Agenda packet — West Sacramento City Council, December 3, 2025 (part 3 of 3)

What are other agencies doing with rates?
We looked at the following neighboring jurisdictions to assess how they have addressed and plan to address their sewer and water rates. These agencies include:
• City of Sacramento
• City of Davis
• City of Elk Grove
• City of Woodland
• City of Folsom
• City of Roseville
• City of Lincoln
Sewer Rates
Among the agencies compared to the City of West Sacramento, Sacramento Area Sewer District provides treatment services to the Cities of Sacramento, Elk Grove, and Folsom, too.

Of the seven agencies considered we found the following:
• City of Sacramento – The City has not increased rates since 2019. They are currently undergoing a five-year study with a Proposition 218 notice of rate adjustments anticipated to be issued in 2026. Their services include both collection and treatment. • City of Davis – A cost of service study was conducted to realign collection and treatment rates in 2024 and establish rates through 2028. The City plans to increase rates annually by 5% each June of 2025-2028.
• City of Elk Grove – The City receives both treatment and collection services from Sacramento Area Sewer District. According to information obtained from Sacramento Area Sewer District, residential bills consisting of both the collection and treatment components will increase by 8% and 7%, respectively in 2026. These follow consecutive increases in prior years ranging from 9-15%. • City of Woodland – The City provides its customers with both treatment and collection services. Currently, it plans to issue 2% annual increases to residential customers in 2026, following the recently adopted 2% increase in 2025. • City of Folsom – The City has not increased its collection rates since 2024. However, a new rate study is underway to establish rates beginning in 2027. • City of Roseville – The City has conducted a rate study to set sewer collection and treatment rates through 2029. Currently, only rate increases for 2025-2027 have been adopted, which include 2% annual increases in 2026 and 2027. • City of Lincoln – The City has issued a Proposition 218 notice to set sewer collection and treatment rates through 2028. However, the City’s treatment rates are passed through from Lincoln-Sewer Maintenance District 1 Wastewater Authority. Currently, the Authority’s rates have only been published through 2027. The City notice shows 364
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Other Agency Rate Status
11/4/2025

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collection rates would increase annually by 5% from 2026-2028. The City notice also shows the treatment rates would increase 3% in both 2026 and 2027.

Water Rates
Of the seven agencies considered we found the following:
• City of Sacramento – The City has not increased rates since 2019. There is currently a rate study underway with rates scheduled to be adopted in late 2026. • City of Davis – The City has not increased rates since 2019, based on information available on the City’s website.
• City of Elk Grove – The City has published conducted a rate study which show increases ranging between 4.5% and 5% for both the fixed charges and tiered rates assessed to residential customers from 2025 through 2028.
• City of Woodland – The City has documented planned increases of 3% in 2026.

Previously, rates have been increased annually by 3% from 2023-2025. • City of Folsom – The City has not increased its rates since 2022. The most recent rate study conducted established rates through 2024. However, no increases were adopted in 2023 or 2024. Currently a rate study is underway to establish rates for a five-year period beginning in 2027.
• City of Roseville – The City published plans to increase rates by 4% in 2026. • City of Lincoln – The City has published a five-year schedule of rates to establish water rates through fiscal year 2027.
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CITY OF WEST

SACRAMENTO
Water and Sewer Cost-of-Service Study
November 20, 2025
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HF&H Consultants
590 Ygnacio Valley Rd. Suite 105
Walnut Creek, CA 94596
Phone: (925) 977-6950
Web: hfh-consultants.com
November 20, 2025
Roberta Raper
Director of Finance
City of West Sacramento
1110 W Capitol Ave
West Sacramento, CA 95691
Sent via email: [email protected]
Subject: Water and Sewer Rate Cost-of-Service Study
Dear Roberta Raper,
HF&H is pleased to submit this cost-of-service report to the City of West Sacramento (City).

The report summarizes the analysis that was conducted to develop the recommended water and sewer rates for FY 2025-26 through FY 2029-30. The rates proposed in this report reflect the current and projected cost of providing water and sewer service for the next five years.

We greatly appreciate your assistance in developing the cost-of-service analysis.

Sincerely,
Rick Simonson
Senior Vice President
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Water and Sewer Cost-of-Service Study
City of West Sacramento | November 20, 2025 | Page i

CONTENTS
I. EXECUTIVE SUMMARY................................................... 1 Study Objectives................................................................. 1 Findings and Recommendations ............................................ 1 II. INTRODUCTION........................................................... 6 Study Purpose .................................................................... 7 Study Process..................................................................... 7 Report Organization............................................................. 7 III. WATER REVENUE REQUIREMENTS ............................. 9 Revenue Requirement Assumptions and Projections................. 9 Reserves ...........................................................................11 Revenue Increases .............................................................12 Debt Service Coverage........................................................13 Reserve Fund balance .........................................................13 IV. WATER RATE COST OF SERVICE ANALYSIS............... 15 Methodology......................................................................15 Customer Classes...............................................................16 Cost-of-Service Allocations ..................................................16 V. WATER RATE DESIGN................................................. 19 Current rates .....................................................................19 Service Charge Design........................................................20 Commodity Charge Design ..................................................22 VI. WATER BILL IMPACTS .............................................. 23 Bill Comparision ................................................................. 23 VII. SEWER REVENUE REQUIREMENTS........................... 25 Reserves ...........................................................................27 Revenue Increases .............................................................27 Debt service Coverage ........................................................28 Reserve Fund Balance.........................................................29 VIII. SEWER RATE COST OF SERVICE ANALYSIS ............ 30 Methodology......................................................................30 Customer Classes...............................................................30 Cost-of-Service Allocations ..................................................30 IX. SEWER RATE DESIGN................................................ 35 Current Rates ....................................................................35 Service Charge Design........................................................35 ATTACHMENT 5
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Water and Sewer Cost-of-Service Study
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Volumetric Rates Design......................................................36 X. SEWER BILL IMPACTS ................................................ 38 Bill Comparison..................................................................38 XI. COMBINED UTILITY BILL IMPACTS........................... 41

FIGURES
Figure I-1. Water Enterprise Reserve Fund Balance.............................................. 2 Figure I-2. Cost-of-Service Water Rates Revenue Summary .................................. 3 Figure I-3. Current and Proposed Service Charge Rates ....................................... 3 Figure I-4. Current and Proposed Commodity Charge Rates.................................. 3 Figure I-5. Sewer Enterprise Reserve Fund Balance ............................................. 4 Figure I-6. Cost-of-Service Sewer Rates Revenue Summary ................................. 5 Figure I-8. Current and Proposed Volumetric Rates.............................................. 5 Figure III-1. Projection Assumptions.................................................................. 9 Figure III-2. Total Annual Projected Revenue Requirement for Water Enterprise .... 10 Figure III-3. Water Enterprise Five-Year Capital Improvement Plan...................... 11 Figure III-4. Rate Increase Calculations ........................................................... 13 Figure III-5. City Debt Coverage Ratio Calculations (with rate adjustments) ......... 13 Figure III-6. Water Enterprise Fund Balance Projection ...................................... 14 Figure IV-1. Allocation of FY 2025-26 Revenue Requirement............................... 17 Figure IV-2. Cost-of-Service Allocation Factors .................................................. 17 Figure IV-3. Cost-of-Service Revenue Summary ................................................ 18 Figure V-1. Current Service Charges ................................................................ 19 Figure V-2. Current Commodity Charges .......................................................... 19 Figure V-3. Service Charge Units of Service ...................................................... 20 Figure V-4. Service Charge Unit Costs.............................................................. 21 Figure V-5. Proposed Bi-Monthly Service Charge Rates – FY 2025-26................... 21 Figure V-6. Current and Proposed Service Charge Rates..................................... 22 Figure V-7. Calculation of Commercial/Multi Family Uniform Commodity Charges .. 22 Figure V-8. Current and Proposed Commodity Charge Rates ............................... 22 Figure VI-1. Single Family Residential Bill Comparison ........................................ 23 Figure VI-2. Single Family Residential Monthly Water Bill Survey .......................... 24 Figure VI-3. Sample Commercial Bill Impacts by Meter Size and Water Use ........... 24 Figure VII-1. Key Modeling Assumptions .......................................................... 25 Figure VII-2. Total Annual Projected Revenue Requirements for Sewer Enterprise.. 26 Figure VII-3. Sewer Five-Year Capital Improvement Plan .................................... 27 Figure VII-4. Rate Increase Calculations........................................................... 28 Figure VII-5. City Debt Coverage Ratio Calculations (with rate adjustments)......... 29 Figure VII-6. Projected Year-End Fund Balance ................................................. 29 Figure VIII-1. Allocation of FY 2025-26 Revenue Requirement ............................ 31 Figure VIII-2. Cost-of-Service Allocation Factors................................................ 32 Figure VIII-3. Units of Service Calculations....................................................... 32 Figure VIII-4. Summary of Units of Service by Customer Class ........................... 32 Figure VIII-5. Unit Costs of Service (City) ......................................................... 33 ATTACHMENT 5
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Water and Sewer Cost-of-Service Study
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Figure VIII-6. Unit Rates per Customer Class ..................................................... 34 Figure VIII-7. Cost-of-Service Revenue Summary.............................................. 34 Figure IX-1. Current Sewer Rates .................................................................... 35 Figure IX-2. Cost of Service Rates Calculations ................................................. 36 Figure IX-3. Current and Proposed Sewer Rates ................................................ 37 Figure X-1. Comparison of Monthly Sewer Charges for Single Family Customers.... 38 Figure X-2. Comparison of Commercial Customer Bills (1 ESD billed by SASD)...... 39 Figure X-3. Comparison of Commercial Customer Bills (5 ESDs billed by SASD) .... 40 Figure X-4. Comparison of Commercial Customer Bills (10 ESDs billed by SASD)... 40 Figure XI-1. Combined Residential Water and Sewer Bill Comparison (eff. 4/1/2026) ..................................................................................................... 41 Figure XI-2. Combined Five-Year Water and Sewer Bill Impacts........................... 42 ATTACHMENT 5
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Water and Sewer Cost-of-Service Study
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GLOSSARY
AWWA – American Water Works Association.

City – City of West Sacramento and/or the City’s Water or Sewer Enterprise CCF – Hundred cubic feet (see HCF below).

CIP - Capital Improvement Program.

Commodity Charges – The product of commodity rates per unit of metered water use multiplied by a customers metered water use during the billing period.

Commodity Rates – The rates assessed per unit of metered water use during the billing period to determine the volumetric portion of a water bill.

EMU – Equivalent Meter Unit.

ESD – Equivalent Sewer Dwelling.

EU – Environment & Utilities (Commission).

FY - Fiscal Year.

Flat rates - Fixed charges per account that do not vary based on metered water use. Flat rates are found in unmetered water systems and in wastewater rates. Flat rates are not uniform rates (see below).

GPD - Gallons Per Day.

HCF - Hundred cubic feet of metered water; 748 gallons; a cube of water 4.6 feet on edge.

One HCF per month is about 25 gallons per day.

Meter charges - One-time charges for the purchase of a meter. Meter charges are not Service Charges (see below).

Multi-Family Residential – Refers to the current Multi Family Residential customer class.

Includes all multi-family customer accounts, including those receiving irrigation from the same potable meter.

O&M - Operating and Maintenance, in reference to the costs of running facilities.

PAYGo - Pay-As-You-Go, in reference to funding capital improvements from cash rather than from borrowed sources such as bonds or loans.

SASD – Sacramento Area Sewer District.

Service Charges (sewer) – Fixed charges paid by City customers for sewer collection service. All residential and commercials with a water meter attached to their parcel are charged a service charge on their sewer bill.

Service Charges (water) – Fixed charges paid by City customers per water meter size, regardless of the amount of water used. The charge is proportionate to the capacity of the customer’s service.

Study Period – Five-year planning period analyzed in this study, which includes fiscal year 2025-26 to fiscal year 2029-30.

Uniform rates - Constant charges per unit of water use that do not change depending on the amount used. Uniform rates are not flat rates (see above).

Volumetric Rates – The rates assessed per unit of metered water use during the billing period to determine the volumetric portion of a wastewater bill.

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Water and Sewer Cost-of-Service Study
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ACKNOWLEDGEMENTS
City Council
Martha Guerrero, Mayor
Verna Sulpizio Hull, Mayor Pro Tem
Norma Alcala, Councilmember
Quirina Orozco, Councilmember
Dawnté Early, Councilmember
Environment & Utilities Commission
Alexander McFall, Member
Dayna Cordano, Member
Keith Cialino, Member
Peter Blando, Member
Suzanne Reed, Member
Tiffany Solorio, Member
Vacant, Member
David Julian, Alternate Member
City Staff
Roberta Raper, Finance Director
Rebecca Scott, Director of Public Works, Operations & Maintenance Robert Santos, Public Works Utilities Superintendent
Chris Kania, Water Treatment Plan Superintendent
Kaisa Miller, Senior Program Manager
Ryan Burnett, Sustainability Manager
Amber Wallace, Senior Civil Engineer
Ariana Adame, Assistant City Manager, Community Services Jaipal Chahal, Director of Capital Projects
Angie Familia, Finance Supervisor
Marjorie Dussault, Accounting Technician
GDP Communications & Marketing
Gina DePinto, Owner
HF&H Consultants, LLC
Rick Simonson, Senior Vice President
Gabe Sasser, PE, Project Manager
Alex Santos, Senior Associate
La Velda Peterson, Assistant Analyst
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Water and Sewer Cost-of-Service Study
City of West Sacramento | November 20, 2025 | Page vi

LIMITATIONS
This document was prepared solely for the City of West Sacramento in accordance with the contract between the City and HF&H and is not intended for use by any other party for any other purpose.

In preparing this study, we relied on information from the City, which we consider accurate and reliable. Our analysis is based on the best available information at the time of the study.

Rounding differences caused by stored values in electronic models may exist.

This document represents our understanding of relevant laws, regulations, and court decisions but should not be relied upon as legal advice. Questions concerning the interpretation of legal authorities referenced in this document should be referred to a qualified attorney.

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City of West Sacramento | November 20, 2025 | Page 1 of 42 I. Executive Summary
This study documents the process by which the City of West Sacramento’s (City’s) water and sewer rates were analyzed to ensure that rates continue to meet the cost of service. This report describes how the revenue requirement (expenses) is apportioned between customer classes receiving water and sewer service, the appropriate changes in the respective classes’ rates to cover their costs, and the proposed water and sewer rate designs that are appropriate to ensure that customers continue paying their proportionate share.

