeway $259,896 $1,081,167 $0 $0 $0 $0 15 Verona Hills Pkwy. and Savona Ct. $0 $251,796 $1,047,473 $0 $0 $0 16 Buena Outfall Under I-5 Freeway $0 $0 $1,622,400 $3,937,024 $0 $0 17 Total - Buena SD Capital Replacement $4,732,681 $12,008,120 $5,793,116 $5,713,971 $2,632,295 $2,750,000

CAPITAL FINANCING PLAN
Table 2-8 shows the capital financing plan. All of the CIP for the District will be entirely rate funded (Line 7) for all years of the study period.

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12 Table 2-8: Capital Financing Plan
Line Capital Financing Plan FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Total CIP $4,732,681 $12,008,120 $5,793,116 $5,713,971 $2,632,295 $2,750,000 2 CIP Execution Rate 100% 100% 100% 100% 100% 100%
3 Executed CIP $4,732,681 $12,008,120 $5,793,116 $5,713,971 $2,632,295 $2,750,000 4 5 Buena SD Capital Replacement
6 Debt Funded $0 $0 $0 $0 $0 $0
7 Rate Funded $4,732,681 $12,008,120 $5,793,116 $5,713,971 $2,632,295 $2,750,000 8 Total - Buena SD Capital Replacement $4,732,681 $12,008,120 $5,793,116 $5,713,971 $2,632,295 $2,750,000

2.6 FINANCIAL POLICIES

RESERVE POLICY
The District’s current reserve policy maintains cash on hand to meet short-term cash imbalances, to execute CIP projects, and to cover unexpected repairs.

The District currently has an adopted reserve policy that consists of the following components:
• Operating Reserve Target: 50% of annual operating expenses • Rate Stabilization: 15% of previous 5-year average of Encina wastewater treatment plant costs • Emergency Capital: $1 million

The reserve target for the study period ranges from approximately $5 million (FY 2027) to $6.2 million (FY 2031) in the District’s reserve funds.

2.7 NO REVENUE ADJUSTMENT FINANCIAL PLAN

NO REVENUE ADJUSTMENT FINANCIAL PLAN SCENARIO
Table 2-9 shows the no revenue adjustment financial plan, which assumes no revenue adjustments and no debt issuance. This scenario is used to evaluate the ability of the current wastewater rates to meet the District’s financial targets and to determine the need for revenue adjustments.

Table 2-9: No Revenue Adjustment Financial Plan Scenario Line Fiscal Year Revenue Adjustment Effective Month
1 FY 2027 0.0% July
2 FY 2028 0.0% July
3 FY 2029 0.0% July
4 FY 2030 0.0% July
5 FY 2031 0.0% July

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13 NO REVENUE ADJUSTMENT CASH FLOW PROJECTIONS
Table 2-10 shows the cash flow projections for the no revenue adjustment financial plan. Revenues (Lines 1-7) are from Table 2-4. Operating expenses (Lines 9-14) are from Table 2-6. Net operating revenue (Line 26) is equal to the difference between total revenues (Line 7) and total operating expenses (Line 14). Rate funded CIP (Line 23) is the total capital projects from Table 2-8. The no revenue adjustment scenario assumes no new debt; all CIP is expected to be rate funded. Net cash flow (Line 28) is equal to the net operating revenue (Line 26) less rate funded CIP (Line 23).

The net operating revenue in this scenario is positive for all years except FY 2031, meaning that the District’s current revenues are sufficient to fund its operating expenses for four years out of the five in the study period. However, the net cash flow in the no revenue adjustment scenario is negative for all years, meaning that the District’s current forecasted revenues are not sufficient to fund its annual CIP.
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14 Table 2-10: Projected Cash Flows (No Revenue Adjustment Financial Plan) Line Cash Flow Projections FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Revenues
2 Rate Revenues at Existing Rates $8,250,443 $8,294,995 $8,339,788 $8,384,823 $8,430,101 $8,475,624 3 Revenue Adjustments $0 $0 $0 $0 $0 $0
4 Capacity Rental Charge Revenue $216,004 $216,004 $216,004 $216,004 $216,004 $216,004 5 Operating Revenues $1,256,146 $1,369,560 $461,514 $237,140 $162,742 $106,434 6 Capital Revenues $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 7 Subtotal - Revenues $10,022,593 $10,180,559 $9,317,306 $9,137,967 $9,108,848 $9,098,062 8 9 Operating Expenses
10 Operating Costs $2,335,350 $2,410,415 $2,535,106 $2,666,389 $2,804,617 $2,950,162 11 Encina Treatment Costs $2,961,997 $3,110,097 $3,390,006 $3,695,106 $4,027,666 $4,390,156 12 Allocated Costs $920,555 $929,122 $956,996 $985,706 $1,015,277 $1,045,735 13 All Other Costs, less Transfers $609,465 $825,086 $851,914 $879,629 $908,262 $937,844 14 Subtotal - Operating Expenses $6,827,367 $7,274,720 $7,734,021 $8,226,830 $8,755,822 $9,323,897 15 16 Debt Service
17 Existing Debt $0 $0 $0 $0 $0 $0
18 Proposed Debt $0 $0 $0 $0 $0 $0
19 Subtotal - Debt Service $0 $0 $0 $0 $0 $0
20 21 Capital Projects
22 Debt Funded $0 $0 $0 $0 $0 $0
23 Rate Funded $4,732,681 $12,008,120 $5,793,116 $5,713,971 $2,632,295 $2,750,000 24 Subtotal - Capital Projects $4,732,681 $12,008,120 $5,793,116 $5,713,971 $2,632,295 $2,750,000 25 26 Net Revenue $3,195,226 $2,905,839 $1,583,285 $911,137 $353,026 ($225,835) 27 Net Revenue Less Debt $3,195,226 $2,905,839 $1,583,285 $911,137 $353,026 ($225,835) 28 Net Cash Flow ($1,537,455) ($9,102,280) ($4,209,832) ($4,802,834) ($2,279,269) ($2,975,835)

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15 NO REVENUE ADJUSTMENT FUND BALANCE PROJECTIONS
Table 2-11 shows the fund balance projections for the no revenue adjustment financial plan. Based on the sources (Lines 3-10) and uses (Lines 12-16) of funds, the District’s fund balances will drop from approximately $26.7 million in FY 2026 to just under $500,000 by the end of FY 2031, a loss of approximately $26.2 million.

Table 2-11: Projected Fund Balances (No Revenue Adjustment Financial Plan) Line Fund Balance Projections FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Combined Beginning Fund Balance $26,700,050 $24,946,591 $15,628,306 $11,202,471 $6,183,633 $3,688,359 2 3 Sources of Funds
4 Rate Revenues at Existing Rates $8,250,443 $8,294,995 $8,339,788 $8,384,823 $8,430,101 $8,475,624 5 Revenue Adjustments $0 $0 $0 $0 $0 $0
6 Operating Revenues $65,000 $65,000 $65,000 $65,000 $65,000 $65,000 7 Capital Revenues $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 8 Debt Proceeds $0 $0 $0 $0 $0 $0
9 Investment Earnings $1,191,146 $1,304,560 $396,514 $172,140 $97,742 $41,434 10 Subtotal - Sources of Funds $9,806,589 $9,964,555 $9,101,302 $8,921,963 $8,892,844 $8,882,058 11 12 Uses of Funds
13 Operating Expenses $6,827,367 $7,274,720 $7,734,021 $8,226,830 $8,755,822 $9,323,897 14 Debt Service $0 $0 $0 $0 $0 $0
15 Capital Projects $4,732,681 $12,008,120 $5,793,116 $5,713,971 $2,632,295 $2,750,000 16 Subtotal - Uses of Funds $11,560,048 $19,282,840 $13,527,138 $13,940,801 $11,388,117 $12,073,897 17 18 Ending Balance $24,946,591 $15,628,306 $11,202,471 $6,183,633 $3,688,359 $496,520

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16 NO REVENUE ADJUSTMENT FINANCIAL PERFORMANCE
The District’s financial performance is evaluated based on the reserve targets and debt coverage requirements, as shown in Table 2-12. Under the no revenue adjustment financial plan, the District will not meet its reserve targets for FY 2030 and FY 2031. As indicated in Line 4, the District has no debt coverage requirements.

Table 2-12: Forecasted Financial Performance (No Revenue Adjustment Financial Plan) Line Financial Performance FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Debt Coverage Target
2 Required Debt Coverage 125% 125% 125% 125% 125% 125%
3 Calculated Debt Coverage N/A N/A N/A N/A N/A N/A
4 Meets Coverage? No Debt No Debt No Debt No Debt No Debt No Debt 5 6 Reserve Target
7 Operating Cash Flow $3,413,684 $3,637,360 $3,867,011 $4,113,415 $4,377,911 $4,661,949 8 Rate Stabilization $337,859 $359,147 $395,780 $436,384 $474,738 $515,546 9 Capital Repairs and Replacement
10 Emergency Capital Replacement $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 11 Total Reserve Target $4,751,543 $4,996,507 $5,262,791 $5,549,799 $5,852,649 $6,177,495 12 Total Reserves $24,946,591 $15,628,306 $11,202,471 $6,183,633 $3,688,359 $496,520 13 Meets Reserve Target? Yes Yes Yes Yes No No

Figure 2-1 shows the comparison of revenues and the revenue requirement for the no revenue adjustment financial plan. The stacked bars represent the revenue requirements, or costs: blue for O&M expenses, gray for debt service, and green for rate funded CIP. The District will not be adding to its reserves (light blue) in this scenario. The current revenue, shown as a solid line, is lower than the revenue requirements, meaning that revenues are insufficient to fund necessary costs.

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17 Figure 2-1: Revenue Requirements vs. Revenues (No Revenue Adjustment Financial Plan)

Figure 2-2 shows the fund balance projections in the no revenue adjustment financial plan. The District’s ending balance (green bars) will not meet reserve targets (dashed line) in FY 2030 or FY 2031.

Figure 2-2: Projected Fund Balances (No Revenue Adjustment Financial Plan)

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18 2.8 PROPOSED FINANCIAL PLAN

PROPOSED FINANCIAL PLAN SCENARIO
The proposed financial plan includes three years of proposed revenue adjustments and two years of forecasted adjustments, shown in Table 2-13. These adjustments are needed to maintain the District’s financial sufficiency and were developed based on direction from the District Board.

Table 2-13: Proposed Financial Plan Scenario
Line Fiscal Year Revenue
Adjustment
Effective
Month
1 FY 2027 4.0% July Proposed
2 FY 2028 4.0% July Proposed
3 FY 2029 4.0% July Proposed
4 FY 2030 5.0% July Forecasted
5 FY 2031 5.0% July Forecasted

PROPOSED CASH FLOW PROJECTIONS
Table 2-14 shows the cash flow projections for the proposed financial plan. Revenues (Lines 1-7) are from Table 2-4. Operating expenses (Lines 9-14) are from Table 2-6. Net operating revenue (Line 26) is equal to the difference between total revenues (Line 7) and total operating expenses (Line 14).

Rate funded CIP (Line 23) is the total capital projects from Table 2-8. All CIP during the study period is expected to be rate funded. Net cash flow (Line 28) is equal to the net operating revenue (Line 26) less debt service (Line 19) and less rate funded CIP (line 23). 03/24/2026 C13 71 of 99

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19 Table 2-14: Projected Cash Flows (Proposed Financial Plan) Line Cash Flow Projections FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Revenues
2 Rate Revenues at Existing Rates $8,250,443 $8,294,995 $8,339,788 $8,384,823 $8,430,101 $8,475,624 3 Revenue Adjustments $0 $331,800 $680,527 $1,046,963 $1,526,752 $2,035,528 4 Capacity Rental Charge Revenue $216,004 $216,004 $216,004 $216,004 $216,004 $216,004 5 Operating Revenues $1,256,146 $1,369,560 $481,676 $268,259 $220,221 $200,686 6 Capital Revenues $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 7 Total - Revenues $10,022,593 $10,512,359 $10,017,995 $10,216,049 $10,693,079 $11,227,841 8 9 Operating Expenses
10 Operating Costs $2,335,350 $2,410,415 $2,535,106 $2,666,389 $2,804,617 $2,950,162 11 Encina Treatment Costs $2,961,997 $3,110,097 $3,390,006 $3,695,106 $4,027,666 $4,390,156 12 Allocated Costs $920,555 $929,122 $956,996 $985,706 $1,015,277 $1,045,735 13 All Other Costs, less Transfers $609,465 $825,086 $851,914 $879,629 $908,262 $937,844 14 Total - Operating Expenses $6,827,367 $7,274,720 $7,734,021 $8,226,830 $8,755,822 $9,323,897 15 16 Debt Service
17 Existing Debt $0 $0 $0 $0 $0 $0
18 Proposed Debt $0 $0 $0 $0 $0 $0
19 Total - Debt Service $0 $0 $0 $0 $0 $0
20 21 Capital Projects
22 Debt Funded $0 $0 $0 $0 $0 $0
23 Rate Funded $4,732,681 $12,008,120 $5,793,116 $5,713,971 $2,632,295 $2,750,000 24 Total - Capital Projects $4,732,681 $12,008,120 $5,793,116 $5,713,971 $2,632,295 $2,750,000 25 26 Net Revenue $3,195,226 $3,237,639 $2,283,973 $1,989,219 $1,937,257 $1,903,944 27 Net Revenue Less Debt $3,195,226 $3,237,639 $2,283,973 $1,989,219 $1,937,257 $1,903,944 28 Net Cash Flow ($1,537,455) ($8,770,481) ($3,509,143) ($3,724,752) ($695,038) ($846,056)

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20 PROPOSED FUND BALANCE PROJECTIONS
Table 2-15 shows the fund balance projections for the proposed financial plan. Based on the sources (Lines 3-10) and uses (Lines 12-16) of funds, the District’s fund balances will be approximately $6.3 million at the end of the study period in FY 2031.

Table 2-15: Projected Fund Balances (Proposed Financial Plan) Line Fund Balance Projections FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Combined Beginning Fund Balance $26,700,050 $24,946,591 $15,960,106 $12,234,959 $8,294,203 $7,383,161 2 3 Sources of Funds
4 Rate Revenues at Existing Rates $8,250,443 $8,294,995 $8,339,788 $8,384,823 $8,430,101 $8,475,624 5 Revenue Adjustments $0 $331,800 $680,527 $1,046,963 $1,526,752 $2,035,528 6 Operating Revenues $65,000 $65,000 $65,000 $65,000 $65,000 $65,000 7 Capital Revenues $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 8 Debt Proceeds $0 $0 $0 $0 $0 $0
9 Investment Earnings $1,191,146 $1,304,560 $416,676 $203,259 $155,221 $135,686 10 Total - Sources of Funds $9,806,589 $10,296,355 $9,801,991 $10,000,045 $10,477,075 $11,011,837 11 12 Uses of Funds
13 Operating Expenses $6,827,367 $7,274,720 $7,734,021 $8,226,830 $8,755,822 $9,323,897 14 Debt Service $0 $0 $0 $0 $0 $0
15 Capital Projects $4,732,681 $12,008,120 $5,793,116 $5,713,971 $2,632,295 $2,750,000 16 Total - Uses of Funds $11,560,048 $19,282,840 $13,527,138 $13,940,801 $11,388,117 $12,073,897 17 18 Ending Balance $24,946,591 $15,960,106 $12,234,959 $8,294,203 $7,383,161 $6,321,100

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21 PROPOSED FINANCIAL PERFORMANCE
Table 2-16 shows the forecasted financial performance for the proposed financial plan. Under this plan, the District will meet its reserve targets in all years of the planning period. The District has no current debt and is not forecast to issue debt during the study period.

Table 2-16: Forecasted Financial Performance (Proposed Financial Plan) Line Financial Performance FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Debt Coverage Target
2 Required Debt Coverage 125% 125% 125% 125% 125% 125%
3 Calculated Debt Coverage N/A N/A N/A N/A N/A N/A
4 Meets Coverage? No Debt No Debt No Debt No Debt No Debt No Debt 5 6 Reserve Target
7 Operating Cash Flow $3,413,684 $3,637,360 $3,867,011 $4,113,415 $4,377,911 $4,661,949 8 Rate Stabilization $337,859 $359,147 $395,780 $436,384 $474,738 $515,546 9 Capital Repairs and Replacement
10 Emergency Capital Replacement $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 11 Total Reserve Target $4,751,543 $4,996,507 $5,262,791 $5,549,799 $5,852,649 $6,177,495 12 Total Reserves $24,946,591 $15,960,106 $12,234,959 $8,294,203 $7,383,161 $6,321,100 13 Meets Reserve Target? Yes Yes Yes Yes Yes Yes

Figure 2-3 shows the comparison of revenues and the revenue requirement for the proposed financial plan scenario. The stacked bars represent the revenue requirements, or costs. The proposed revenue (dotted line) remains insufficient to cover the District’s revenue requirement through the period, though it approaches break-even.