STUDY OBJECTIVES
The City undertook this rate study to meet the following key objectives.

1. Provide revenue sufficiency and financial stability - Ensure revenues from future water and sewer rates continue covering costs without depleting reserves and maintaining necessary debt service coverage requirements. Revenue requirement projections (i.e., expenses) are increasing with expanded capital program expenses to upgrade aging infrastructure.

2. Maintain adequate reserves to meet City policies – Confirm future rates will continue to generate revenues that will keep the City’s reserve balance in line with its target threshold to have sufficient reserves on hand for operational cash flow, debt service payments, unplanned emergencies, retirement funding liability, and capital project funding.

3. Rate payer equity - Revisit allocation of City’s costs to verify each customer class pays their proportionate share of expenses for each utility. Each customer within each customer class must pay their proportionate share of expenses via volumetric and service capacity charges.

FINDINGS AND RECOMMENDATIONS
The following discussion summarizes HF&H’s findings and recommendations for both the City’s Water and Sewer Enterprises.

1. Water rate revenue increases are necessary. The City has not increased rates since 2021. Revenue increases are needed to fund additional staffing and operational expenses.

The City’s capital improvement plans to fund necessary infrastructure are to be funded through a combination of new debt issuance and cash on-hand. These capital needs necessitate rate revenue increases, as well. Annual revenue increases of 20%, 15%, 6%, 5%, and 5% over the next five fiscal years (FY) 2025-26 through 2029-30 are recommended. Refer to Section III for additional details.

2. The City will continue to meet all Water Enterprise reserve targets with recommended revenue increases. Increasing water rate revenues will allow the City to continue to maintain sufficient reserves to meet the minimum and target reserve levels.

Cost increases should be monitored to ensure modeled rate increases are sufficient. The City should re-analyze rates within five years to ensure rates are providing enough support so that reserves continue to meet the target threshold. Figure I-1 shows the projected reserve balance (solid green line) meets or exceeds the target reserve (solid blue line) throughout the five-year planning period. Refer to Section III for additional details.

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City of West Sacramento | November 20, 2025 | Page 2 of 42 Figure I-1. Water Enterprise Reserve Fund Balance
Note: Minimum and target balances are proposed policies.

3. Water rates are recommended for realignment to the cost of service. The cost-ofservice analysis of the FY 2025-26 revenue requirement indicates adjustments are required to realign water rates to reflect the proportional benefits each customer class receives. With the recommended adjustments, rate revenues for each customer class would adjust based on Figure I-2.

Based on the cost-of-service analysis, overall revenue from Commodity Charges would increase by 1.4% and revenue from Service Charges would increase by 42.8%. The increase can be attributed to an increase in the capital improvement plans to address critical infrastructure. This expense is the largest expense category in the cost allocation exercise. The City customer’s share will be $3,978,871 (82.4%). Refer to Section IV for additional details.

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City of West Sacramento | November 20, 2025 | Page 3 of 42 Figure I-2. Cost-of-Service Water Rates Revenue Summary

4. Updated Fixed Service Charges are recommended for water rates. Figure I-3 shows the current and cost-of-service Fixed Service Charges during the period of FY 2025- 26 through FY 2029-30. All customers would see an increase. However, the increase varies between 37% and 46%, depending on the meter size. Refer to Section V for additional details.

Figure I-3. Current and Proposed Service Charge Rates

5. Updated Commodity Charges are recommended for water rates. Figure I-4 shows the current and cost-of-service Commodity Charges during the period of FY 2025-26 through FY 2029-30. All metered customers are charged the same uniform rate. Therefore, under the proposed rates, all customers would see an increase of 1.2% in FY 2025-26.

Refer to Section V for additional details.

Figure I-4. Current and Proposed Commodity Charge Rates Components of Rate Structure
Single Family Residential
Commodity Charge Revenue $4,684,778 47.6% $4,751,571 38.9% $66,794 1.4% Service Charge Revenue $5,159,620 52.4% $7,454,774 61.1% $2,295,153 44.5% Subtotal - SFR $9,844,398 100.0% $12,206,345 100.0% $2,361,947 24.0% Commercial
Commodity Charge Revenue $4,611,683 65.7% $4,677,435 58.2% $65,752 1.4% Meter Charge Revenue $2,409,662 34.3% $3,355,111 41.8% $945,450 39.2% Subtotal - Commercial $7,021,345 100.0% $8,032,546 100.0% $1,011,201 14.4% Total
Commodity Charge Revenue $9,296,461 55.1% $9,429,006 46.6% $132,545 1.4% Service Charge Revenue $7,569,282 44.9% $10,809,885 53.4% $3,240,603 42.8% Total $16,865,742 100.0% $20,238,891 100.0% $3,373,148 20.0% Revenue at FY 2025-26 Difference
Current Rates Cost of Service COS Minus Current
Monthly Service Charges
Current FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 Rates eff. 4/1/2026 eff. 1/1/2027 eff. 1/1/2028 eff. 1/1/2029 eff. 1/1/2030 Meter Size rate increases: varies 15.0% 6.0% 5.0% 5.0%
up to 3/4" Meters $24.61 $35.93 $38.09 $39.99 $41.99 $44.09 1" Meters $40.98 $58.42 $61.93 $65.03 $68.28 $71.69

6. Sewer rate revenue increases are necessary. Like water rates, the City has not increased sewer rates since 2021. Revenue increases are needed to fund additional staffing and operational expenses. The City’s capital improvement plans to fund necessary infrastructure are to be funded through a combination of new debt issuance and cash onhand. These capital needs necessitate rate revenue increases, as well. Annual revenue increases of 35%, 30%, 25%, 10%, and 8% over the next five fiscal years (FY) 2025-26 through 2029-30 are recommended. Refer to Section VII for additional details.

7. The City will continue to meet all Sewer Enterprise reserve targets with recommended revenue increases. Increasing sewer rate revenues will allow the City to continue to maintain sufficient reserves to meet the minimum and target reserve levels.

Cost increases should be monitored to ensure modeled rate increases are sufficient. The City should re-analyze rates within five years to ensure rates are providing enough support so that reserves continue to meet the target threshold. Figure I-5 shows the projected reserve balance (solid green line) meets or exceeds the target reserve (solid blue line) throughout the five-year planning period. Refer to Section VII for additional details.

Figure I-5. Sewer Enterprise Reserve Fund Balance
Note: Minimum and target balances are proposed policies.

8. Sewer rates are recommended for realignment to the cost of service. The cost-ofservice analysis of the FY 2025-26 revenue requirement indicates adjustments are required to realign sewer rates to reflect the proportional benefits each customer class receives. With the recommended adjustments, rate revenues for each customer class would adjust based on Figure I-6.

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City of West Sacramento | November 20, 2025 | Page 5 of 42 Figure I-6. Cost-of-Service Sewer Rates Revenue Summary

9. Update Service Charges are recommended. Figure I-8 shows the current and costof-service Service Charges during the period of FY 2025-26 through FY 2029-30. All Residential (i.e., Single-Family and Multi-Family customers) and Other Non-Residential (i.e., non-metered commercial accounts) parcels will see an increase. Commercial customers will see a decreased Service Charge to reflect their proportionate share of the cost of service. Refer to Section IX for additional details.

10. Updated Volumetric Rates are recommended. Figure I-8 shows the current and costof-service Volumetric Rates during the period of FY 2025-26 through FY 2029-30. The Volumetric Rates charged to Commercial customers will see a decrease to reflect their proportionate share of the cost of service. Refer to Section IX for additional details.

Figure I-8. Current and Proposed Volumetric Rates

13.Water and sewer bill increases will vary by customer. The combined impacts to a utility bill are also customer specific. Refer to Section VI for further discussion of water bill impacts. Refer to Section X for further discussion of sewer bill impacts. Section XI provides sample monthly bill comparisons considering the proposed rates over the five year period.

Current Revenue Cost-of-Service Difference % Difference Single Family Residential $1,747,023 $3,187,782 $1,440,759 82.5% Multi-Family Residential $704,789 $1,185,309 $480,520 68.2% Commercial $1,863,056 $1,411,569 ($451,487) -24.2%
Other Non-Residential $85,132 $155,340 $70,208 82.5%
Total $4,400,000 $5,940,000 $1,540,000 35.0%
Current FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 eff. 4/1/2026 eff. 1/1/2027 eff. 1/1/2028 eff. 1/1/2029 eff. 1/1/2030 Monthly Sewer Rates rate increase: varies 30% 25% 10% 8% Residential
Single-Family (per dwelling) $10.88 $19.85 $25.81 $32.26 $35.49 $38.33 Multi-Family (per dwelling) $8.16 $13.53 $17.59 $21.99 $24.19 $26.13 Commercial (Metered)
Fixed Charge $5.40 $3.19 $4.15 $5.19 $5.71 $6.17
Volumetric Rate (per hcf) $3.16 $2.41 $3.14 $3.93 $4.32 $4.67 Other Non-Residential
Flat Rate $10.88 $19.85 $25.81 $32.26 $35.49 $38.33
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City of West Sacramento | November 20, 2025 | Page 6 of 42 II. Introduction
The City provides water service to its residential and commercial accounts, including 14,425 Single Family Residential meters and 1,752 Non-Residential meters. The City treats surface water from the Sacramento River at its George Kristoff Water Treatment Plant for potable use by all customers.

The City provides sewer collection service to 1,3381 Single Family Residential accounts, 7,298 Multi-Family dwellings, 964 Commercial accounts, and 652 other equivalent sewer dwellings (ESD) representing other large commercial customers. City wastewater is conveyed through the City’s network and is transported to Sacramento Area Sanitary District (SASD) for treatment. Treatment services are billed by SASD.

Separate enterprise funds are maintained for the sewer and water programs. As such, each enterprise fund maintains its own operating and capital reserves.

The water rates in this study were developed using rate-making principles set forth by the American Water Works Association (AWWA) in Principles of Water Rates, Fees and Charges (M1 Manual). This Manual’s cost-of-service principles endeavor to distribute costs to customer classes (also referred to as classes) and to individual customers in proportion to customers’ impacts on the water system. Pursuant to the M1 Manual, rate studies generally contain three elements: (1) a revenue requirements analysis, which determines how much revenue is needed from rates to recover a utility’s projected costs; (2) a cost-of-service analysis, which allocates the revenue requirements to the rate components;1 and (3) a rate design analysis, which determines any modifications that are required to align the rate structure with the cost of service.

Similarly, the sewer rates in this study were developed using rate-making principles in compliance with Proposition 218. Therefore, the sewer rate analysis employs the same three elements as the water rate analysis: (1) a revenue requirements analysis; (2) a cost-ofservice analysis; and (3) a rate design analysis.

Rate studies always include a revenue requirements analysis. A cost-of-service analysis is typically only conducted periodically. It is recommended that a cost-of-service analysis be conducted at least every five years to account for any material differences in the costs of providing service and in the water usage among customer classes, which will affect their respective shares of the cost of service. The City last conducted a cost-of-service study in 2016 to establish rates through 2021 for each of the respective utilities.

The City hired HF&H Consultants (HF&H) to conduct a cost-of-service study to set water and sewer rates for FY 2025-26 through FY 2029-30 (Study Period). Since the previous study, changes in usage patterns among customer classes has occurred, which affects the factors that are used to allocate costs. The costs to which the allocation factors are applied also changed. Hence, there will be differences between the previous and current cost-of-service analyses. Adjustments are made to reflect the differences and rates are set accordingly. 1 The cost-of-service analysis in the current study tailors the base/extra capacity method to account for unique conditions, circumstances, and factors related to the City’s cost of providing water service, which the M1 Manual does not specifically address. The adjustments to the M1 base/extra capacity method of allocating costs are described in more detail in Section IV.

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City of West Sacramento | November 20, 2025 | Page 7 of 42 The cost-of-service analysis proportionately allocates the revenue that is required from rates to the components of the rate structure and to the customer classes. Costs are classified corresponding to the function they serve. Each function’s costs are further allocated to each component of the rates in proportion to the level of service required by customers. The levels of service are related to volumes of demand, infrastructure capacity, and customer service. A cost-of-service analysis ensures that the rates yield charges that are proportional to the cost of providing service to each customer.

STUDY PURPOSE
The purpose of this study is to conduct a cost-of-service analysis that will determine rates that proportionally recover the costs of providing the City’s water service and sewer collection service. Toward that end, the cost-of-service analysis for each utility determines how much revenue should be generated by each component of the rate structure so that rate payers within each customer class are charged for their proportionate share of the cost of providing service on a parcel basis. The cost-of-service analysis is tailored specifically to the City’s customer classes and the rate structures that are appropriate for each class.

STUDY PROCESS
In 2023, the City contracted with HF&H to perform a cost-of-service study to set water and sewer rates for FY 2025-26 and FY 2029-30. A ten-year analysis provided support for longterm planning. The primary goal of this study is to ensure that rates continue to reflect the current cost of providing water and sewer service, as required by Proposition 218.

A comprehensive rate study comprises three steps: 1) revenue requirement projections; 2) cost-of-service analysis; and 3) rate design. Revenue requirement projections identify how much revenue is needed from rates. The cost-of-service analysis determines how much of the revenue should come from the fixed and variable charges. This step also confirms the proportionate amount to be paid by each customer class. The final step, rate design, establishes the structure of the fixed service charges and the variable volume charges for each customer class.

The water cost-of-service analysis was conducted following industry practices promulgated by the American Water Works Association.2 At the outset of the analysis, the types of customer classes were reviewed, as were the types of rate structures that are appropriate to the City’s customer classes.

The sewer cost-of-service analysis was conducted following industry practices promulgated by the Water Environment Federation Manual of Practice No. 27, Financing and Charges for Sewer Systems, 2004. At the initial stages of the project, HF&H reviewed the types of customer classes and the types of rate structures that are appropriate to the City’s customer classes.

REPORT ORGANIZATION
The report includes both the water rates study and sewer rates study. The report is bifurcated to cover the analysis associated with each study. Therefore, the report is divided into four initial sections addressing the water rate study: Water Revenue Requirements, Water Rate Cost of Service Analysis, Water Rate Design, and Comparison to Water Agencies. Next, there are four subsequent sections addressing the sewer rate study: Sewer Revenue Requirements, 2 Principles of Water Rates, Fees, and Charges. American Water Works Association Manual M1. 2017.

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City of West Sacramento | November 20, 2025 | Page 8 of 42 Sewer Rate Cost of Service Analysis, Sewer Rate Design, and Comparison to Sewer Agencies.