Figure 2-3: Revenue Requirements vs. Revenues (Proposed Financial Plan)

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22 Figure 2-4 shows the fund balance projections in the proposed financial plan. The District’s ending balance (green bars) will meet the reserve target (dashed line) in all five years of the study period.

Figure 2-4: Projected Fund Balances (Proposed Financial Plan)

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23 3. COST-OF-SERVICE ANALYSIS

3.1 COST-OF-SERVICE METHODOLOGY
A cost-of-service (COS) analysis is a technical process used to determine the cost of providing wastewater service to the District’s customers based on each customer’s use of and burden on the wastewater system. The COS analysis is the basis of the nexus between the costs incurred by the utility to provide wastewater service and the wastewater rates charged to customers, which is a requirement of Proposition 218.

The COS methodology is based on industry standards set forth by the Water Environment Federation (WEF). The overall goal of the cost-of-service analysis is to develop “unit costs,” which provide the basis from which proposed rates are calculated. Note that, although the study period spans multiple years, the cost-of-service analysis is limited to a single representative year referred to as the “test year.” The test year in this study is FY 2026.

The key steps in conducting a cost-of-service analysis are outlined below:
• Revenue requirement determination: The revenue requirement for the test year is determined based on the results of the proposed financial plan and divided into primary sub- components (operating, capital, etc.).
• Cost functionalization: Operating and capital costs are evaluated and assigned to “functional categories” in the wastewater system (e.g., flow, treatment, billing, etc.). This provides a proportional breakdown of system costs by functional category. • Revenue requirement allocation to cost causation components: Functionalized costs are allocated to “cost causation components” (e.g., flow, BOD, TSS, billing, etc.), which are used to attribute customers’ use of the system to the District’s functional costs. • Unit cost development: The allocation of revenue requirements for each individual cost causation component is divided by the appropriate units of service to establish unit costs for the test year. Unit costs provide the basis from which proposed rates are calculated.

3.2 REVENUE REQUIREMENT
The total rate revenue requirement for the test year, FY 2026, is based on the financial plan projections (Table 2-14) and is allocated between the Operating, Capital and Revenue Offset components, as shown in Table 3-1. The Operating revenue requirement consists of operating expenses (Line 2). The Capital revenue requirement includes debt service (Line 3), rate funded CIP (Line 4), capital revenue (Line 8), capacity rental charge revenue (Line 9), and adjustments for cash from reserves (Line 15; from Table 2-14, Line 28). The Revenue Offset includes all other revenues and interest income (Lines 10-11). The total revenue requirement (Line 18) is equal to the amount of rate revenue collected in FY 2026 (Table 2-14, Line 2).

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24 Table 3-1: FY 2026 Revenue Requirement
Line FY 2026 Revenue Requirement Operating Capital Rev. Offset Total 1 Revenue Requirements
2 Operating Expenses $6,827,367 $0 $0 $6,827,367
3 Debt Service $0 $0 $0 $0
4 Rate Funded CIP $0 $4,732,681 $0 $4,732,681
5 Subtotal - Revenue Requirements $6,827,367 $4,732,681 $0 $11,560,048 6 7 Revenue Offsets
8 Capital Revenue $0 ($300,000) $0 ($300,000)
9 Capacity Rental Charge Revenue $0 ($216,004) $0 ($216,004) 10 All Other Revenues $0 $0 ($65,000) ($65,000)
11 Interest Income $0 $0 ($1,191,146) ($1,191,146)
12 Subtotal - Revenue Offsets $0 ($516,004) ($1,256,146) ($1,772,150) 13 14 Adjustments
15 Cash to/(from) Reserves $0 ($1,537,455) $0 ($1,537,455) 16 Subtotal - Adjustments $0 ($1,537,455) $0 ($1,537,455) 17 18 Total - Revenue Requirement $6,827,367 $2,679,222 ($1,256,146) $8,250,443

3.3 MASS BALANCE
The next step in the cost-of-service analysis is to complete a mass balance, which is detailed in this section. Wastewater flow data is not typically metered, which means that a mass balance must be completed in order to estimate the wastewater flow and strength for each customer class.

Wastewater flow and strength estimates are based on known data (such as total flows into the treatment plant, inflow and infiltration, commercial users’ water use data and strength factors) and relevant assumptions (residential wastewater use per person). Mass balances are typically used to verify the assumed flow and strength units for each customer class.

Table 3-2 shows the wastewater flow for industrial and commercial class in FY 2025. The strength estimates are based on the current definition for each customer type in the District.

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25 Table 3-2: Wastewater Flow and Strength Estimates
Line FY 2025 Flow BOD TSS
1 hcf mg/L mg/L
2 Industrial/Commercial - City
3 Low Strength 57,257 200 200
4 Medium Strength 54,814 450 240
5 High Strength 33,643 1,000 600
6 7 Industrial/Commercial - County/San Marcos
8 Low Strength 25,314 200 200
9 Medium Strength 5,571 450 240
10 High Strength 3,610 1,000 600

Table 3-3 shows the mass balance calculations. The total treatment plant influent flow (Line 2) is the total amount of wastewater flow and strength that enters the treatment plant in FY 2025, based on Encina’s records. Based on historical records, the inflow and infiltration (Line 3) is estimated at 4 percent. The total non-residential flow and strength data are from Table 3-2 (Lines 3-5), converted into lbs per year. The residential flow and strength estimates (Lines 11-13) are calculated by subtracting the total non-residential flow and strength (Lines 7-9) from the net treatment plant flow and strength (Line 4). This calculation is compared with the assumed residential flow and strength from Table 3-4 (Lines 3-5) to see if the assumptions are consistent with influent data. In this case, the difference is minimal, meaning that the flow and strength assumptions are reasonable.

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26 Table 3-3: Mass Balance
Line FY 2025 Flow BOD TSS
1 MG lbs/year lbs/year
2 Total Treatment Plant Influent Flow 717 1,975,110 1,386,104 3 Less Inflow & Infiltration 29 35,902 35,902
4 Net Treatment Plant Influent Flow 688 1,939,207 1,350,202 5 6 Industrial/Commercial - City 109 435,471 279,611
7 Low Strength 43 71,484 71,484
8 Medium Strength 41 153,976 82,120
9 High Strength 25 210,012 126,007
10 11 Industrial/Commercial - County/San Marcos 26 69,788 53,471 12 Low Strength 19 31,604 31,604
13 Medium Strength 4 15,649 8,346
14 High Strength 3 22,535 13,521
15 16 Residential - City 299 774,923 549,664
17 Single Family 194 503,181 356,913
18 Multi-Family 105 271,742 192,750
19 20 Residential - County/San Marcos 256 663,394 470,555 21 Single Family 182 470,654 333,842
22 Multi-Family 74 192,740 136,713

3.4 UNITS OF SERVICE
Table 3-4 shows the units of service by customer class. The industrial and commercial flow and strength is taken from Table 3-3. The residential flow is calculated by multiplying the number of EDUs (from Table 2-2) by 160 gpd. This number is most aligned with the results from the mass balance, indicating that the flow definition per EDU has reduced from the currently assumed 200 gpd per EDU.

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27 Table 3-4: Units of Service Summary by Customer Class Line Customer Class Flow BOD TSS EDUs
1 hcf/year lbs/year lbs/year
2 City Limits
3 Residential 402,075 779,108 552,632 5,924
4 Single Family 261,079 505,898 358,841 3,344
5 Multi-Family 140,995 273,209 193,791 2,580
6 7 Industrial/Commercial 146,501 437,823 281,121 3,951 8 Low Strength 57,566 71,870 71,870
9 Medium Strength 55,110 154,807 82,564
10 High Strength 33,825 211,146 126,687
11 Owned EDU 3,951
12 13 County/San Marcos
14 Residential 344,207 666,976 473,096 4,958
15 Single Family 244,203 473,196 335,644 3,128
16 Multi-Family 100,005 193,781 137,451 1,830
17 18 Industrial/Commercial 34,681 70,165 53,760 492 19 Low Strength 25,451 31,774 31,774
20 Medium Strength 5,601 15,734 8,391
21 High Strength 3,629 22,657 13,594

3.5 FUNCTIONAL CATEGORIES
After determining the revenue requirement and units of service, the next step in the cost-of-service analysis is to allocate the District’s costs into various functional categories. These categories represent the main functions of the District’s wastewater system and include:
• Collection: costs related to the wastewater collection system • Treatment: costs related to treating wastewater
• Water Quality Protection: costs related to stormwater services • General: costs that are not directly attributable to any other functional category • Revenue Offset: non-rate revenue that can be used to offset a portion of the rate

WRE evaluated and allocated the operating expenses for FY 2026 (Table 2-6) to the most closely associated functional categories within the wastewater system, as shown in Table 3-5. The detailed allocation of the operating expense budget to the functional categories is included in the Appendix.

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28 Table 3-5: Operating Costs by System Function
Line Cost Function Operating Expenses Percent of Total
1 Collection $2,335,350 34.2%
2 Treatment $2,961,997 43.4%
3 General $954,682 14.0%
4 Water Quality Protection $575,338 8.4%
5 Total $6,827,367 100.0%

WRE evaluated and allocated the District’s CIP (Table 2-8) to the most closely associated functional categories within the wastewater system, as shown in Table 3-6. The detailed allocation of the capital assets to the functional categories is included in the Appendix.

Table 3-6: Capital Expenses by System Function
Line Cost Function Capital Expenses Percent of Total
1 Collection $16,790,549 49.9%
2 Treatment $13,941,474 41.5%
3 General $2,898,160 8.6%
4 Water Quality Protection $0 0.0%
5 Total $33,630,183 100.0%

Table 3-7 shows the percentage cost allocation for each functional category into the various cost components. The District’s wastewater system has five main functions: flow, BOD, TSS, General, and water quality protection. WRE worked with District staff to determine the cost allocation for each of the system functions. Collection costs (Line 1) are allocated entirely to Flow. Treatment costs (Line 2) are allocated partially to Flow and the remainder is split between BOD and TSS. General costs (Line 3) are entirely allocated to General, and Water Quality Protection costs (Line 4) are allocated entirely to Water Quality Protection.

Table 3-7: Functional Cost Allocation
Line Cost Function Flow BOD TSS General
Water
Quality
Protection
Total
1 Collection 100% 0% 0% 0% 0% 100%
2 Treatment 24% 38% 38% 0% 0% 100%
3 General 0% 0% 0% 100% 0% 100%
4 Water Quality Protection 0% 0% 0% 0% 100% 100%

3.6 OPERATING COST ALLOCATION
Table 3-8 shows the operating cost allocation by cost component. The functionalized operating expenses from Table 3-5 are allocated based on the cost component allocation factors in Table 3-7.

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29 (Line 5) and represents the proportion of the Operating revenue requirement that will be allocated to each cost component.

Table 3-8: Operating Cost Allocation
Line Operating Expenses Flow BOD TSS General
Water
Quality
Protection
Total
1 Collection $2,335,350 $0 $0 $0 $0 $2,335,350
2 Treatment $699,926 $1,131,036 $1,131,036 $0 $0 $2,961,997 3 General $0 $0 $0 $954,682 $0 $954,682
4 Water Quality Protection $0 $0 $0 $0 $575,338 $575,338 5 Total $3,035,276 $1,131,036 $1,131,036 $954,682 $575,338 $6,827,367 6 Operating Cost Allocation 44.5% 16.6% 16.6% 14.0% 8.4% 100.0%

3.7 CAPITAL COST ALLOCATION
Table 3-9 shows the capital cost allocation by cost component. The functionalized capital assets from Table 3-6 are allocated based on the cost component allocation factors in Table 3-7. The capital allocation (Line 6) is derived from the total CIP by cost component (Line 5) and represents the proportion of the Capital revenue requirement that will be allocated to each cost component.

Table 3-9: Capital Cost Allocation
Line Capital Expenses Flow BOD TSS General
Water
Quality
Protection
Total
1 Collection $16,790,549 $0 $0 $0 $0 $16,790,549
2 Treatment $3,294,398 $5,323,538 $5,323,538 $0 $0 $13,941,474 3 General $0 $0 $0 $2,898,160 $0 $2,898,160
4 Water Quality Protection $0 $0 $0 $0 $0 $0
5 Total $20,084,947 $5,323,538 $5,323,538 $2,898,160 $0 $33,630,183 6 Capital Cost Allocation 59.7% 15.8% 15.8% 8.6% 0.0% 100.0%

3.8 REVENUE REQUIREMENT ALLOCATION
Table 3-10 shows the cost-of-service allocation prior to any adjustments and the adjusted cost-of- service allocations after the General cost reallocation. The Operating costs (Line 1) are equal to the total Operating revenue requirements (Table 3-1, Line 18) allocated to each cost component based on the Operating allocation (Table 3-8, Line 6). The Capital costs (Line 2) are equal to the total Capital revenue requirements (Table 3-1, Line 18) allocated to each cost component based on the Capital allocation (Table 3-9, Line 6). The Revenue offset (Line 3) is equal to the total Revenue Offset revenue requirements (Table 3-1, Line 18). Note that the total cost-of-service (Line 4) is equal to the total rate revenue requirement for FY 2026 (Table 3-1, Line 18).

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30 The next step is to reallocate General costs (Line 5) based on the proportion of costs in each cost component (except General and Revenue Offset) in the initial allocation. The total revenue requirement (Line 6) stays the same after the General cost reallocation.

Table 3-10: Revenue Requirement Allocation
Line Revenue Requirement Flow BOD TSS General
Water
Quality
Protection
Revenue
Offset Total
1 Operating Costs $3,035,276 $1,131,036 $1,131,036 $954,682 $575,338 $0 $6,827,367 2 Capital Costs $1,600,111 $424,111 $424,111 $230,888 $0 $0 $2,679,222 3 Revenue Offsets $0 $0 $0 $0 $0 ($1,256,146) ($1,256,146) 4 Total - COS (Initial) $4,635,387 $1,555,147 $1,555,147 $1,185,570 $575,338 ($1,256,146) $8,250,443 5 General Cost Allocation $709,502 $238,034 $238,034 ($1,185,570) $0 $0 $0 6 Total - COS (General) $5,344,889 $1,793,181 $1,793,181 $0 $575,338 ($1,256,146) $8,250,443

3.9 UNIT COST DERIVATION
Table 3-11 shows the unit cost calculations for each cost component based on the revenue requirement allocation results (Table 3-10). The Final COS (Line 1) is divided by the units of service for each cost component (Line 3) to arrive at the unit cost per component (Line 6). Units of service are from Table 3-4. Flow and revenue offset costs are divided by total hcf of estimated wastewater flow for all classes. BOD costs are divided by total lbs of BOD per year for all classes, and TSS costs are divided by total lbs of TSS per year for all classes.

Table 3-11: Unit Cost Calculations
Line Unit Cost Flow BOD TSS Water Quality
Protection Revenue Offset
1 Final COS $5,344,889 $1,793,181 $1,793,181 $575,338 ($1,256,146) 2 3 Units of Service 927,464 1,954,072 1,360,609 9,101 927,464 4 Units hcf lbs/yr lbs/yr Equiv. EDU - City hcf
5 6 Unit Cost $5.76 $0.92 $1.32 $63.22 ($1.35)
7 Units hcf lbs/yr lbs/yr Equiv. EDU - City hcf

3.10 COST-OF-SERVICE BY CUSTOMER CLASS
Table 3-12 shows the total COS by customer class and cost component. The unit costs for each cost component (Table 3-11) are multiplied by the units of service (Table 3-4) to determine the total cost for each class. Note that the total COS (Line 25) is equal to the total rate revenue requirement (Table 3-1, Line 18).