Finally, the closing section is the Combined Utility Bill Impacts, which looks at the overall impacts to customers when both water and sewer rate adjustments are considered.

A Glossary of technical terms and acronyms is provided following the Table of Contents.

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City of West Sacramento | November 20, 2025 | Page 9 of 42 III. Water Revenue Requirements
The revenue requirements analysis starts by determining the FY 2025-26 revenue requirements based on the budgeted O&M and capital expenditures. Revenue requirements for each fiscal year are then projected over the Study Period. Revenue increases needed to cover the projected revenue requirements are then determined.

REVENUE REQUIREMENT ASSUMPTIONS AND PROJECTIONS
Expense projections become the revenue requirements. The City’s operating and capital budgets were relied on for FY 2025-26 expenses in the first-year revenue requirement. The operating and maintenance (O&M) expenses were projected over a ten-year period, through FY 2034-35, using appropriate escalation factors. Capital expenses were projected according to the City’s current capital improvement program (CIP). While a ten-year model was built, for brevity, Figure III-1 reflects the assumptions which were used to project revenue requirements through FY 2029-30 in order to set rates for the next five-year period. All assumptions were reviewed with City staff. HF&H worked with City staff to project expenses for additional years where approved budgets were not available.

Figure III-1. Projection Assumptions
The application of these projections to O&M and capital expenses are summarized graphically in Figure III-2 and are described below in more detail.

Assumptions FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 General Inflation per Budget 3.0% 3.0% 3.0% 3.0%
Salary and Wage Increases per Budget 5.0% 5.0% 5.0% 5.0% Benefit Increases per Budget 5.0% 5.0% 5.0% 5.0%
Utility Cost Increases per Budget 4.0% 4.0% 4.0% 4.0%
Interest of Reserve Balance 1.0% 1.0% 1.0% 1.0% 1.0%
Flat Rate Meter Phase-out 0.0% 0.0% 0.0% 0.0% 0.0%
Grow th in Residential Accounts 0.0% 1.0% 1.0% 1.0% 1.0% Grow th in Commercial Accounts 0.0% 1.0% 1.0% 1.0% 1.0% Change in Water Use per Residential Customer 0.0% 1.0% 1.0% 1.0% 1.0% Change in Water Use per Non-Residential Customer 0.0% 1.0% 1.0% 1.0% 1.0% ATTACHMENT 5
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City of West Sacramento | November 20, 2025 | Page 10 of 42 Figure III-2. Total Annual Projected Revenue Requirement for Water Enterprise O&M Expenses
The City’s O&M expenses include salaries, benefits, materials, supplies, insurance, vehicle maintenance, utilities, and administrative expenses. Expense projections were calculated using assumptions reviewed with City staff. The City identified supplemental budget needs for personnel, professional services expenses, and operations and maintenance expense increases for both its Water Treatment and Water Distribution divisions. In FY 2026-27, the City budget includes $696,057 of additional Treatment expenses and $602,005 for Water Distribution expenses. The supplemental Water Distribution expenses were escalated through FY 2029-30 by a 3% inflationary factor. Water Treatment expenses for additional staff and O&M expenses identified in FY 2026-27 were also escalated through FY 2029-30 by a 3% inflationary factor. Collectively, this category represents approximately 50% of the total revenue requirement over the Study Period. These O&M expenses are projected to increase annually by an average of 11% over the five-year period (which reflects additional staff and inflation), averaging $12.6 million per fiscal year from FY 2025-26 through FY 2029-30.

Individual expense line items present in both water and sewer studies were escalated by the same factors for consistency.

Debt Service
The City has existing debt service that was previously issued to fund various capital infrastructure improvements. Currently, the City has $4.8 million in annual payments for existing obligations in FY 2025-26. These obligations include revenue bonds issued in 2017 and 2020 and are scheduled to be paid off in 2047 and 2034, respectively. In addition, the Water Enterprise has a Bank of America annual lease payment of $107,262 that will be paid off in FY 2030-31 (outside the Study Period).

To fund necessary capital improvements, the City is also planning to issue two bonds during the Study Period. The first bond would fund $39,000,000 in capital projects and be issued in ATTACHMENT 5
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City of West Sacramento | November 20, 2025 | Page 11 of 42 FY 2026-27. The second bond would fund $22,000,000 in capital projects and be issued in FY 2029-30. Both bonds assume a 5% interest rate and a 30-year term. As such, the first bond would have an annual payment of $2,575,061 and the second bond would have an annual payment of $1,452,599. Note: the City is exploring other debt funding alternatives including grants and low interest State and Federal loans, which may reduce the debt service payments. With these supplemental debt issuances, the Water Enterprise annual debt service payments would grow from $4.8 million to $8.8 million by FY 2029-30.

This category of expenses accounts for approximately 29% of the total revenue requirement over the Study Period.

Capital Project Costs
This category of expenses includes only those funded through rate revenues and cash on hand. The cash-funded capital expenditures projections average $4,847,000 annually during the five-year period. In addition, $47.0 million in projects are proposed to be debt funded and paid for over time in the form of annual debt service (described above). Figure III-3 provides a detailed listing of the Water Enterprise five-year CIP. The City contemplated multiple options of capital improvements to determine the recommended volume of projects, cash-funded capital needs, and future debt issuance needs. The schedule of capital improvements reflects the scenario recommended by the Environment & Utilities (EU) Commission.

Figure III-3. Water Enterprise Five-Year Capital Improvement Plan

RESERVES
The City uses its reserves to stabilize rates against annual fluctuations in capital expenditures, variances between projected and actual water demands, and unanticipated expenditures and other expenditure variances. In some years, there is surplus revenue that is available to replenish reserves. In other years, reserves are drawn down to cover the cost of service.

Capital Projects FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 Total Annual Water System Repairs/Replacement Projects $2,000,000 $3,000,000 $5,000,000 $10,000,000 $20,000,000 Water Tank Cathodic Protection Assessment & Installation $500,000 $500,000 Central Water Tank Rehabilitation/Recoating $3,000,000 $3,000,000 Water Pump Stations Pump & Motor Evaluation & Rehabilitation $1,250,000 $1,250,000 High Service Manifold Repair/Replacement/Vault Installation $10,000,000 $10,000,000 Water Treatment Plant Security $500,000 $500,000
Tank Projects $2,000,000 $1,500,000 $2,000,000 $2,000,000 $7,500,000 Major Water System Emergency Repairs $600,000 $1,500,000 $1,000,000 $1,000,000 $1,000,000 $5,100,000 Process Drain Pump Station Improvements $300,000 $300,000 Sand Pump Replacements $250,000 $250,000
Tube Settler Replacements $250,000 $250,000
Westmore Oaks Neighborhood Water System Replacement Proj $500,000 $7,000,000 $7,500,000 Water Meter Upgrade and Replacement Project $1,000,000 $1,000,000 $2,000,000 WTP VFD Replacement $195,000 $195,000
Water Treatment Building & Pipe Painting $750,000 $250,000 $1,000,000 Backwash Equipment $1,000,000 $1,000,000
PSIP Tank and BPS Replacement $6,000,000 $6,000,000
Potable Well Refurbishment & Construction $1,600,000 $1,500,000 $1,500,000 $4,600,000 WTP Altitude Valve Replacement $40,000 $40,000
Water Treatment Plant-Alternative Energy/Solar Cells $3,000,000 $3,000,000 New Security Fencing for Remote Water Facility Sites $1,000,000 $500,000 $500,000 $500,000 $2,500,000 Total Capital Projects $6,140,000 $25,845,000 $15,000,000 $16,000,000 $13,500,000 $76,485,000 Total Debt-Funded Capital Projects $0 $19,000,000 $10,000,000 $10,000,000 $8,000,000 $47,000,000 Net Cash-Funded Capital Projects $6,140,000 $6,845,000 $5,000,000 $6,000,000 $5,500,000 $29,485,000 Vehicle Replacement Expenses $0 $1,500,000 $1,500,000 $1,500,000 $1,500,000 $6,000,000 (Less) Impact Fee Revenues ($2,250,000) ($2,250,000) ($2,250,000) ($2,250,000) ($2,250,000) ($11,250,000) Net Capital Projects $3,890,000 $6,095,000 $4,250,000 $5,250,000 $4,750,000 $24,235,000 5-Year Average Annual Cash-funded Capital Projects $4,847,000 ATTACHMENT 5
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City of West Sacramento | November 20, 2025 | Page 12 of 42 Reserves are required to stabilize rates and to provide for contingencies. Reserves can be drawn on in years when the City’s Water Enterprise Fund experiences above average costs and augmented during years when costs are below average. The City’s reserves are used for operating and capital purposes. Each of these purposes has its own requirements that lead to a minimum and optimum target balance. Rates must be set so that the fund balance achieves the target balance.

Operating Reserve
The operating component of the reserves provides working capital for month-to-month O&M expenditures. With sufficient working capital, the City can operate without cash flow constraints. The City’s approved reserve policy is 180 days (50% of annual) operating expenses. Staff is proposing a change to this policy to require a minimum of 90 days of operating expenses, or 25% of annual operating expenses. The City’s Reserves should never drop below this minimum balance.

Capital Reserve
The capital improvement component of the reserves provides working capital for the City’s capital improvement program. The fund balance needs to be sufficient to at least pay contractors without delays caused by cash flow limitations. The fund balance can be larger so that the City can fund larger construction projects on a pay-as-you-go basis, thereby eliminating financing costs. The City’s current policy requires one-year of average capital spend to be placed in a capital reserve. However; that amount is increasing significantly with this five-year model, and to avoid placing undue burden on rates, staff is instead proposing a target reserve for the total fund balance of the City’s operating and capital reserves of 180 days of operating expenses, or 50% of annual operating expenses.

Proposed Reserve Policy Changes
The City is proposing to reduce both the minimum and target balances policies, as well as to eliminate the separate capital reserve. Thus, the operating reserve minimum balance would decrease from 50% to 25% of annual operating expenses. The target balance would be revised to a figure equal to 50% of annual operating expenses. In other words, the City’s current minimum balance would become the new threshold for the target balance. These proposed changes are in line with industry best practices for utility reserves. These proposed minimum and target balance policies are reflected in Figure III-6.

REVENUE INCREASES
Rates are set to generate sufficient revenue to cover annual expenses. In addition, rates are set to maintain adequate reserves. Figure III-4 summarizes the projected revenue from current rates, projected revenue at proposed rates, annual revenue requirements, and the annual surplus or shortfalls with and without the proposed rate increases.

The proposed revenue increases serve to decrease the projected shortfalls facing the City. In addition, rates are not the only funding source. The City projects to receive $2.25 million in impact fee revenues each year to offset the cost of capital. When added to line h in Figure III-4, these supplemental revenues mitigate the rate revenue shortfall each year. This allows the rate increases proposed to decrease incrementally over the five-year period.

The specific rates, which generate the total revenue at proposed rates, are derived in Section V. With those rate increases, the City is able to pay for its annual O&M and capital expenses and maintain adequate reserves, as further discussed below.

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City of West Sacramento | November 20, 2025 | Page 13 of 42 Figure III-4. Rate Increase Calculations
Note: City is projected to collect $2.25 million annually in impact fee revenues to offset shortfalls projected in line h.

DEBT SERVICE COVERAGE
Figure III-5 shows the debt service coverage provided by the revenue increases in Figure 3-4. The City is required to maintain a minimum coverage ratio of 1.35. A higher ratio provides a greater margin of safety to bondholders and enhances the credit rating on bonds.

Moreover, a higher credit rating benefits ratepayers by reducing the cost of future borrowing, if needed.

Figure III-5. City Debt Coverage Ratio Calculations (with rate adjustments) Note: Revenue sources include water rate revenues, non-operating revenues, and investment interest.

RESERVE FUND BALANCE
Figure III-6 shows the annual fluctuations (solid, dark, green line) in the fund balance that are caused by the differences between the revenue requirement and revenue from rates with the rate increases; the dashed green line is the projected fund balance without rate increases.

The revenue and rate increases in Figure III-4 were derived to balance increasing rates while maintaining a level of reserves that continues to meet the City’s reserve target (blue line) through FY 2029-30.

The five-year projection in Figure III-6 demonstrates the use of reserves over the Study Period as expense projections outpace revenue increases. The City is using both reserves and rate increases to address the Water Enterprise revenue requirement. Consequently, reserves project to decline through FY 2026-27, despite larger revenue increases. Thereafter, the cumulative nature of the multiple years of rate increases will help stabilize the reserve fund balance from FY 2027-28 through FY 2029-30, such that the fund balance decreases more gradually. By FY 2029-30, the reserve fund balance will meet the City’s reserve target line. In contrast, the dashed green line, reflects the projected fund balance without rate increases, and the year-end fund balance of $10.3 million in FY 2024-25 is projected to drop below the City’s Minimum Reserve by the end of FY 2026-27 and be fully depleted before the end of FY 2027-28.

FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30
Revenue from Current Rates a $16,865,742 $17,034,400 $17,204,744 $17,376,791 $17,550,559 Revenue Requirement b $19,673,226 $24,316,453 $25,382,501 $26,987,305 $29,323,264 Non-Operating Revenue c ($375,525) ($386,791) ($398,394) ($410,346) ($422,657) Transfer to Reserves d $941,190 $0 $0 $0 $0
Net Revenue Requirement e $20,238,891 $23,929,662 $24,984,107 $26,576,959 $28,900,608 Surplus/(Shortfall) - Without Rate Incr f = a-e ($3,373,148) ($6,895,262) ($7,779,363) ($9,200,167) ($11,350,048) Revenue at Proposed Rates g $17,709,030 $21,974,376 $24,454,823 $26,054,240 $27,630,521 Surplus/(Shortfall) - With Rate Incr h=g-a ($2,529,861) ($1,955,286) ($529,284) ($522,719) ($1,270,086) FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30
Revenue Sources $18,184,389 $22,444,685 $24,925,268 $26,538,597 $28,126,965 Operating Expenses ($9,999,361) ($11,698,644) ($12,838,780) ($13,950,644) ($14,528,241) Net Revenue $8,185,028 $10,746,041 $12,086,488 $12,587,953 $13,598,724 Debt Service $4,826,865 $7,398,809 $7,393,721 $7,386,661 $8,845,023 Debt Coverage Ratio 1.70 1.45 1.63 1.70 1.54
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City of West Sacramento | November 20, 2025 | Page 14 of 42 Figure III-6. Water Enterprise Fund Balance Projection
Note: Minimum and target balances are proposed policies.