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31 Table 3-12: Cost-of-Service by Customer Class
Line Customer Class Flow BOD TSS
Water
Quality
Protection
Revenue
Offsets Total
1 City
2 Residential
3 Single Family $1,504,576 $464,244 $472,925 $211,393 ($353,603) $2,299,536 4 Multi-Family $812,543 $250,714 $255,402 $114,163 ($190,962) $1,241,860 5 6 Industrial/Commercial
7 Low Strength $331,749 $65,952 $94,719 $0 ($77,967) $414,453 8 Medium Strength $317,594 $142,061 $108,813 $0 ($74,640) $493,828 9 High Strength $194,928 $193,761 $166,965 $0 ($45,812) $509,842 10 Owned EDU $0 $0 $0 $249,782 $0 $249,782
11 12 Subtotal - City $3,161,390 $1,116,733 $1,098,825 $575,338 ($742,984) $5,209,302 13 14 County/San Marcos
15 Residential
16 Single Family $1,407,317 $434,235 $442,354 $0 ($330,745) $1,953,161 17 Multi-Family $576,317 $177,825 $181,151 $0 ($135,445) $799,848 18 19 Industrial/Commercial
20 Low Strength $146,670 $29,158 $41,876 $0 ($34,470) $183,235 21 Medium Strength $32,279 $14,438 $11,059 $0 ($7,586) $50,190 22 High Strength $20,916 $20,791 $17,916 $0 ($4,916) $54,708 23 24 Subtotal - County/San
Marcos $2,183,499 $676,448 $694,356 $0 ($513,162) $3,041,141 25 Total $5,344,889 $1,793,181 $1,793,181 $575,338 ($1,256,146) $8,250,443

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32 4. WASTEWATER RATES

4.1 RATE DESIGN METHODOLOGY
The proposed wastewater rate schedule was developed based on the results of the proposed financial plan and cost-of-service analysis. The key steps in developing the proposed rate schedule are outlined below:
• Test year rate development: Rates are calculated under the proposed rate structure for the cost-of-service test year (FY 2026). Rate calculations directly incorporate the unit costs developed in the cost-of-service analysis. The test year rates are first calculated on a revenue- neutral basis and are then increased based on the proposed financial plan revenue adjustments. Although total rate revenues in the first year of adjustments (FY 2027) are designed to increase by the proposed revenue adjustment percentage (4% in FY 2027), the proposed percentage increase to each rate/charge varies due to the updated cost-of-service allocations.
• Rate schedule development: Proposed rates for the full study period are calculated by increasing the cost-of-service rates by the proposed annual revenue adjustment percentages from the proposed financial plan.

4.2 PROPOSED CHANGES TO THE RATE STRUCTURE
The main objective of the rate study was to conduct a comprehensive cost-of-service analysis while maintaining as much of the current wastewater rate structure as possible to minimize customer impacts. The District’s current wastewater rate structure includes an annual service charge based on customer class and a variable rate for commercial/industrial customers based on annual usage.

After examining current customer classification and discussion with District staff regarding customer usage patterns, WRE recommends the following changes:
• Reducing the gallons per day (gpd) definition from 200 gpd per EDU to 160 gpd due to reductions in wastewater flow.
• Currently, the District provides laundry and car wash discounts to customers who request a variance due to their water recirculation practices. However, upon further investigation, it was found that all discharge for these facilities enters the wastewater system. Thus, no discount should be offered.
• Among the commercial customers, some have separate irrigation meters, and some do not.

For customers with separate irrigation meters, the District should bill based on the actual water usage since irrigation is accounted for in a separate meter. For customers without irrigation meters, the District should bill based on the lowest two months of water usage to account for irrigation usage which does not enter the wastewater system. • During the mass balance process, the District’s BOD readings showed high strength readings.

We recommend that the District conduct an audit of residential water use in the District to pinpoint the source of high strength readings.
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33 4.3 REVENUE ADJUSTMENTS
Table 4-1 shows the annual revenue adjustments based on the proposed financial plan scenario. The revenue-neutral COS charges are increased by the revenue adjustments to determine the proposed wastewater rates.

Table 4-1: Proposed Revenue Adjustments
Line Fiscal Year Revenue
Adjustments
Effective
Date
1 FY 2027 4% 7/1/2026 Proposed
2 FY 2028 4% 7/1/2027 Proposed
3 FY 2029 4% 7/1/2028 Proposed
4 FY 2030 5% 7/1/2029 Forecasted
5 FY 2031 5% 7/1/2030 Forecasted

4.4 WASTEWATER RATE CALCULATION
Table 4-2 shows the revenue-neutral residential annual service charge rate calculation based on the revenue requirement (Table 3-12) and the number of EDUs in each customer class (Table 3-4).

Table 4-2: Residential Rates Calculation
Line Customer Class Revenue
Requirement
Number of
EDUs
Revenue Neutral
Rate ($/EDU)
1 Residential - City
2 Single Family $2,299,536 3,344 $687.67
3 Multi-Family $1,241,860 2,580 $481.37
4 5 Residential - County
6 Single Family $1,953,161 3,128 $624.45
7 Multi-Family $799,848 1,830 $437.12

Table 4-3 shows the revenue-neutral industrial/commercial annual service charge rate calculation based on the revenue requirement (Table 3-12) and the number of EDUs and amount of flow in each customer class (Table 3-4). The current fixed charge represents approximately 30 percent of the total rate revenue. To minimize changes, WRE retained the 30 percent allocation for the fixed charge. The variable rate recovers the remaining 70 percent of the revenue requirement.

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34 Table 4-3: Industrial/Commercial Rates Calculation
Line Customer Class Revenue
Requirement Fixed Charge Variable Rate # of EDU Flow (hcf) Revenue Neutral Rate
1 Industrial/
Commercial $1,706,255 $511,877 $1,194,379 4,443 $115.21 2 Low Strength $597,688 $179,306 $418,381 83,017 $5.04 3 Medium
Strength $544,018 $163,205 $380,812 60,711 $6.27
4 High Strength $564,550 $169,365 $395,185 37,454 $10.55 5 6 Water Quality
Rate $249,782 3,951 $63.22

4.5 PROPOSED RESIDENTIAL WASTEWATER CHARGE
Table 4-4 shows the proposed residential annual service charges for FY 2027 based on the results of the proposed financial plan and the COS analysis. The revenue neutral rate (Table 4-2) is increased by the FY 2027 revenue adjustment in Table 4-1 to arrive at the proposed FY 2027 wastewater rate.

Table 4-4: Proposed Residential Wastewater Charge after Adjustment Line Customer Class Revenue Neutral Rate
($/EDU) FY 2027 Adjustment Proposed Wastewater
Charge ($/EDU)
1 Residential - City
2 Single Family $688 4% $716
3 Multi-Family $481 4% $501
4 5 Residential - County
6 Single Family $624 4% $650
7 Multi-Family $437 4% $455

4.6 PROPOSED COMMERCIAL WASTEWATER CHARGE
Table 4-5 shows the proposed industrial/commercial annual service charges for FY 2027 based on the results of the proposed financial plan and the COS analysis. The revenue neutral rate (Table 4-3) is increased by the FY 2027 revenue adjustment in Table 4-1 to arrive at the proposed FY 2027 wastewater rate.

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35 Table 4-5: Proposed Commercial Wastewater Charge after Adjustment Line Industrial/
Commercial Unit Revenue Neutral
Rate ($/EDU)
FY 2027
Adjustment
Proposed
Wastewater
Charge ($/EDU)
1 Fixed Portion
2 City Limits per EDU owned $178 4% $186
3 County/San Marcos per EDU owned $115 4% $120
4 5 Strength Portion
6 Low Strength per HCF $5.04 4% $5.25
7 Medium Strength per HCF $6.27 4% $6.53
8 High Strength per HCF $10.55 4% $10.98

4.7 PROPOSED CAPACITY RENTAL CHARGE
Table 4-6 shows the capacity rental charge calculation, which is applied to all commercial/industrial customers who exceeded their owned capacity based on their wastewater flow.

WRE retained the same methodology as the previous rate study as it is based on industry accepted methodology for a capacity rental charge calculation.

Currently, customers who exceed their owned EDU capacity are renting additional capacity from the District. Thus, the capacity rental charge is calculated on the “utility basis approach”, which includes a weighted average cost of capital (WACC).

The Rate of Return (Line 4) is calculated by multiplying the WACC (Line 1) by the total assets owned by the District (Lines 2-3). Annual depreciation of those assets is added to the Rate of Return (Line 4) to arrive at the Total Rate of Return (Line 8).

The Total Rate of Return (Line 8) is divided by the total number of EDUs in the system to arrive at the annual rate of return per EDU (Line 11). Finally, the FY 2025 annual rate of return per EDU is inflated to FY 2027 dollars using the projected ENR annual construction cost index.