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City of West Sacramento | November 20, 2025 | Page 15 of 42 IV. Water Rate Cost of Service Analysis

METHODOLOGY
The revenue requirement analysis establishes how much revenue is required from rates. The next step in the analysis is determining the cost of service. Cost-of-service analysis is used to derive rates that proportionally allocate the cost of service. The cost-of-service analysis performed in this study follows a procedure described by the AWWA, which is referred to as the “base/extra capacity method.” This method allocates the revenue requirements to the components of the rate structure.

A cost-of-service analysis determines the unit cost of the services provided to the City’s water customers. Each customer class is charged the same unit cost for its share of the services that it requires. In this way, the total revenue requirement is proportioned between the Service Charges and the Commodity Charges. This methodology is consistent with industry standards promulgated by the American Water Works Association and referred to as the “base/extra capacity method.”
The City provides demand services and customer services to water customers. Demand services include the costs related to meeting average and peak levels of demand. Customer services include the costs related to customer accounts and the capacity that customers require.

The analytical procedure contains the following steps:

1. Cost classification - Costs in the FY 2025-26 revenue requirement are classified into the service categories related to providing for customer demands and for customer service. FY 2025-26 costs are used for the cost-of-service analysis because they are the most recent budget year.

2. Cost allocation - The classified costs are allocated to the functions associated with each service. For demand services, the functions are levels of service that comprise average day, maximum day, and maximum hour demands. For customer services, the functions are customer accounts and customer capacity.

The classifications of major costs are summarized as follows:

Demand services
• Commodity: all costs borne by the City to support water demand are captured in this classification, regardless of the level of demand placed on the system.

Customer services
• Accounts: meter reading, billing, accounting, customer service, fire services. • Capacity: a portion of distribution storage, distribution mains to customers, hydrants, conservation programs.
• Composite services: Indirect allocations for costs that are not directly related to either the demand or customer service functions: reserve transfers, debt service.

Working with City staff, the individual line items in the revenue requirements were classified into either the demand or customer service categories. Certain costs, however, are not directly related to either demand or customer services. Such costs are considered to be composite in function and are allocated based on a composite of the direct allocations to the demand and customer service categories.

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City of West Sacramento | November 20, 2025 | Page 16 of 42

CUSTOMER CLASSES
The cost-of-service analysis distributes the revenue requirements among customer classes in proportion to their service requirements. There is no industry standard that specifies which customer classes should be used. The law allows utilities to exercise discretion in determining the appropriate customer classes provided the rates yield charges that are proportional to the cost of providing service for each category. As a result, the base/extra capacity method needs to be tailored to the customer classes.

The City currently has multiple customer classes: Metered Water customers and Flat Rate customers. These classes were last reviewed as part of the previous cost-of-service study in 2016. The division of separate customer classes captures those customers who receive water service through a meter and those customers who are not metered. The City is working actively to install meters for all parcels in order to comply with California Water Code. No revisions to the number of types of customer classes are recommended at this time. Once all customers served by the City are metered, these classes can be re-visited.

The cost allocation methodology is further discussed below.

COST-OF-SERVICE ALLOCATIONS
A cost-of-service analysis is a process of determining how much services cost for each customer class. To provide water service, infrastructure must be constructed, operated, and maintained, which must be paid for from cash or debt. The type and size of infrastructure depends on how much service customers require. Water systems are designed to provide sufficient capacity to meet customer demands for service wherever, whenever, and for as long as demanded.

Although each customer places unique demands on the system, water system design is based on the maximum or peak demand for service placed on the system by all customers during the peak demand period. The size of the infrastructure that is needed will depend on the maximum demand. Higher demands will require larger, more costly infrastructure as well as increased operating and O&M costs. The goal of a cost-of-service analysis is to allocate the cost of the capacity to meet the peak demand in proportion to how much of the capacity is required by each customer. The proportions correspond to the maximum amount of capacity provided by the infrastructure. This means that customers that place greater demands on the infrastructure – customers with greater service needs will be apportioned a greater share of the operating and capital costs of the infrastructure required to meet that demand.

Figure IV-1 allocates the FY 2025-26 revenue requirement between the demand services (i.e. commodity) and customer service functions. Figure IV-2 summarizes the percentage allocations used in apportioning the revenue requirement. A discussion of the methodology behind the allocation of costs follows.

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City of West Sacramento | November 20, 2025 | Page 17 of 42 Figure IV-1. Allocation of FY 2025-26 Revenue Requirement Cost of Service Allocations and Allocation Factors
The allocation factors in Figure IV-2 were used to apportion the City customers’ allocation of costs in Figure IV-1. Figure IV-2 includes the demand service level allocation, listed as Commodity Charge, in addition to Customer Service and Composite allocations. The expenses that are allocated to the Demand Service Levels are recovered from the City’s Commodity Charges. The Customer Service factors are either 100% customer service or 100% capacity allocations. The O&M Composite and Expenses Composite allocations are based on the subtotals of the O&M and capital costs that were directly allocated to either the demand or customer service categories.

Figure IV-2. Cost-of-Service Allocation Factors
FY 2025-26 Allocation Commodity Service Charge
Revenue Requirement Factor Charge Services Capacity
O&M Expenses
Water Treatment $4,665,710 Commodity $4,665,710 $0 $0
Water Distribution $2,893,962 Commodity $2,893,962 $0 $0 Water Backflow Prevention $410,614 Services $0 $410,614 $0 Water Conservation $451,553 Commodity $451,553 $0 $0
Total Allocable O&M $8,421,839 $8,011,225 $410,614 $0
O&M Composite 95.1% 4.9% 0.0%
Debt Service $4,826,865 Capacity $0 $0 $4,826,865
Capital Expenses (PayGo) $4,847,000 Capacity $0 $0 $4,847,000 Subtotal - O&M and Capital $18,095,704 $8,011,225 $410,614 $9,673,865 Expense Composite 44.3% 2.3% 53.5%
Water Administration $470,903 Exp Composite $208,475 $10,685 $251,742 Subtotal O&M, Capital, Administration $18,566,607 $8,219,700 $421,300 $9,925,607 Non-Operating Revenue ($375,525) O&M Composite ($357,216) ($18,309) $0 Transfers to/(from) Op Reserves $2,047,809 Exp Composite $906,594 $46,467 $1,094,748 Total Revenue Requirement $20,238,891 $8,769,078 $449,458 $11,020,355 % of total revenue requirement 43.3% 56.7%
Commodity Charge COS Service Charge COS
Customer Services
Commodity Capacity
System-Wide Cost Allocation Facto Charge Services Charge Total Demand Services
Commodity 100.0% 0.0% 0.0% 100.0%
Customer Services
Capacity 0.0% 0.0% 100.0% 100.0%
Services 0.0% 100.0% 0.0% 100.0%
Composite Allocations
O&M Composite 95.1% 4.9% 0.0% 100.0%
Exp Composite 44.3% 2.3% 53.5% 100.0%
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City of West Sacramento | November 20, 2025 | Page 18 of 42 Figure IV-3 summarizes the overall shift in revenues from the Commodity Charge revenues to the Service Charge revenues to align with the cost-of-service. The exercise performed indicates the proportion of Service Charge revenues will increase from 44.9% to 53.4% of total rate revenues, while the share of Commodity Charge revenues will increase from 55.1% to 46.6%. Debt service and capital expenditure allocations to capacity in Figure IV-1 are leading to an increased share of overall Service Charge revenues. All customers will contribute to funding the capital improvements funded through this rate study, whether through debt service or out-of-pocket expenses. With the allocation to capacity for these revenue requirement categories, the share of funding these capital improvements is proportional to the size of the meter serving a parcel.

Rates need to be designed to generate each class’s share of the revenue requirement related to commodity charges. The next section provides the recommended modifications to the Service Charge and Commodity Charges needed to meet the cost of service.

Figure IV-3. Cost-of-Service Revenue Summary
Components of Rate Structure
Single Family Residential
Commodity Charge Revenue $4,684,778 47.6% $4,751,571 38.9% $66,794 1.4% Service Charge Revenue $5,159,620 52.4% $7,454,774 61.1% $2,295,153 44.5% Subtotal - SFR $9,844,398 100.0% $12,206,345 100.0% $2,361,947 24.0% Commercial
Commodity Charge Revenue $4,611,683 65.7% $4,677,435 58.2% $65,752 1.4% Meter Charge Revenue $2,409,662 34.3% $3,355,111 41.8% $945,450 39.2% Subtotal - Commercial $7,021,345 100.0% $8,032,546 100.0% $1,011,201 14.4% Total
Commodity Charge Revenue $9,296,461 55.1% $9,429,006 46.6% $132,545 1.4% Service Charge Revenue $7,569,282 44.9% $10,809,885 53.4% $3,240,603 42.8% Total $16,865,742 100.0% $20,238,891 100.0% $3,373,148 20.0% Revenue at FY 2025-26 Difference
Current Rates Cost of Service COS Minus Current
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City of West Sacramento | November 20, 2025 | Page 19 of 42 V. Water Rate Design
The City has historically charged water customers the combination of a fixed Service Charge and a variable Commodity Charge based on metered water use. As previously discussed, this is a common set of charges that is prevalent throughout the water industry. This section explains the derivation of the Commodity and Service Charge rates that reflect the projected cost of service.

CURRENT RATES
The City’s current water rate structure is composed of two components: Service Charges and Commodity Charges.

Current Service Charges
The Service Charges are fixed rates that are charged on a fixed rate graduated in proportion to the capacity of the service provided for all customers. All customers are billed on a monthly basis. Figures V-1 summarizes the current Service Charges, which were last increased on July 1, 2021.

Figure V-1. Current Service Charges
Current Commodity Charges
Commodity Charges are the product of rates per unit of metered water use multiplied times the metered water use during the monthly billing period. Water is metered in “units” of HCF of metered water use, whereby one unit or HCF equals 748 gallons. Commodity Charges are charged to all metered water customers. Figure V-2 reflects the current Commodity Charge rates.

All components of the rate structure were reviewed, including the composition of the customer classes, the structures of the Service Charges, and Commodity Charges.

Figure V-2. Current Commodity Charges
Monthly Service Charges
FY 2025-26
Meter Size Current Rates
up to 3/4" Meters $24.61
1" Meters $40.98

1.5" Meters $81.78
2" Meters $131.02
3" Meters $262.13
4" Meters $409.61
6" Meters $818.94
8" Meters $1,310.45
10" Meters $1,883.65
Commodity Charge (per hcf)
Monthly Use Current Rates
Metered Accounts
All Water Use $2.43
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City of West Sacramento | November 20, 2025 | Page 20 of 42

SERVICE CHARGE DESIGN
Service Charges are fixed rates that are billed each billing period to recover the cost of the service functions. The cost-of-service analysis determined how much of the revenue requirement is attributable to the customer service function. The function has two components – customer services (meters) and customer capacity – each of which is itemized in the costof-service analyses in Figure IV-1. Costs attributable to customer services are allocated to customers in proportion to the number of meters. Costs attributable to customer capacity are allocated to customers in proportion to the capacity of their services. The sum of the two components equals the Service Charge rate per connection.

Figure V-3 lists the units of service corresponding to each of the cost components. Capacity costs associated with the water system are apportioned among the connections in proportion to the capacity associated with each connection. Connections are converted to Equivalent Meter Units (EMU’s) to apportion the customer capacity cost component. An EMU represents the number of 3/4-inch meters to which a larger meter is equivalent. For example, a 2-inch meter provides 5.33 times as much capacity as a 3/4-inch meter. The capacity multipliers are based on the industry standard meter nominal capacity ratings, confirm with the City. There are 25,652 total EMUs. In effect, the 16,177 services of assorted sizes have the equivalent capacity as 25,652 3/4-inch meters. Specifically, there are 16,177 meters providing 26,562 total EMUs of capacity for City customers.

Figure V-3. Service Charge Units of Service
Note: Capacity multiplier assumes 3/4” meter = 1 EMU = 30 gallons per minute.

Figure V-4 derives the unit costs for the customer service and customer capacity cost components for City customers. Each service is allocated $2.19 per month for the customer service cost component. That amount represents the costs the City incurs to maintain each meter regardless of the capacity of the service (e.g., customer billing, administration overhead). Each service is also allocated $33.74 per monthly period per EMU. That amount represents a portion of the cost of providing water system capacity for each meter, and increases based on the capacity of the meter.

Service Service Meter Capacity
Size Services Ratings (gpm) Multiplier EMUs
a b c = b ÷ 30 a * c
up to 3/4" Meters 10,168 30 1.00 10,168
1" Meters 4,862 50 1.67 8,103
1 1 /2" Meters 373 100 3.33 1,243
2" Meters 642 160 5.33 3,424
3" Meters 15 320 10.67 160
4" Meters 87 500 16.67 1,450
6" Meters 26 1,000 33.33 867
8" Meters 3 1,600 53.33 160
10" Meters 1 2,300 76.67 77
Total Services 16,177 Total EMUs 25,652
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City of West Sacramento | November 20, 2025 | Page 21 of 42 Figure V-4. Service Charge Unit Costs
Figure V-5 combines the customer service and capacity components into a single Service Charge for each size of service and compares proposed rates to the current rates.

Figure V-5. Proposed Bi-Monthly Service Charge Rates – FY 2025-26 Note: Rounding differences caused by stored values in electronic models may exist.

With the proposed rates, all meter sizes would see an increase. The increase in rates reflects the 42.8% increase to Service Charge revenues to be collected from all customers (see Figure IV-3). The proposed rates reflect the proportional change of fixed service charges such that the capacity portion of each charge is significantly more than the service portion of each charge.

Figure V-6 shows the proposed five-year schedule of Service Charge rates.

FY 2025-26 Customer Customer
City Service Capacity
Service Expenses Component Component
Cost Allocation $424,627 $10,385,258
Units of Service 16,177 25,652
Services EMUs
Annual Unit Cost $26.25 $404.85
Monthly Unit Cost $2.19 $33.74
per Service per EMU
Service COS Total
Service % of Component Capacity Capacity Service Charges Current $ Size Meters ($/mo.) $/EMU Multiplier Total ($/mo.) Charge Difference a b c d = b * c e = a + d f g = e - f
up to 3/4" Meters 62.9% $2.19 $33.74 1.00 $33.74 $35.93 $24.61 $11.32 1" Meters 30.1% $2.19 $33.74 1.67 $56.23 $58.42 $40.98 $17.44 1 1 /2" Meters 2.3% $2.19 $33.74 3.33 $112.46 $114.65 $81.78 $32.87 2" Meters 4.0% $2.19 $33.74 5.33 $179.93 $182.12 $131.02 $51.10 3" Meters 0.1% $2.19 $33.74 10.67 $359.87 $362.06 $262.13 $99.93 4" Meters 0.5% $2.19 $33.74 16.67 $562.29 $564.48 $409.61 $154.87 6" Meters 0.2% $2.19 $33.74 33.33 $1,124.59 $1,126.78 $818.94 $307.84 8" Meters 0.0% $2.19 $33.74 53.33 $1,799.34 $1,801.53 $1,310.45 $491.08 10" Meters 0.0% $2.19 $33.74 76.67 $2,586.55 $2,588.74 $1,883.65 $705.09 Capacity Component
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City of West Sacramento | November 20, 2025 | Page 22 of 42 Figure V-6. Current and Proposed Service Charge Rates

COMMODITY CHARGE DESIGN
All customers pay a uniform Commodity Charge rate under the City’s existing rates. The proposed adjustment for FY 2025-26 is intended to increase the uniform rate to re-align with the cost of service. Figure V-7 derives the uniform Commodity Charge for all customers. The proposed Commodity Charge rate will increase 1.2%, or $0.03 per HCF, from current rates.

Figure V-7. Calculation of Commercial/Multi Family Uniform Commodity Charges Commodity Charges Summary
The five-year schedule of proposed Commodity Charge rates is shown in Figure V-8. After rates are revised to meet the cost-of-service in FY 2025-26, all rates will increase uniformly by 15%, 6%, 5%, and 5%, respectively, each of the next four fiscal years.

Figure V-8. Current and Proposed Commodity Charge Rates Monthly Service Charges
Current FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 Rates eff. 4/1/2026 eff. 1/1/2027 eff. 1/1/2028 eff. 1/1/2029 eff. 1/1/2030 Meter Size rate increases: varies 15.0% 6.0% 5.0% 5.0%
up to 3/4" Meters $24.61 $35.93 $38.09 $39.99 $41.99 $44.09 1" Meters $40.98 $58.42 $61.93 $65.03 $68.28 $71.69

1.5" Meters $81.78 $114.65 $121.53 $127.61 $133.99 $140.69 2" Meters $131.02 $182.12 $193.05 $202.70 $212.84 $223.48 3" Meters $262.13 $362.06 $383.78 $402.97 $423.12 $444.28 4" Meters $409.61 $564.48 $598.35 $628.27 $659.68 $692.66 6" Meters $818.94 $1,126.78 $1,194.39 $1,254.11 $1,316.82 $1,382.66 8" Meters $1,310.45 $1,801.53 $1,909.62 $2,005.10 $2,105.36 $2,210.63 10" Meters $1,883.65 $2,588.74 $2,744.06 $2,881.26 $3,025.32 $3,176.59 All Customers
Grand Total Consumption Charge COS $9,429,006
Annual water use (hcf) 1,897,812
Unit Rate per hcf $2.46
Commodity Charge (per hcf)
Current Rates FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 Rates eff. 4/1/2026 eff. 1/1/2027 eff. 1/1/2028 eff. 1/1/2029 eff. 1/1/2030 Monthly Use rate increase: 1.2% 15.0% 6.0% 5.0% 5.0%
Metered Accounts
All Water Use $2.43 $2.46 $2.83 $3.00 $3.15 $3.31
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City of West Sacramento | November 20, 2025 | Page 23 of 42 VI. Water Bill Impacts
In the previous section, the Service Charge and Commodity Charge structures were compared for the current and proposed rates. A further understanding of the differences between the two structures can be gained by comparing bills based on both rate structures.

BILL COMPARISION
Single Family Residential Bills Under Proposed Rates (eff. 4/1/2026) Customers pay the sum of the Service Charge corresponding to the capacity of their service plus a Commodity Charge for water use during the billing period.

Figure VI-1 provides perspective on the impact of the proposed (light blue line) and current rates (dark blue line). This graph plots bills across a range of water use. Customers can expect an increase at all levels of water use as both the fixed service charge and commodity rate for water use would increase under the proposed rates. The lines appear to be parallel which reflects that all customers with a 3/4-inch meter would see an increase of $11.32 for the fixed service charge and in addition, would see an increase of $0.03 per HCF of water use.

Figure VI-1. Single Family Residential Bill Comparison
Neighboring Agency Comparison
The bill for common water use by a Single Family household in West Sacramento was compared to a water bill subject to neighboring agency rates in Figure VI-2. For a monthly comparison, the average monthly water use of 11 HCF was used to calculate the Commodity Charge. The Service Charge reflects the monthly fixed charge assessed to a customer with a ATTACHMENT 5
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City of West Sacramento | November 20, 2025 | Page 24 of 42 3/4 -inch meter. With the recommend increases, the customer bill for common water use increases slightly among neighboring agencies.

Figure VI-2. Single Family Residential Monthly Water Bill Survey Note: Service charge represented by darker shaded portion of each bill. Commodity charge represented by lighter shaded portion of each bill.
¹Service Charge reflects rates for smallest meter size available which is larger than larger a 3/4-inch meter.

Commercial Bills Under Proposed Rates (eff. 4/1/2026)
Commercial bills will increase proportionately to the level of water use. At lower levels of water use, bills benefit due to the reduced Service Charge. Figure VI-3 provides specific bill impacts by incremental water use and meter size.

Figure VI-3. Sample Commercial Bill Impacts by Meter Size and Water Use Note: Proposed rates shown would be effective 4/1/2026
1" Meter 2" Meter 4" Meter
Bill with Bill with Bill with
Water Use Current Proposed Monthly Current Proposed Monthly Current Proposed Monthly (HCF) Bill Rates Increase Bill Rates Increase Bill Rates Increase 0 $40.98 $58.42 $17.44 $131.02 $182.12 $51.10 $409.61 $564.48 $154.87 10 $65.28 $83.02 $17.74 $155.32 $206.72 $51.40 $433.91 $589.08 $155.17 20 $89.58 $107.62 $18.04 $179.62 $231.32 $51.70 $458.21 $613.68 $155.47 30 $113.88 $132.22 $18.34 $203.92 $255.92 $52.00 $482.51 $638.28 $155.77 40 $138.18 $156.82 $18.64 $228.22 $280.52 $52.30 $506.81 $662.88 $156.07 50 $162.48 $181.42 $18.94 $252.52 $305.12 $52.60 $531.11 $687.48 $156.37 100 $283.98 $304.42 $20.44 $374.02 $428.12 $54.10 $652.61 $810.48 $157.87 200 $526.98 $550.42 $23.44 $617.02 $674.12 $57.10 $895.61 $1,056.48 $160.87 300 $769.98 $796.42 $26.44 $860.02 $920.12 $60.10 $1,138.61 $1,302.48 $163.87 400 $1,012.98 $1,042.42 $29.44 $1,103.02 $1,166.12 $63.10 $1,381.61 $1,548.48 $166.87 500 $1,255.98 $1,288.42 $32.44 $1,346.02 $1,412.12 $66.10 $1,624.61 $1,794.48 $169.87 ATTACHMENT 5
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City of West Sacramento | November 20, 2025 | Page 25 of 42 VII. Sewer Revenue Requirements
A spreadsheet model was developed to derive revenue requirements for a ten-year planning period, FY 2025-26 through FY 2033-34. The revenue requirements represent the costs that must be covered by revenue from rates and other sources. The City’s budget for FY 2025-26 served as the starting point for projecting the City’s expenses and revenues. The escalation factors summarized in Figure VII-1 were incorporated in the model for projecting expenses and revenues for the duration of the Study Period. For brevity, only the first five years of modeling assumptions are shown. Factors driving these annual increases are discussed in more detail following Figure VII-2.

Figure VII-1. Key Modeling Assumptions
The application of these projections to O&M and capital expenses are summarized graphically in Figure VII-2 and are described below in more detail.

O&M Expenses
The City’s Collection System O&M expenses include salaries, benefits, materials, supplies, insurance, vehicle maintenance, utilities, and administrative expenses. Expense projections were calculated using assumptions reviewed with City staff. The City identified supplemental budget needs for personnel and operations and maintenance expense increases for its collection system. In FY 2026-27, the City budget includes $591,169 of additional expenses.

Of this amount, $123,717 are attributable to annual operations and maintenance expenses increases and were escalated through FY 2029-30 by a 3% inflationary factor. The City’s additional headcount requires a supplemental budget of $467,452 in FY 2026-27 and this will increase to $1,328,493 by FY 2029-30.

Collectively, this category represents approximately 46% of the total revenue requirement over the Study Period. These O&M expenses are projected to increase annually by an average of 15% over the five-year period, averaging $2.4 million per fiscal year from FY 2025-26 through FY 2029-30. No additional headcount in staffing is assumed during the five-year rate setting period.

Assumptions FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 General Inflation Per Budget 3.0% 3.0% 3.0% 3.0%
Salary and Wage Increases Per Budget 5.0% 5.0% 5.0% 5.0% Benefit Increases Per Budget 5.0% 5.0% 5.0% 5.0%
Utility Cost Increases Per Budget 4.0% 4.0% 4.0% 4.0%
Interest of Reserve Balance 1.0% 1.0% 1.0% 1.0% 1.0%
Growth in Residential Accounts Per Budget 1.0% 1.0% 1.0% 1.0% Growth in Commercial Accounts Per Budget 1.0% 1.0% 1.0% 1.0% ATTACHMENT 5
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City of West Sacramento | November 20, 2025 | Page 26 of 42 Figure VII-2. Total Annual Projected Revenue Requirements for Sewer Enterprise Debt Service
The City has existing debt service that was previously issued to fund various capital infrastructure improvements. Currently, the City makes annual payments of approximately $483,000 toward a revenue bond issued in 2017 that will continue through FY 2034-35. In addition, the City has a note payment of $90,956 per year, which shall be paid off in FY 2025-

26. To fund necessary capital improvements, the City is also planning to issue two bonds during the Study Period. The first bond would fund $21,000,000 in capital projects and be issued in FY 2026-27. The second bond would fund $14,000,000 in capital projects and be issued in FY 2029-30. Both bonds assume a 5% interest rate and a 30-year term. As such, the first bond would have an annual payment of $1,386,571 and the second bond would have an annual payment of $924,381. Note: the City is exploring other debt funding alternatives including grants and low interest State and Federal loans, which may reduce the debt service payments. With these supplemental debt issuances, the Water Enterprise annual debt service payments would grow from $0.6 million to $2.8 million by FY 2029-30.

This category of expenses accounts for approximately 17% of the total revenue requirement over the Study Period.

Capital Project Costs
This category of expenses includes only those projects funded through rate revenues and cash on-hand. The capital expenditures projections average $3,225,000 annually during the fiveyear period. In addition, $47.0 million in projects are proposed to be debt funded and paid for over time in the form of annual debt service (described above). Figure VII-3 provides a detailed listing of the Water Enterprise five-year CIP. The City contemplated multiple options of capital improvements to determine the recommended volume of projects, cash-funded capital needs, and future debt issuance needs. The schedule of capital improvements reflects the scenario recommended by the EU Commission.

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City of West Sacramento | November 20, 2025 | Page 27 of 42 Figure VII-3. Sewer Five-Year Capital Improvement Plan

Reserves are required to stabilize rates and to provide for contingencies. Reserves can be drawn on in years when the City’s Sewer Enterprise Fund experiences above average costs and augmented during years when costs are below average. The City’s reserves are used for operating and capital purposes. Each of these purposes has its own requirements that lead to a minimum and optimum target balance. Note, the types of reserves held by the Sewer Enterprise mirror the reserves held by the Water Enterprise, including the target balance.

Rates must be set so that the fund balance achieves the target balance.

Operating Reserve
The operating component of the reserves provides working capital for month-to-month O&M expenditures. With sufficient working capital, the City can operate without cash flow constraints. The City’s approved reserve policy is 180 days of operating expenses, or 50% of annual operating expenses. The City’s Reserves should never drop below this minimum balance.

Capital Reserve
The capital improvement component of the reserves provides working capital for the City’s capital improvement program. The fund balance needs to be sufficient to at least pay contractors without delays caused by cash flow limitations. The fund balance can be larger so that the City can fund larger construction projects on a pay-as-you-go basis, thereby eliminating financing costs. The City’s approved policy is one-year of average annual capital expenditures. The current target reserve for the total fund balance of the City’s operating and capital reserves is the sum of 50% of annual operating expenses plus one-year of average annual capital expenditures.

Proposed Reserve Policy Changes
The City is proposing to reduce both the minimum and target balances policies, as well as to eliminate the separate capital reserve. Thus, the operating reserve minimum balance would Capital Projects FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 Total South Lift Station Rehabilitation Project $8,500,000 $8,500,000 Westmore Oaks Sewer Rehabilitation Project $6,000,000 $6,000,000 Bryte Lift Station Sewer Rehabilitation Project $1,500,000 $8,000,000 $9,500,000 Major Sewer System Repairs (Mainline) $250,000 $250,000 $8,000,000 $7,500,000 $16,000,000 Yearly Reoccuring Emergency Sewer Fund $250,000 $250,000 $250,000 $500,000 $500,000 $1,750,000 GIS Utility Infrastructure Surveying And Mapping $250,000 $250,000 Total Capital Projects $2,000,000 $9,000,000 $14,500,000 $8,500,000 $8,000,000 $42,000,000 Total Debt-Funded Capital Projects $0 $5,000,000 $11,000,000 $5,000,000 $5,000,000 $26,000,000 Net Cash-Funded Capital Projects $2,000,000 $4,000,000 $3,500,000 $3,500,000 $3,000,000 $16,000,000 Vehicle Replacement Expenses $0 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $4,000,000 (Less) Impact Fee Revenues ($775,000) ($775,000) ($775,000) ($775,000) ($775,000) ($3,875,000) Net Capital Projects $1,225,000 $4,225,000 $3,725,000 $3,725,000 $3,225,000 $16,125,000 5-Year Average Annual Cash-funded Capital Projects $3,225,000 ATTACHMENT 5
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City of West Sacramento | November 20, 2025 | Page 28 of 42 decrease from 50% to 25% of annual operating expenses. The target balance would be revised to a figure equal to 50% of annual operating expenses. In other words, the City’s current minimum balance would become the new threshold for the target balance. These proposed minimum and target balance policies are reflected in Figure VII-6.