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36 Table 4-6: Proposed Capacity Rental Charge Calculation Line FY 2025 Values
1 Weighted Average Cost of Capital (WACC) 4.92%
2 Buena Sanitation District Fixed Assets $74,569,763
3 Encina Wastewater Authority Assets $13,154,475
4 Rate of Return $4,316,032
5 Annual Depreciation
6 Buena Sanitation District $3,296,091
7 Encina Wastewater Authority $1,082,526
8 Total Rate of Return $8,694,650
9 10 Total Number of EDUs 15,242
11 Annual Rate of Return per EDU $570.44
12 Projected ENR Index Increase (2026 - 2027) 107.4%
13 Annual Rate of Return per EDU (FY 2027) $613.00

4.8 PROPOSED SANITATION RATE SCHEDULE
The proposed three-year sanitation rate schedule is based on the updated COS analysis and the proposed revenue adjustments in the three-year period. Table 4-7 shows the proposed wastewater rates to be implemented in July 2026 through July 2028.

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37 Table 4-7: Proposed Sanitation Rates Schedule
Line Current Rate 7/1/2026 7/1/2027 7/1/2028
1 City Limits
2 Residential
3 Single Family per unit/year $663 $716 $745 $775
4 Multi-Family per unit/year $463 $501 $522 $543
5 6 Industrial/Commercial
7 Fixed Portion per EDU owned $200 $186 $194 $202
8 9 Strength Portion
10 Low Strength per HCF $5.83 $5.25 $5.46 $5.68
11 Medium Strength per HCF $6.68 $6.53 $6.80 $7.08
12 High Strength per HCF $9.21 $10.98 $11.42 $11.88
13 14 Capacity Rental Charge per excess EDU used $506 $613 $613 $613 15 16 County/San Marcos
17 Residential
18 Single Family per unit/year $621 $650 $676 $704
19 Multi-Family per unit/year $434 $455 $474 $493
20 21 Industrial/Commercial
22 Fixed Portion per EDU owned $158 $120 $125 $130
23 24 Strength Portion
25 Low Strength per HCF $5.83 $5.25 $5.46 $5.68
26 Medium Strength per HCF $6.68 $6.53 $6.80 $7.08
27 High Strength per HCF $9.21 $10.98 $11.42 $11.88
28 29 Capacity Rental Charge per excess EDU used $464 $613 $613 $613

4.9 CUSTOMER IMPACTS
Table 4-8 shows the monthly residential customer impacts based on the first year of proposed wastewater rates. Single family customers within the City limits will see an increase of $53 per year, or $4.42 per month, and customers in the Buena County/San Marcos area will see an increase of $29 per year, or $2.42 per month.

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38 Table 4-8: Proposed Residential Customer Impacts
Line Customer Class Current Bill Proposed Bill Difference ($) Difference (%)
1 Residential - City Limits
2 Single Family $663 $716 $53 7.99%
3 Multi-Family $463 $501 $38 8.21%
4 Weighted Average 8.07%
5 Residential - Buena County/
San Marcos

6 Single Family $621 $650 $29 4.67%
7 Multi-Family $434 $455 $21 4.84%
8 Weighted Average 4.72%

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39 5. APPENDIX
Table 5-1: O&M Allocation
Line O&M Allocation FY 2026 Collection Treatment General Water
Quality
Protection
1 Buena Sanitation District Operations &
Maintenance
2 Salaries & Benefits $1,921,360 100%
3 Professional Services $249,694 100%
4 Encina Treatment Facility $2,961,997 100%
5 Operating Expenses $110,760 100%
6 Utilities $53,536 100%
7 Allocated Costs $920,555 100%
8 Capital Outlay $34,127 100%
9 Transfers to Other Funds
10 Stormwater Expenses $575,338 100%
11 Total - Buena Sanitation District Operations &
Maintenance $6,827,367 $2,335,350 $2,961,997 $954,682 $575,338

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40 Table 5-2: Capital Allocation
Line CIP Allocation 6-year Total Collection Treatment General Water
Quality
Protection
1 Buena Sanitation District Capital Replacement
(Fund 506)
2 Buena Outfall Force Main Extension $0 100%
3 Encina Wastewater Authority Capital
Improvement Project $13,941,474 100%
4 B1: Green Oak Road Trunk Sewer Replacement $5,827,192 100% 5 Buena Yard Improvements $2,112,320 100%
6 Buena Sewer Pipeline Rehabilitation $1,500,000 100%
7 FOG Abatement Buena Creek Pump Station $0 100%
8 Sewer Master Plan $0 100%
9 Buena Creek Pump Station Mechanical
Modifications $0 100%
10 Vallecitos Failsafe Outfall $0 100%
11 Vallecitos Land Outfall Rehabilitation $0 100%
12 Public Works Building C Improvements $785,840 100% 13 Buena Outfall CIPP $0 100%
14 El Valle Opulento Phase 1 - to Creek Crossing $1,263,600 100% 15 Sycamore Ave. under 78 Freeway $1,341,063 100%
16 Verona Hills Pkwy. and Savona Ct. $1,299,270 100%
17 Buena Outfall Under I-5 Freeway $5,559,424 100%
18 Total - Buena Sanitation District Capital
Replacement $33,630,183 $16,790,549 $13,941,474 $2,898,160 $0

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41 Table 5-3: Encina Cost Allocation
Line Encina Cost Allocation FY 2026 Flow BOD TSS
1 Vista
2 Encina Water Pollution Control Facility $5,403,604 50% 50% 3 Source Control $440,000 50% 50%
4 Agua Hedionda Lift Station $505,457 100%
5 Buena Vista Pump Station $930,235 100%
6 Raceway Basin Pump Station $328,328 100%
7 Total Vista $7,607,624 $1,764,020 $2,921,802 $2,921,802 8 23.2% 38.4% 38.4%
9 Buena
10 Encina Water Pollution Control Facility $2,069,694 50% 50% 11 Source Control $147,285 50% 50%
12 Buena Creek Pump Station $702,898 100%
13 Total Buena $2,919,877 $702,898 $1,108,490 $1,108,490 14 24.1% 38.0% 38.0%
15 16 Encina Treatment Allocation (Average) 24% 38% 38%

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Notice of Public Hearing:

Proposed Adjustments to Sewer Rates
This notice is being furnished to you by the City of
Vista (City) pursuant to California Constitution Article XIIID (also known as “Proposition 218”). Under the
terms of Proposition 218, the City is required to notify the property owners of record of proposed changes
to property-related fees, such as sewer services.

If you are currently serviced by a septic system,
please disregard this notice.

Important Information About Your Rates:

Rate adjustments are based on the updated
Rate Study presented to the City Council on
March 24, 2026.

Additional resources, including details on how
to participate in the public hearing and a full
copy of the Rate Study are available at:
vista.gov/SewerRates
Members of the Public are Invited to Review the Rate Study and Attend:

Public Hearing
Tuesday, May 26, 2026 at 5:30pm
Vista City Council Chambers
200 Civic Center Drive, Vista, CA 92084
Details about the proposed sewer rate
adjustments are included in this notice.

Why Have You Received This Notice:

You have received this information because the City
is evaluating rate adjustments that would affect your
sewer bill. The City periodically evaluates sewer rates to ensure sufficient revenue is available to maintain
an adequate rate structure to provide safe and
reliable sewer service, including:
•Fund Vista’s Costs of Operating and Maintaining
the Sewer and Sewage Treatment System;
•Meet Regulatory Compliance; and
•Rehabilitate and Reconstruct Aging Infrastructure
The proposed changes are based on a rate study
conducted by an independent financial consultant.

The research, reasoning and analysis behind
the proposed adjustments are explained in this
document, will be addressed at the public hearing,
and are available on the City’s website at:
vista.gov/SewerRates
The public hearing will cover proposed rate increases
for sewer services. If approved, the proposed sewer
rate adjustments will take effect July 2026, July 2027, and July 2028.

Please refer to the “How Can You Participate”
section for instructions on submitting a formal written protest against the proposed action. All written
protests will be verified. You may also appear at the
public hearing to share any comments or concerns.