REVENUE INCREASES
Rates are set to generate sufficient revenue to cover annual expenses. In addition, rates are set to maintain adequate reserves. Figure VII-4 summarizes the projected revenue from current rates, projected revenue at proposed rates, annual revenue requirements, and the annual surplus or shortfalls with and without the proposed rate increases.

Figure VII-4. Rate Increase Calculations
Rate increases account for rate revenue and future revenue requirements. As shown in Figure VII-4, the City is proposing a five-year schedule of increases where the change in rates yearover-year increases less over time as the compounding nature of rate increases allows the City to increase rate by smaller percentages each year. The revenue requirement (shown in greater detail in Figure VII-2) increases due to increasing staffing costs, debt issuance, and increased capital project expenditures to address the City’s aging infrastructure. The proposed revenue increases serve to decrease the projected shortfalls facing the City.

In addition, rates are not the only funding source. The City projects to receive $775 thousand in impact fee revenues each year to offset the cost of capital. When added to line h in Figure III-4, these supplemental revenues mitigate the rate revenue shortfall each year. This allows the rate increases proposed to decrease incrementally over the five-year period.

The specific rates, which generate the total revenue at proposed rates, are derived in Section IX. With those rate increases, the City is able to pay for its annual O&M and capital expenses and maintain adequate reserves, as further discussed below.

DEBT SERVICE COVERAGE
Figure VII-5 shows the debt service coverage provided by the revenue increases in Figure VII-4. The City is required to maintain a minimum coverage ratio of 1.235. A higher ratio provides a greater margin of safety to bondholders and enhances the credit rating on bonds.

Moreover, a higher credit rating benefits ratepayers by reducing the cost of future borrowing, if needed.

FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30
Revenue from Current Rates a $4,400,000 $4,444,000 $4,488,440 $4,533,324 $4,578,658 Revenue Requirement $7,395,581 $9,516,279 $10,041,275 $10,245,362 $11,719,316 Non-Operating Revenue ($247,200) ($254,616) ($262,254) ($270,122) ($278,226) Transfer from Reserves ($1,208,381) $0 $0 $0 $0
Net Revenue Requirement b $5,940,000 $9,261,663 $9,779,021 $9,975,240 $11,441,090 Surplus/(Shortfall) - Without Rate Incr c=a-b ($1,540,000) ($4,817,663) ($5,290,581) ($5,441,915) ($6,862,433) Revenue at Proposed Rates d $4,785,000 $6,899,310 $8,861,864 $10,442,229 $11,490,828 Surplus/(Shortfall) - With Rate Incr e=d-b ($1,155,000) ($2,362,353) ($917,157) $466,990 $49,738 ATTACHMENT 5
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City of West Sacramento | November 20, 2025 | Page 29 of 42 Figure VII-5. City Debt Coverage Ratio Calculations (with rate adjustments) Note: Revenue sources include sewer rate revenues, non-operating revenues, and investment interest.

RESERVE FUND BALANCE
Figure VII-6 shows the annual fluctuations (solid, dark, green line) in the fund balance that are caused by the differences between the revenue requirement and revenue from rates with the rate increases; the dashed green line is the projected fund balance without rate increases.

The revenue and rate increases in Figure VII-4 were derived to balance increasing rates while maintaining a level of reserves that continues to meet the City’s reserve target (blue line) through FY 2029-30.

By FY 2029-30, the reserve fund balance will meet the City’s reserve target line. In contrast, the projected fund balance without rate increases, the year-end fund balance of $8.0 million in FY 2024-25 is projected to be fully depleted before the end of FY 2027-28.

Figure VII-6. Projected Year-End Fund Balance
Note: Minimum and target balances are proposed policies.

FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30
Revenue Sources $5,110,036 $7,217,743 $9,186,574 $10,777,432 $11,841,285 Operating Expenses ($3,598,030) ($4,331,158) ($4,946,510) ($5,150,397) ($5,700,170) Net Revenue $1,512,005 $2,886,586 $4,240,063 $5,627,035 $6,141,114 Debt Service $572,550 $1,960,122 $1,869,765 $1,869,965 $2,794,146 Debt Coverage Ratio 2.64 1.47 2.27 3.01 2.20
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City of West Sacramento | November 20, 2025 | Page 30 of 42 VIII. Sewer Rate Cost of Service Analysis

METHODOLOGY
The revenue requirement analysis establishes how much revenue is required from rates. The next step in the analysis is determining the cost of service. Cost-of-service analysis is used to derive rates that proportionally allocate the cost of service. This is achieved by allocating the revenue requirements to the components of the rate structure.

A cost-of-service analysis determines how much each customer and customer class should pay based on its respective share of service-related expenses and flow. The volume of sewer discharged influences the design of the collection and treatment systems. The cost-of-service analysis allocates expenses to “cost components on the basis of operating considerations or design capacity of each facility.” Therefore, a larger proportion of expenses associated with sewer flow on the sewer system are allocated to customers who place a greater burden on the system.

CUSTOMER CLASSES
The cost-of-service analysis distributes the revenue requirements among customer classes in proportion to their service requirements. Like water rates, there is no industry standard that specifies which customer classes should be used. The law allows utilities to exercise discretion in determining the appropriate customer classes provided the rates yield charges that are proportional to the cost of providing service for each category. As a result, the allocation of costs needs to be tailored to the customer classes.

The City currently has multiple customer classes: Single Family Residential, Multi-Family Residential, Commercial, and Other Non-Residential. Other Non-Residential customers consist of accounts that are not tied to a water meter. These classes were last reviewed as part of the previous cost-of-service study in 2016. As stated previously in Section IV, the City is working actively to install water meters for all parcels in order to comply with California Water Code. No revisions to the number of types of customer classes are recommended at this time.

Once an Other Non-Residential customer has a meter installed, they are charged as a Commercial customer and subject to those identified sewer rates.

COST-OF-SERVICE ALLOCATIONS
The cost-of-service analysis allocation process follows the same process as the one performed for the allocation of water costs. The FY 2025-26 revenue requirement was summarized by function and these functional costs were allocated between City customers. The proportionate shares of the revenue requirement were then further allocated among the fixed and variable components for cost recovery.

Figure VIII-1 allocates the FY 2025-26 revenue requirement between into four functions:
accounts, flow, BOD (biochemical oxygen demand), and TSS (total suspended solids). Figure VIII-2 summarizes the percentage allocations used in apportioning the revenue requirement.

A discussion of the methodology behind the allocation of costs follows. The allocation type specified on each row of Figure VIII-1 ties to the allocation type listed in Figure VIII-2.

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City of West Sacramento | November 20, 2025 | Page 31 of 42 Figure VIII-1. Allocation of FY 2025-26 Revenue Requirement Cost of Service Allocations and Allocation Factors
The allocation factors in Figure VIII-2 were used to apportion the City customers’ allocation of costs in Figure VIII-1. The Collection System O&M was allocated between three functions related to customer demand placed on the system, flow, BOD, and TSS. The percentages reflect that the City’s collection system costs are largely driven by the volume of flow, and the sizing of the conveyance and collection system assets required to transport wastewater to the Rev. Req't Allocation Cost Allocation
Description 2025-26 Type Accounts Flow BOD TSS
Collection System O&M
5111 Salaries/Wages-Regular $965,298 1 $0 $868,768 $48,265 $48,265 5113 Salaries/Wages-O/T & Standby $85,000 1 $0 $76,500 $4,250 $4,250 5114 Salaries/Wages-Other /PERS $45,887 1 $0 $41,298 $2,294 $2,294 5116 Salaries/Wages-Holiday Pay $0 1 $0 $0 $0 $0
5118 Salaries/Wages-Other/Non PERS $45,557 1 $0 $41,001 $2,278 $2,278 5121 Medicare $13,997 1 $0 $12,597 $700 $700
5122 Retirement-P.E.R.S. $240,663 1 $0 $216,597 $12,033 $12,033 5130 Employee Health Ins $232,137 1 $0 $208,923 $11,607 $11,607 5131 Retired Employee Health Ins $27,916 1 $0 $25,124 $1,396 $1,396 5132 Workers Comp Ins $40,795 1 $0 $36,715 $2,040 $2,040 5133 Deferred Compensation $525 1 $0 $473 $26 $26
5135 Retiree Health Savings $3,120 1 $0 $2,808 $156 $156 5136 OPEB ADC Contribution $0 1 $0 $0 $0 $0
5195 Retiree Health Reimb Offset $0 1 $0 $0 $0 $0
5199 Payroll Reimbursement Offset $0 1 $0 $0 $0 $0
5212 Small Tools/Instruments $9,270 1 $0 $8,343 $464 $464 5215 Safety Clothing/Supplies $22,248 1 $0 $20,023 $1,112 $1,112 5219 Household Expenses $0 1 $0 $0 $0 $0
5221 Communications $7,871 1 $0 $7,084 $394 $394
5222 Utilities $230,000 1 $0 $207,000 $11,500 $11,500
5240 Maintenance-Equipment $59,731 1 $0 $53,758 $2,987 $2,987 5241 Maintenance-Structures/Grounds $80,855 1 $0 $72,770 $4,043 $4,043 5245 Rents/Leases-Equipment $75,350 1 $0 $67,815 $3,768 $3,768 5251 Office Expense $361 1 $0 $324 $18 $18
5253 Educational Materials/Supplies $515 1 $0 $464 $26 $26 5255 Vehicle Expenses $66,314 1 $0 $59,683 $3,316 $3,316 5256 Memberships/Dues $1,056 1 $0 $950 $53 $53
5257 Software Maintenance $14,800 1 $0 $13,320 $740 $740 5258 Training/Travel/Meals $6,438 1 $0 $5,794 $322 $322 5259 Special Departmental Expense $2,029 1 $0 $1,826 $101 $101 5260 Legal Fees $515 1 $0 $464 $26 $26
5261 Professional Services $8,849 1 $0 $7,964 $442 $442 Total Collection System O&M $2,287,096 $0 $2,058,386 $114,355 $114,355 Non-Operating/Admin Expenses $1,310,935 2 $1,310,935 $0 $0 $0 Debt Service $572,550 1 $0 $515,295 $28,628 $28,628
Subtotal O&M + Admin $4,170,581 $1,310,935 $2,573,681 $142,982 $142,982 O&M Admin Composite 31.4% 61.7% 3.4% 3.4%
Non-Operating Revenues ($247,200) 3 ($77,702) ($152,548) ($8,475) ($8,475) Contribution to Capital $3,225,000 1 $0 $2,902,500 $161,250 $161,250 Subtotal Expenses $7,148,381 $1,233,233 $5,323,633 $295,757 $295,757 Expense Composite 17.3% 74.5% 4.1% 4.1%
Transfers to/(from) Op Reserves ($1,208,381) 3 ($379,829) ($745,696) ($41,428) ($41,428) Total Revenue Requirement $5,940,000 $853,403 $4,577,937 $254,330 $254,330 ATTACHMENT 5
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City of West Sacramento | November 20, 2025 | Page 32 of 42 treatment plan, and to a lesser extent by the wastewater loading characteristics. Expenses that are allocated to the Accounts allocation factor are recovered from the City’s fixed charge tied to each account. The O&M Composite and Expenses Composite allocations are based on the subtotals of the O&M and capital costs that were directly allocated to either the demand or customer service categories.

Figure VIII-2. Cost-of-Service Allocation Factors
Units of Service
The units of service provided by the City to its customers are the sum of the services provided to each of the City’s customer classes.

Estimates of City customer flows and wastewater loading associated with each customer class are shown in Figure VIII-3. Flow volumes were calculated using annualized winter water use for calendar years 2019-2024. Wastewater loading weights were determined using estimated loading characteristics based on wastewater industry standard sampling data, and were confirmed with the City. BOD and TSS concentrations represent the average of each customer class.

Figure VIII-3. Units of Service Calculations
Note: Other Non-Residential customers are billed by ESD (Equivalent Sewer Dwelling) in place of a per account charge or per dwelling charge. These figures coincide with those assigned by SASD.

Figure VIII-4 summarizes the units of service by customer class calculated in Figure VIII8.

Figure VIII-4. Summary of Units of Service by Customer Class Note: Other Non-Residential customers are billed by ESD in place of a per account charge or per dwelling charge. These figures coincide with those assigned by SASD.

Type Description Accounts Flow BOD TSS Total
1 Collection System O&M 0.0% 90.0% 5.0% 5.0% 100.0%
2 Customer Account 100.0% 0.0% 0.0% 0.0% 100.0%
3 O&M Admin Composite 31.4% 61.7% 3.4% 3.4% 100.0%
4 Expense Composite 17.3% 74.5% 4.1% 4.1% 100.0%
Accts/Dwellings Winter Flow BOD TSS BOD TSS
Units hcf mg/l mg/l (lbs/year) (lbs/year)
Single Family Residential 13,381 1,233,446 200 200 1,539,956 1,539,956 Multi-Family Residential 7,298 417,647 200 200 521,432 521,432 Commercial 964 569,807 500 500 1,778,507 1,778,507
Other Non-Residential 652 60,105 200 200 75,042 75,042
Total 22,295 2,281,005 3,914,936 3,914,936
Accts/Dwellings Winter Flow BOD TSS
Units hcf (lbs/year) (lbs/year)
Single Family Residential 13,381 1,233,446 1,539,956 1,539,956 Multi-Family Residential 7,298 417,647 521,432 521,432
Commercial 964 569,807 1,778,507 1,778,507
Other Non-Residential 652 60,105 75,042 75,042
Total 22,295 2,281,005 3,914,936 3,914,936
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City of West Sacramento | November 20, 2025 | Page 33 of 42 Unit Costs of Service
The functionalized costs in Figure VIII-1 are divided by the respective units of service in Figure VIII-4 to determine the unit costs. The derivation of the unit costs applicable to the City customers is shown in Figure VIII-5. These unit costs are the costs of providing the units of service to all customer classes without exception, thereby ensuring that all customers pay their share in proportion to their respective units of service.

Figure VIII-5. Unit Costs of Service (City)
Note: Rounding differences caused by stored values in electronic models may exist.

Revenue Requirement by Customer Class
In cost-of-service analyses, all customer classes are treated equally through the application of the same unit costs to all customers, which is the fundamental purpose of cost-of-service analysis. In this way, the cost-of-service analysis proportionally distributes the revenue requirement to each customer class without discrimination, after which rates can be designed to generate the revenue required to provide the necessary level of service to each class.

Figure VIII-6 shows the result of applying the unit costs from Figure VIII-5 to each customer class’s units of service in Figure VIII-4 to distribute the respective shares of the revenue requirement. Figure VIII-7 summarizes how rate revenues would be redistributed so that the City could continue to meet the cost-of-service if the rates calculated in Figure VIII-6 were implemented.

Cost Allocation
Fixed Flow BOD TSS Total
Allocated Functional Costs (from Fig. VIII-1) $853,403 $4,577,937 $254,330 $254,330 $5,940,000 Units of Service (from Fig. VIII-4) 22,295 2,281,005 3,914,936 3,914,936 Annual Unit Costs $38.28 $2.01 $0.06 $0.06
$/acct or $/dwelling $/hcf $/lb $/lb
ATTACHMENT 5
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City of West Sacramento | November 20, 2025 | Page 34 of 42 Figure VIII-6. Unit Rates per Customer Class
Note: Rounding differences caused by stored values in electronic models may exist.

Figure VIII-7. Cost-of-Service Revenue Summary
Note: FY 2025-26 revenues assume 12 months of rates implemented on July 1, 2025.

Single Family Residential
Units 13,381 accounts 1,233,446 hcf 1,539,956 lbs 1,539,956 lbs Accounts 13,381 accounts 13,381 accounts 13,381 accounts 13,381 accounts Units per account 92.18 hcf/account 115.09 lbs/account 115.09 lbs/account Unit Costs ($ per Unit) $38.28 per account $2.01 per hcf $0.06 per lbs $0.06 per lbs Total Single Family Residential $38.28 per account $185.00 per account $7.48 per account $7.48 per account Multi-Family Residential
Units 7,298 dwellings 417,647 hcf 521,432 lbs 521,432 lbs Accounts 7,298 dwellings 7,298 dwellings 7,298 dwellings 7,298 dwellings Units per account 57.23 hcf/account 71.45 lbs/account 71.45 lbs/account Unit Costs ($ per Unit) $38.28 per account $2.01 per hcf $0.06 per lbs $0.06 per lbs Total Multi-Family Residential $38.28 per account $114.85 per account $4.64 per account $4.64 per account Commercial
Units 964 accounts 569,807 hcf 1,778,507 lbs 1,778,507 lbs Accounts 964 accounts 569,807 hcf 569,807 hcf 569,807 hcf Units per account 1.00 hcf/account 3.12 lbs/account 3.12 lbs/account Unit Costs ($ per Unit) $38.28 per account $2.01 per hcf $0.06 per lbs $0.06 per lbs Total Commercial $38.28 per account $2.01 per hcf $0.20 per hcf $0.20 per hcf Other Non-Residential
Units 652 ESDs 60,105 hcf 75,042 lbs 75,042 lbs
Accounts 652 ESDs 652 ESDs 652 hcf 652 hcf
Units per account 92.18 hcf/ESD 115.09 lbs/hcf 115.09 lbs/hcf Unit Costs ($ per Unit) $38.28 per ESD $2.01 per hcf $0.06 per lbs $0.06 per lbs Total Other Non-Residential $38.28 per ESD $185.00 per ESD $7.48 per ESD $7.48 per ESD Fixed Flow BOD TSS
Fixed Flow BOD TSS
Fixed Flow BOD TSS
Fixed Flow BOD TSS
Current Revenue Cost-of-Service Difference % Difference Single Family Residential $1,747,023 $3,187,782 $1,440,759 82.5% Multi-Family Residential $704,789 $1,185,309 $480,520 68.2% Commercial $1,863,056 $1,411,569 ($451,487) -24.2%
Other Non-Residential $85,132 $155,340 $70,208 82.5%
Total $4,400,000 $5,940,000 $1,540,000 35.0%
ATTACHMENT 5
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City of West Sacramento | November 20, 2025 | Page 35 of 42 IX. Sewer Rate Design
The City has historically charged residential sewer customers a fixed service charge and commercial sewer customers the combination of a fixed service charge and a variable charge based on metered water use. Both approaches are common throughout the sewer industry.

This section explains the derivation of the Service Charges and the Volumetric Rates that reflect the projected cost of service.

CURRENT RATES
The City’s current sewer rate structure is composed of two components: Service Charges and Volumetric Rates.

Current Service Charges
The Service Charges billed to residential accounts are fixed rates that are charged on a fixed rate per dwelling for Single-Family Residential and Multi-Family Residential. The Service Charges billed to Commercial customers are charged on a fixed rate per account. The Service Charges billed to Other Non-Residential customers are charged on a fixed rate per account and differ from those charged to Commercial accounts.

Current Volumetric Rates
The City charges Commercial customers via Volumetric Rates. Customers are billed based on metered water use per monthly period multiplied by the Commercial Volumetric Rate. Water is metered in “units” of HCF of metered water use, whereby one unit or HCF equals 748 gallons.

No adjustments are recommended to the City’s current rate structure.

Figures IX-1 summarizes the current Service Charges and Volumetric Rates, which were last increased on July 1, 2021.

Figure IX-1. Current Sewer Rates

SERVICE CHARGE DESIGN
The Service Charges billed to Single Family Residential and Multi Family Residential customers are calculated by adding the fixed unit costs with the flow, BOD, and TSS unit costs. Flow, FY 2025-26
Customer Class Current Rates
Single Family
Flat Rate per month $10.88
Multi-Family
Flat Rate per month (per DU) $8.16
Commercial
Flat Rate per month $5.40
Metered Rate per hcf $3.16
Other Non-Residential per ESD
Flat Rate per month $10.88
ATTACHMENT 5
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City of West Sacramento | November 20, 2025 | Page 36 of 42 unit costs from Figure VIII-6 are converted to a cost per dwelling by multiplying each by the average annual flow per dwelling. Similarly, BOD and TSS unit costs from Figure VIII-6 are converted to a cost per dwelling by multiplying each by the average annual loading per dwelling. The resulting unit costs are shown in Figure IX-2. For example, the Single Family Residential unit costs of $2.01 per HCF, are converted to $185.00 per dwelling after multiplying this unit cost by the average annual flow per dwelling. Also, the Single Family Residential unit costs of $0.06 per pound BOD and $0.06 per pound TSS are converted to $7.49 per dwelling each after multiplying each of the unit costs by the average annual loading of BOD and TSS per dwelling In total, the annual account charge recovered through the Service Charge is $238.23, or $19.85 per month,3 for Single Family Residential customers as shown in Figure V-1. Following the same steps for Multi-Family Residential rates yields a monthly Service Charge of $13.53 for each Multi Family Residential dwelling.

The Service Charge that would be billed to Commercial customers represents only the fixed unit cost per account for each customer class. In FY 2025-26, each Commercial customer would pay an annual total of $38.28, or $3.19 per month, per account to reimburse the City for their portion of fixed service costs.

Figure IX-2. Cost of Service Rates Calculations
Note: Rounding differences caused by stored values in electronic models may exist.

With the proposed rates, all Service Charges billed to City customers would see an increase.

The increase in rates reflects the increase to service charge revenues calculated in Figure VIII-9. Figure IX-4 shows the proposed five-year schedule of Service Charges.

VOLUMETRIC RATES DESIGN
The Volumetric Rate for Commercia customers was determined via adding the unit costs of flow, BOD, and TSS in Figure IX-2. The resulting Volumetric Rate is shown in Figure IX-2 3 Rounding differences caused by stored values in electronic models may exist.

Single Family Residential Total Total
Units 13,381 dwellings 1,233,446 hcf 1,539,956 lbs 1,539,956 lbs per dwelling/mo. per hcf Accounts 13,381 dwellings 13,381 dwellings 13,381 dwellings 13,381 dwellings Units per account 92.18 hcf/dwelling 115.09 lbs/dwelling 115.09 lbs/dwelling Unit Costs ($ per Unit) $38.28 per dwelling $2.01 per hcf $0.06 per lbs $0.06 per lbs Total Single Family Residential $38.28 per dwelling $185.00 per dwelling $7.48 per dwelling $7.48 per dwelling $19.85 $0.00 Multi-Family Residential Total Total
Units 7,298 dwellings 417,647 hcf 521,432 lbs 521,432 lbs per dwelling/mo. per hcf Accounts 7,298 dwellings 7,298 dwellings 7,298 dwellings 7,298 dwellings Units per account 57.23 hcf/dwelling 71.45 lbs/dwelling 71.45 lbs/dwelling Unit Costs ($ per Unit) $38.28 per dwelling $2.01 per hcf $0.06 per lbs $0.06 per lbs Total Multi-Family Residential $38.28 per dwelling $114.85 per dwelling $4.64 per dwelling $4.64 per dwelling $13.53 $0.00 Commercial Total Total
Units 964 accounts 569,807 hcf 1,778,507 lbs 1,778,507 lbs per account/mo. per hcf Accounts 964 accounts 569,807 hcf 569,807 hcf 569,807 hcf Units per account 1.00 hcf/account 3.12 lbs/account 3.12 lbs/account Unit Costs ($ per Unit) $38.28 per account $2.01 per hcf $0.06 per lbs $0.06 per lbs Total Commercial $38.28 per account $2.01 per hcf $0.20 per hcf $0.20 per hcf $3.19 $2.41 Other Non-Residential Total Total
Units 652 ESDs 60,105 hcf 75,042 lbs 75,042 lbs per ESD/mo. per hcf Accounts 652 ESDs 652 ESDs 652 hcf 652 hcf
Units per account 92.18 hcf/ESD 115.09 lbs/hcf 115.09 lbs/hcf Unit Costs ($ per Unit) $38.28 per ESD $2.01 per hcf $0.06 per lbs $0.06 per lbs Total Other Non-Residential $38.28 per ESD $185.00 per ESD $7.48 per ESD $7.48 per ESD $19.85 $0.00 Fixed Flow BOD TSS
Fixed Flow BOD TSS
Fixed Flow BOD TSS
Fixed Flow BOD TSS
ATTACHMENT 5
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City of West Sacramento | November 20, 2025 | Page 37 of 42 and Figure IX-3. Initially, Volumetric Rates are decreasing to reflect the shift of more costs being borne by the fixed charge component assessed to all customers.

Figure IX-3. Current and Proposed Sewer Rates
Current FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 eff. 4/1/2026 eff. 1/1/2027 eff. 1/1/2028 eff. 1/1/2029 eff. 1/1/2030 Monthly Sewer Rates rate increase: varies 30% 25% 10% 8% Residential
Single-Family (per dwelling) $10.88 $19.85 $25.81 $32.26 $35.49 $38.33 Multi-Family (per dwelling) $8.16 $13.53 $17.59 $21.99 $24.19 $26.13 Commercial (Metered)
Fixed Charge $5.40 $3.19 $4.15 $5.19 $5.71 $6.17
Volumetric Rate (per hcf) $3.16 $2.41 $3.14 $3.93 $4.32 $4.67 Other Non-Residential
Flat Rate $10.88 $19.85 $25.81 $32.26 $35.49 $38.33
ATTACHMENT 5
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City of West Sacramento | November 20, 2025 | Page 38 of 42 X. Sewer Bill Impacts
In the previous section, the Service Charges and Volumetric Rate structures were compared for the current and proposed rates. A further understanding of the differences between the two structures can be gained by comparing bills for each customer class.

BILL COMPARISON
Single Family Residential Bills Under Proposed Rates
Single Family Residential customers will pay a uniform Service Charge regardless of recorded water use. With the proposed rates, customers can expect a 16.3% increase from their current combined sewer and treatment sewer bills. Figure 10-1 compares the current combined (treatment and collection charges) monthly sewer bill to the proposed sewer bill. No increase has been assumed for SASD treatment charges in FY 2025-26.

The combined sewer bill for a Single Family household in West Sacramento was compared to a sewer bill subject to neighboring agency rates in Figure 6-2. With the recommended increases, the customer bill for combined sewer collection and treatment services increases slightly among neighboring agencies.

Figure X-1. Comparison of Monthly Sewer Charges for Single Family Customers *Reflects a combined collection and treatment bill (i.e., includes charges by SASD for treatment). This is necessary to compare to the other jurisdictions which both collect and treat their own wastewater.

Commercial Bills Under Proposed Rates
Commercial customers will pay a uniform Service Charge per account under the proposed rates. In addition to the Service Charge, each customer will be charged a Volumetric Rate that is applied to the monthly water use recorded. Figure X-2 through Figure X-4 compares ATTACHMENT 5
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City of West Sacramento | November 20, 2025 | Page 39 of 42 sewer bills by plotting bills across a range of water use and three distinct assumptions of the number of ESDs that are assessed by Sacramento Area Sewer District (SASD) for treatment services. ESDs assigned by SASD are subject to the specific business associated with the parcel and rates assigned by SASD for that respective business. Often times, the number of ESDs is calculated according to gross floor area of the building serving the commercial account. Customers should review their bill from SASD to determine the specific number of ESDs that make up their treatment charge when evaluating the sample bill impact graphs below.

Figure X-2. Comparison of Commercial Customer Bills (1 ESD billed by SASD) ATTACHMENT 5
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City of West Sacramento | November 20, 2025 | Page 40 of 42 Figure X-3. Comparison of Commercial Customer Bills (5 ESDs billed by SASD) Figure X-4. Comparison of Commercial Customer Bills (10 ESDs billed by SASD) ATTACHMENT 5
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City of West Sacramento | November 20, 2025 | Page 41 of 42 XI. Combined Utility Bill Impacts
In the previous sections, the proposed water and sewer rates were compared for the current and proposed rates. Combining water and sewer bills, including the treatment charge assessed by SASD, provides customers with a broader perspective of how their overall utility bills would be influenced by the proposed rates. Figure XI-1 shows how combined water and sewer bills at current rates compare to bills at the proposed rates across a range of water usage. For comparison, these bills are shown next to the combined sewer and water bills assessed to single family residential customers of neighboring agencies.

Figure XI-1. Combined Residential Water and Sewer Bill Comparison (eff. 4/1/2026)
Figure XI-1 includes the bill impacts with the proposed water and sewer rates over a five-year period for typical residential and commercial customers. Assumptions are noted for water use and billed sewered water volumes for the commercial customer comparison. Bills assume average water use; however, it should be noted that bills modulate throughout the year as water use patterns change. Thus, customers can expect bills to increase and decrease relative to their use of water.