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4 Why Are Rate Adjustments Necessary?
The updated rates will allow the City to address the
long-term needs of the community, including:

How You Can Participate:

The City welcomes your participation and input
throughout the process as they consider the changes
explained in this notice. If you have questions or
comments about the City’s proposed rates, you can:

Write. Property owners or account holders may submit
written protests or legal objections by mail or in person to the City of Vista, Office of the City Clerk, 200 Civic Center Drive, Vista, CA 92084. Only one written protest per parcel should be submitted and must include the name of the
record owner or customer of record, street address or
utility account number, and include original signature.

Protests: Protests must be received by mail no later than May 26, 2026, and you may appear at the May 26, 2026
hearing to make comments regarding the proposed rates.

Protests may also be delivered in person and must be
received until the May 26, 2026, public hearing is closed.

Legal Objections: To be considered sufficient, a legal
objection must be submitted in writing and must
describe the nature of the objection with sufficient
specificity (enough detail) to allow the City to respond in writing. Written legal objections must be received by May 26, 2026. Pursuant to Government Code Section
53759.1, failure to submit a timely and sufficient written objection will bar any right to challenge the proposed
rates in a judicial proceeding. Pursuant to Government
Code Section 53759, any judicial action or proceeding
challenging any new, increased, or extended water fee or charge must be filed within 120 days from the effective date of the resolution adopting the fee or charge. In any legal challenge, judicial review will generally be limited to the administrative record developed by the District, as provided in Government Code Section 53759.2.

Attend the Public Hearing. Members of the public
are welcome to attend the public hearing regarding the
proposed rate changes. At the hearing, all members of
the public will have the opportunity to speak, but verbal comments alone do not qualify as a formal protest.

Public Hearing Process. At the time of the public
hearing, the City will hear and consider all written protests and public comments. After the public hearing, if a
majority of the property owners or account holders of the impacted parcels submit written protests in opposition to the proposed rate adjustments, then the proposed rate
adjustments will not be imposed. If a majority written
protest is not received, the City may adopt the proposed changes, though they are not obligated to.

Maintenance,
Repair and
Upgrade of the
City Sewer System
City’s Share
of the Costs (40%)
at the Encina
Treatment Facility
Si gustaría obtener esta información en
español, por favor visite vista.gov/SewerRates
o contáctenos a (760) 639-6139.

Proposed changes are
described in more detail in
the City’s Rate Study available
by scanning this QR code or
visiting vista.gov/SewerRates
03/24/2026 C13 96 of 99
EXHIBIT 3

What Are The Proposed Changes?
If approved, the average household will see an
average annual sewer rate increase of 5.1% on their
annual bill beginning July 2026.

Residential customers will see the following
increases in the first year.

Proposed Sewer Rates
A proposed three-year schedule of sewer rates
are shown below.

Billing Change: Beginning in July 2026, the City
will no longer issue direct bills for sewer services.

Instead, the service charges will be collected on your
property tax bill.

Lifeline Rebate Program: Residential customers
meeting low-income limits qualify for a 30% service
charge rebate.

Understanding Your Rate Structure
The cost of providing service and service charges are
proportionally distributed amongst sewer customers
based on usage and strength.

Residential Customers
Residential rates are annual flat charges based on
the type of dwelling unit. Commercial and industrial
wastewater is composed of two separate rate
components:

1. Fixed Charge Based on the Capacity Owned, and

2. Volumetric Charge Based on the Strength of the
Wastewater
Residential customers within the city generally have
very similar wastewater characteristics. This includes
the amount of wastewater discharged into the City’s
pipes as well as the level of treatment required once
the sewer water is received by Encina. Since most
customers are residential, this flat charge helps the
City keep costs low, which translates into savings for
our customers.

Commercial Customers
Commercial/Industrial users may be subject to a
capacity rental charge based on the volumetric excess
flow over sewer capacity owned.

Sewer Services Overview
Once water drains from a sink, bathtub, washing
machine, or toilet, it becomes wastewater. In the City
of Vista, 215 miles of underground pipes from our
homes and businesses lead all of our wastewater
into one central pipe, which enters the Encina
Wastewater Treatment Facility in Carlsbad. At Encina,
all wastewater is cleansed of pollutants before it’s
released into the ocean. As a result of this collection system and treatment process, public health and
water quality are preserved and protected.

In addition to wastewater collection, the City provides water quality protection services. These services
protect life, property, receiving waters, and the
environment from loss or damage by discharges from
within the City’s jurisdiction.

In partnership with our customers, we are dedicated to managing our City’s sewer collection system and in protecting our waterways.

What Does My Sewer Bill Fund?
The sewer system’s expenses (as shown below)
are primarily fixed in nature, meaning they are not
connected to the flow of wastewater through the
system. The City’s sewer system includes pump stations
and over 215 miles of collection pipes located under
almost every street in the City. To maintain the system, City crews clean and CCTV pipelines on a cyclical basis.

Equipment
Maintenance
Utilities17%
22%
20%
22%
19%
Encina
Operation &
Maintenance
Staffing (Collection &
System Maintenance)
Capital
(Collection
& System
Improvements)
Encina Capital
Improvements
City Limits CURRENT
RATES
Proposed
July 2026
Proposed
July 2027
Proposed
July 2028
Residential Per Unit/Year
Single Family $ 708 $ 744 $ 785 $ 829
Multi-Family 495 521 550 581
Industrial/Commercial
Fixed Portion (Per EDU Owned)$ 177 $ 215 $ 227 $ 240
Strength Portion (Per HCF)
Low Strength 6.56 6.07 6.41 6.77
Medium Strength 7.70 7.52 7.94 8.38
High Strength 11.00 12.58 13.28 14.02
Capacity Rental Charge
Per Excess EDU Used $ 546 $ 671 $ 671 $ 671

1. Single Family Residential includes condominiums, townhomes and duplexes.

2. Multi- Family Residential includes apartments of three or more dwellings units and mobile homes.

3. Commercial/ Industrial customer charges vary depending on the type of use, amount of flow, and strength of flow.

4. Strength Portion Includes Biochemical Oxygen Demand: amount of oxygen required to stabilize the waste biologically.

5. Strength Portion Includes Suspended Solids: solids in wastewater that cannot be removed with conventional gravity settling which requires treatment.

6. Capacity Rental Charge Applied to Commercial/ Industrial users who discharge more capacity than they own.

7. EDU: Unit of measure which is based on the flow characteristic of an average single- family residence(160 gallons/ day).

8. HCF (Hundred Cubic Feet) = 748 Gallons of Water
If you have questions about the
proposed rate increase, please
contact City staff at (760) 639-6139.

An independent financial consultant conducted a
cost-of-service study in partnership with the City. The study includes a legally compliant rate framework that
ensures fairness and equity to all customers.

As a public agency, the City cannot earn a profit from the services it provides, and must charge no more than the actual costs associated with providing services to its customers. $36 Single-Family Annual Increase
Average $26 Multi-Family Annual Increase
Average
03/24/2026 C13 97 of 99

Buena
Sanitation
District
Notice of Public Hearing:

Proposed Adjustments to Sewer Rates
This notice is being furnished to you by the Buena
Sanitation District (BSD or District) pursuant to
California Constitution Article XIIID (also known as
“Proposition 218”). Under the terms of Proposition
218, BSD is required to notify the property owners of
record of proposed changes to property-related fees,
such as sewer services.

If you are currently serviced by a septic system,
please disregard this notice.

Important Information About Your Rates:

Rate adjustments are based on the updated
Rate Study presented to the Vista City Council
on March 24, 2026.

Additional resources, including details on how
to participate in the public hearing and a full
copy of the Rate Study are available at:
vista.gov/SewerRates
Members of the Public are Invited to Review the Rate Study and Attend:

Public Hearing
Tuesday, May 26, 2026 at 5:30pm
Vista City Council Chambers
200 Civic Center Drive, Vista, CA 92084
Details about the proposed sewer rate
adjustments are included in this notice.

Why Have You Received This Notice:

You have received this information because BSD is
evaluating rate adjustments that would affect your
sewer bill. The District periodically evaluates sewer
rates to ensure sufficient revenue is available to
maintain an adequate rate structure to provide safe
and reliable sewer service, including:
•Fund BSD’s Costs of Operating and Maintaining
the Sewer and Sewage Treatment System;
•Meet Regulatory Compliance; and
•Rehabilitate and Reconstruct Aging Infrastructure
The proposed changes are based on a rate study
conducted by an independent financial consultant.

The research, reasoning and analysis behind
the proposed adjustments are explained in this
document, will be addressed at the public hearing,
and are available on the City of Vista’s website at:
vista.gov/SewerRates
The public hearing will cover proposed rate increases
for sewer services. If approved, the proposed sewer
rate adjustments will take effect July 2026, July 2027, and July 2028.

Please refer to the “How Can You Participate”
section for instructions on submitting a formal written protest against the proposed action. All written
protests will be verified. You may also appear at the
public hearing to share any comments or concerns.

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4 The updated rates will allow BSD to address the long- term needs of the community, including:

Maintenance,
Repair and
Upgrade of the
BSD Sewer System
BSD’s Share
of the Costs (25%)
at the Encina
Treatment Facility
Si gustaría obtener esta información en
español, por favor visite vista.gov/SewerRates
o contáctenos a (760) 639-6139.

Why Are Rate Adjustments Necessary?
How You Can Participate:

BSD welcomes your participation and input throughout
the process as they consider the changes explained in this notice. If you have questions or comments about BSD’s
proposed rates, you can:

Write. Property owners or account holders may submit
written protests or legal objections by mail or in person to the City of Vista, Office of the City Clerk, 200 Civic Center Drive, Vista, CA 92084. Only one written protest per parcel should be submitted and must include the name of the
record owner or customer of record, street address or
utility account number, and include original signature.

Protests: Protests must be received by mail no later than May 26, 2026, and you may appear at the May 26, 2026
hearing to make comments regarding the proposed rates.

Protests may also be delivered in person and must be
received until the May 26, 2026, public hearing is closed.

Legal Objections: To be considered sufficient, a legal
objection must be submitted in writing and must describe the nature of the objection with sufficient specificity (enough detail) to allow BSD to respond in writing. Written legal objections must be received by May 26, 2026.

Pursuant to Government Code Section 53759.1, failure
to submit a timely and sufficient written objection will bar any right to challenge the proposed rates in a judicial proceeding. Pursuant to Government Code Section 53759,
any judicial action or proceeding challenging any new,
increased, or extended water fee or charge must be filed within 120 days from the effective date of the resolution adopting the fee or charge. In any legal challenge, judicial review will generally be limited to the administrative
record developed by BSD, as provided in Government
Code Section 53759.2.

Attend the Public Hearing. Members of the public
are welcome to attend the public hearing regarding the
proposed rate changes. At the hearing, all members of
the public will have the opportunity to speak, but verbal comments alone do not qualify as a formal protest.

Public Hearing Process. At the time of the public
hearing, BSD will hear and consider all written protests and public comments. After the public hearing, if a
majority of the property owners or account holders of the impacted parcels submit written protests in opposition to the proposed rate adjustments, then the proposed rate
adjustments will not be imposed. If a majority written
protest is not received, BSD may adopt the proposed
changes, though they are not obligated to.

Proposed changes are
described in more detail in
BSD’s Rate Study available
by scanning this QR code or
visiting vista.gov/SewerRates
03/24/2026 C13 98 of 99
EXHIBIT 4

What Are The Proposed Changes?
If approved, the average household will see an
average annual sewer rate increase of 4.7% on their
annual bill beginning July 2026.

Residential customers will see the following
increases in the first year.

Proposed Sewer Rates
A proposed three-year schedule of sewer rates are shown below. The first table includes details for customers within Buena City limits and the second is for Buena County / San Marcos customers.

Billing Change: Beginning in July 2026, BSD will no
longer issue direct bills for sewer services. Instead,
the service charges will be collected on your
property tax bill.

Lifeline Rebate Program: Residential customers
meeting low-income limits qualify for a 30% service
charge rebate.

Understanding Your Rate Structure
The cost of providing service and service charges are
proportionally distributed amongst sewer customers
based on usage and strength.

Residential Customers
Residential rates are annual flat charges based on
the type of dwelling unit. Commercial and industrial
wastewater is composed of two separate rate
components:

1.Fixed Charge Based on the Capacity Owned, and

2.Volumetric Charge Based on the Strength of the
Wastewater
Residential customers within the District generally
have very similar wastewater characteristics. This
includes the amount of wastewater discharged into
the District’s pipes as well as the level of treatment
required once the sewer water is received by Encina.

In addition, since most customers are residential, this flat charge helps the District keep costs low, which
translates into savings for our customers.

Commercial/Industrial Customers
Commercial/Industrial users may be subject to a
capacity rental charge based on the volumetric excess
flow over sewer capacity owned.

Sewer Services Overview
Once water drains from a sink, bathtub, washing
machine,or toilet, it becomes wastewater. In the
District, 101 miles of underground pipes from our
homes and businesses lead all of our wastewater
into one central pipe, which enters the Encina
Wastewater Treatment Facility in Carlsbad. At Encina,
all wastewater is cleansed of pollutants before it’s
released into the ocean. As a result of this collection system and treatment process, public health and
water quality are preserved and protected.
**In addition to wastewater collection, the City of Vista provides 18% of the District (within City limits) with
water quality protection services. Households within
this area are charged an additional $24 annually for
services to protect life, property, receiving waters, and the environment from loss or damage by discharges
from within the District’s jurisdiction.

What Does My Sewer Bill Fund?
The sewer system’s expenses (as shown below) are
primarily fixed in nature, meaning they are not
connected to the flow of wastewater through the
system. The District’s sewer system includes pump
stations and 101 miles of collection pipes located
under almost every street in the District. To maintain
the system, BSD crews clean and CCTV pipelines on a
cyclical basis.
47%12%
10%
15%16%
Capital
(Collection
System &
Improvements)
Collection
System
Maintenance
Encina
Capital
Improvements
Encina Operation &
Maintenance
Buena City Limits**CURRENT
RATES
Proposed
July 2026
Proposed
July 2027
Proposed
July 2028
Residential Per Unit/Year
Single Family $ 663 $ 716 $ 745 $ 775
Multi-Family 463 501 522 543
Industrial/Commercial
Fixed Portion (Per EDU Owned)$ 200 $ 186 $ 194 $ 202
Strength Portion (Per HCF)
Low Strength 5.83 5.25 5.46 5.68
Medium Strength 6.68 6.53 6.80 7.08
High Strength 9.21 10.98 11.42 11.88
Capacity Rental Charge
Per Excess EDU Used $ 506 $ 613 $ 613 $ 613
As a public agency, BSD cannot earn a profit from the services it provides, and must charge no more than the actual costs associated with providing services to its customers.

1.Single Family Residential
includes condominiums,
townhomes and duplexes.

2.Multi- Family Residential
includes apartments of
three or more dwellings
units and mobile homes.

3.Commercial/ Industrial
customer charges vary
depending on the type of
use, amount of flow, and
strength of flow.

4.Strength Portion Includes
Biochemical Oxygen
Demand: amount of oxygen
required to stabilize the
waste biologically.

5.Strength Portion Includes
Suspended Solids: solids in
wastewater that cannot be
removed with conventional
gravity settling which
requires treatment.

6.Capacity Rental Charge
Applied to Commercial/
Industrial users who
discharge more capacity
than they own.

7.EDU: Unit of measure
which is based on the flow
characteristic of an average
single- family residence(160
gallons/ day).

8.HCF (Hundred Cubic Feet) =
748 Gallons of Water
If you have questions about the proposed rate increase, please contact District staff at (760) 639-6139.

An independent financial consultant conducted a
cost-of-service study in partnership with the District.

The study includes a legally compliant rate framework
that ensures fairness and equity to all customers.

Buena County/San Marcos CURRENT
RATES
Proposed
July 2026
Proposed
July 2027
Proposed
July 2028
Residential Per Unit/Year
Single Family $ 621 $ 650 $ 676 $ 704
Multi-Family 434 455 474 493
Industrial/Commercial
Fixed Portion (Per EDU Owned)$ 158 $ 120 $ 125 $ 130
Strength Portion (Per HCF)
Low Strength 5.83 5.25 5.46 5.68
Medium Strength 6.68 6.53 6.80 7.08
High Strength 9.21 10.98 11.42 11.88
Capacity Rental Charge
Per Excess EDU Used $ 464 $ 613 $ 613 $ 613
Equipment
Maintenance
Utilities
$53
Buena City Limits**
Single-Family Annual Increase Average
Multi-Family Annual Increase
Average$38
$29
Buena County / San Marcos
Single-Family Annual Increase Average
Multi-Family Annual Increase
Average$21
03/24/2026 C13 99 of 99