ATTACHMENT 5
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City of West Sacramento | November 20, 2025 | Page 42 of 42 Figure XI-2. Combined Five-Year Water and Sewer Bill Impacts [1] Residential Bill impacts based on Average Water use of 11 HCF per month. [2] Commercial Bill impacts based on Average Water use of 90 HCF per month with a 2" Meter. [3] Current sewer bills and FY 2025-26 sewer bills include $44 treatment charge from SASD, in addition to City portion.
[4] Sewer bills include minimum $44 treatment charge from SASD, in addition to City portion, at 49 HCF per month.
[5] Treatment charge in future years calculated using approved $47 monthly rate for FY 2026-27. Future years assume 3% annual increases thereafter.

Combined Water and Sewer Bill Impacts FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 Average Residential Bill Impact [1, 3, 5]
Average Monthly Bill (Current) $106.22 $106.22 $106.22 $106.22 $106.22 Proposed Monthly Bill by Fiscal Year $126.84 $145.26 $157.47 $165.99 $174.39 Per month Increase vs Current $20.62 $39.04 $51.25 $59.77 $68.17 Average Commercial Bill Impact [2, 4, 5]
Average Monthly Bill (Current) $553.96 $553.96 $553.96 $553.96 $553.96 Proposed Monthly Bill by Fiscal Year $568.80 $666.15 $733.77 $778.00 $821.67 Per month Increase vs Current $14.84 $112.19 $179.81 $224.04 $267.71 ATTACHMENT 5
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CITY COUNCIL AGENDA REPORT
MEETING DATE: December 3, 2025 ITEM # 11
SUBJECT:

WORKSHOP AND CONSIDERATION OF APPROVAL OF A MEMORANDUM OF

UNDERSTANDING BETWEEN THE CITY OF WEST SACRAMENTO AND THE

WASHINGTON UNIFIED SCHOOL DISTRICT FOR A SCHOOL RESOURCE OFFICER

POSITION
INITIATED OR REQUESTED BY: REPORT COORDINATED OR PREPARED BY:
[ ] Council [X ] Staff
[ ] Other
Dea Pugh, Police Support Services Manager
Police Department
ATTACHMENT [ X ] Yes [ ] No [ ] Information [ ] Direction [ X ] Action

OBJECTIVE
The purpose of this report is to discuss the request by the Washington Unified School District Board, supported by the West Sacramento Police Department to contract limited police services (aka: a School Resource Officer) for an initial term of five years, beginning at the start of school year 2026-27, and to obtain approval for the adoption of a Memorandum of Understanding between the City of West Sacramento and the Washington Unified School District for a School Resource Officer Position.

RECOMMENDED ACTION
Staff respectfully recommend that the City Council:

1. Approve the Memorandum of Understanding (MOU) for a School Resource Officer (SRO) position;

2. Authorize the City Manager or designee to sign the Memorandum of Understanding and effectuate the agreement;

3. Authorize the City Manager or designee to execute non-substantive changes and modifications, with approval from the City Attorney; and

4. Authorize the City Manager or designee to execute amendments to extend the term of the contract and increase the total contract NTE up to the Council approved budget.

BACKGROUND
The City of West Sacramento and the Washington Unified School District partnered in a School Resource Officer Program for many years until budgetary constraints and social-political climate necessitated the School District to discontinue the contract. The prior contract split the personnel cost of two police officers in half between the City and the District. Most other costs in that agreement were borne by the City. The prior agreement provided police services at all Washington Unified School District campuses within the City of West Sacramento. When the program was discontinued in the summer of 2020, the City absorbed the unplanned financial burden, and the two School Resource Officer positions were reassigned to the Police Department in patrol functions.

Since that time, school district leadership has engaged discussions about restarting a formally contracted relationship with the City of West Sacramento for Police Department provided School Resource Officer services.

Discussions between our organizations and public outreach by the school district over the past year have led the WUSD Board of Trustees to create a letter of intent on January 27, 2025 (Attachment 1) stating its intent to contract with the City for these Services. Our collaborative work has also resulted in the development of a draft Memorandum of Understanding for the implementation of a School Resource Officer program at the High School campuses within the district (Attachment 2). The proposed agreement will provide only one SRO for these schools in its initial iteration and will only serve the High School campuses within the WUSD. The proposed MOU, including its financial agreements, has been reviewed by both parties’ finance and legal teams.

ANALYSIS
During the first half of 2020, the world was dealing with the onset of a pandemic, and the nation was wrestling with the social-political realities of the murder of George Floyd. There was an immense energy of concern, fear and a strong desire to create stability and a sense of safety. Additionally, during that time school districts (and many other organizations) were trying to make shifts in expenditures and other practices to appropriately adjust to the significant changes in the delivery of core and other support services.

By the 2024-25 academic year, after hearing an increasing amount of staff, student and parent concerns regarding campus environments and safety, the Washington Unified School District conducted surveys and 416
School Resource Officer MOU
December 3, 2025

Page 2 ends

community meetings to share information and elicit feedback. This led the Board of Trustees to move to reinstate School Resource Officer Program and formally reached out to the West Sacramento Police Department.

The following are hyperlinks to the various agendized public meeting items that discussed reinstituting a School Resource Officer program with WSPD:
 District Safety & School Resource Officer Discussion (Autri Streeck, Assistant Superintendent of Educational Services) 8/22/2024
 Approval to Designate Funding for Future School Resource Officer Services for WUSD Schools in Collaboration with the West Sacramento Police Department (WSPD) [Dr. Jay Berns, Director of Special Programs and Student Services] 9/12/2024
 Timeline of the Washington Unified School District and West Sacramento Police Department's Commitment to Service Collaboration (Jay Berns, Ed.D., Director of Special Programs and Student Services) 12/17/2024
 Enhancing School Safety: Districtwide Updates and Initiatives (Jay Berns, Ed.D., Director of Special Programs and Student Services) 4/10/2025
 Enhancing School Safety: Districtwide Updates and Initiatives (Jay Berns, Ed. D., Director of Special Programs and Student Services) 5/22/2025
This effort to reinvigorate and enhance the School Resource Officer role has been collaborative. It is focused on the role of SRO being one that seeks to build positive connections with students, staff and family; to have a positive influence on campus culture and sense of safety for all; that provides non-enforcement opportunities to interact with officers as a means to improve trust, build a strong campus and City community; and, when necessary, to provide input on safety protocols and intervene in life-safety and property-protection incidents with police authority when needed. The SRO connection to normal policing and investigative functions may improve efficiency in some cases.

Environmental Considerations
N/A (In OnBase SEQA)
Commission Recommendation
N/A
Strategic Plan Integration
This supports the City’s vision of “People Feeling Safe and Secure.” Alternatives

1. Council could direct staff to modify the terms of the MOU; or

2. Council could choose not to approve the adoption of the MOU; or

3. Council could provide recommendations and request that staff return with a recommendation of approval with a refreshed MOU as part of the City’s spring budget process.

Coordination and Review
This report was drafted by Police Department and Finance Staff.

Budget/Cost Impact
The City shall be reimbursed by the District for fifty percent (50%) of the actual personnel costs associated with the SRO and their vehicle, as well as indirect costs including but not limited to vehicle maintenance and fuel, personal equipment and software licensing. Although it is still applied in full, the City has provided a reduced overhead rate for this contract. Total Estimated maximum cost for Fiscal Year 2026/27 for the WUSD is $212,656.60 based on current fiscal year wages, benefits, overhead, and other costs.

Adjustments to salary, benefits, or related costs during the term of this agreement will be shared equally by both parties (50/50). The costs and expected revenue related to this contract begin in FY 2026/27 and will be included in the annual budget considered by Council in June 2026.

ATTACHMENTS

1. WUSD Letter of Intent to contract the City for SRO services

2. Draft MOU
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January 27, 2025
Mayor Martha Guerrero and Members of the City Council
City of West Sacramento
1110 West Capitol Avenue
West Sacramento, CA 95691
Re: School Resource Officer Services (SRO) Program
Dear Mayor Guerrero and Honorable City Council Members, On behalf of the Washington Unified School District (WUSD) Board of Trustees, we are writing to propose re-establishing a collaborative partnership between our district and the City of West Sacramento to enhance school safety by implementing a reimagined School Resource Officer Services (SRO) program.

Our Board of Trustees has recently approved setting aside some of the funds for this initiative, which aims to create a safer learning environment. The proposed SRO program will:
● Foster positive relationships between students, staff, families, and law enforcement. ● Provide support and education on safety and crime prevention. ● Facilitate collaboration in developing and implementing safety protocols.

Given this program's mutual benefits to our school district and the broader West Sacramento community, we request that the City of West Sacramento consider covering half of its cost. This shared investment would strengthen our partnership and ensure the program's success and long-term sustainability.

Our staff is developing a plan to actively seek feedback from students, families, and staff regarding the SRO program to ensure transparency and address community concerns. This input would be instrumental in shaping the program's implementation and finalizing our agreement with the West Sacramento Police Department (WSPD). Your early commitment would greatly assist in our budget development and planning phases.

We would welcome the opportunity to discuss this proposal further. Please contact us to arrange a meeting or if you require additional information.
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Thank you for your time and consideration. We look forward to your response and the possibility of working together on this important initiative.

Sincerely,
Sarah Kirby-Gonzalez
President, WUSD Board of Trustees
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MEMORANDUM OF UNDERSTANDING
Between the Washington Unified School District and the City of West Sacramento Police Department This Memorandum of Understanding (MOU) is entered into by and between the Washington Unified School District (hereinafter referred to as the “District”) and the City of West Sacramento (hereinafter referred to as the “City”), collectively referred to as “the Parties.” I. Purpose
The purpose of this MOU is to establish a collaborative partnership between the District and the City to support the safety, protection, and educational development of youth, staff, and community within the District through the assignment of a School Resource Officer (SRO).

II. Term
This MOU shall be effective from July 1, 2026, through June 30, 2031, covering a total period of five (5) school years.

III. Scope of Agreement
The District and the City agree to jointly fund and coordinate the assignment of one (1) School Resource Officer (SRO) to support the schools within the District, with a primary focus on River City High School and Yolo High School. This partnership will address student safety concerns, including truancy, gang activity, substance abuse, and other barriers to academic success through prevention, intervention, and community-based policing strategies.

IV. Work Year and Work Schedule
The School Resource Officer (SRO) shall be assigned to a twelve (12) month work year, with a full-time commitment to duties within the Washington Unified School District, except during periods of approved vacation, training, or emergency police obligations. The SRO shall work four (4) ten-hour days per week, with either Monday or Friday designated as the regular day off. The specific schedule shall be determined through mutual agreement between the District and the City.

Non-Coverage Days (Monday or Friday)
The SRO will maintain a four-day, ten-hour work schedule Tuesday through Friday, with their designated day off occurring on Monday each week. On non-coverage days when the SRO is not on duty, standard procedures will remain in effect: school staff should call 911 in the event of an emergency or use the non-emergency number for routine law enforcement matters. Additionally, the Director of Special Programs and Student Services will coordinate with the Deputy Chief and the assigned Lieutenant to follow up on any school-related law enforcement interactions occurring on these days. A debrief with the SRO will be conducted upon their return to duty to ensure continuity of service and awareness of incidents. 420
Summer Responsibilities for the SRO
When school is not in session during the summer months, the SRO will be encouraged to take approved vacation time, attend relevant SRO-specific training, support ongoing District summer programs, and assist with the implementation of youth engagement initiatives. These activities are intended to maintain a visible and supportive presence in the community and promote continued proactive engagement with students outside the regular academic year.

V. Financial Responsibilities
The City shall be reimbursed by the District for fifty percent (50%) of the actual personnel costs associated with the SRO and their vehicle, as well as indirect costs, including but not limited to vehicle maintenance and fuel, personal equipment, and software licensing. Although it is still applied, the City has provided a reduced overhead rate for this contract.

Total estimated maximum cost for Fiscal Year 2025-2026 for the WUSD is $212,656.60. That costing is detailed below:

1. Base Salary and Benefits ($267,452.16): 50% =$133,726.08

2. Pre-Approved Overtime (School Activities): 10% = $20,499.00

3. Overhead Costs (25% of salary/benefits): $33,431.52
a. The City agrees to provide the District with a detailed breakdown of overhead costs upon request to ensure transparency and mutual understanding of these expenses.

4. Miscellaneous (Personal equipment, software licensing, vehicle maintenance & fuel): $12,000

5. Vehicle ($130,000): 50% = $65,000 ($13,000 annually) Adjustments to salary, benefits, or related costs during the term of this agreement will be shared equally by both parties (50/50).

VI. Responsibilities of the District
The District agrees to:

1. Collaborate with site administrators and the SRO in the planning and implementation of programs, including parent education, family engagement, and student activities.

2. Coordinate with the City’s Police Department through regular monthly meetings led by the District’s Director of Special Programs and Student Services.

3. Integrate the SRO into school-based instructional activities at the high schools, where appropriate and when available, across middle and secondary schools.

4. Provide the SRO with a designated workspace and access to necessary office equipment at River City High School.

5. Designate a site administrator as the SRO's primary point of contact. 421

6. Participate in the selection process of the designated School Resource Officer, including participation in interviews and providing input regarding the endorsement of the final candidate chosen for the position.

VII. Responsibilities of the City
The City agrees to:

1. Assign one (1) Sworn Officer as the designated School Resource Officer to focus on support and connection at the high school campuses.

2. Act as the financial administrator, billing the District quarterly for reimbursable expenses.

3. Ensure proper supervision of the SRO through the City’s established chain of command.

4. Provide the SRO with all required law enforcement materials and maintain records of related activities.

5. Involve the SRO in school-related training, as mutually agreed.

6. Assign the SRO to a full-time schedule aligned with the academic calendar and school needs.

7. Collaborate with the District on program planning and participate in monthly coordination meetings.

8. Engage in a joint discussion with the District regarding the appropriate uniform to be worn by the SRO while on school campuses, in alignment with student-centered practices and community context.

VIII. Duties of the School Resource Officer
The assigned SRO shall:

1. Maintain a consistent and visible presence on school campuses, with a primary emphasis on high school campuses.

2. Serve as a supportive mentor and trusted adult for students.

3. Engage with families and community stakeholders.

4. Investigate and respond to criminal or suspicious activities affecting school sites.

5. Deliver drug awareness, gang prevention, and safety education sessions upon request.

6. Assist with emergency response and participate in school safety drills.

7. Support training students and staff on the Standard Response Protocol (SRP).

8. Serve as a District’s Student Services (Support) Team member and participate in applicable professional development, training, and collaborative planning efforts to align with district-wide support services.

IX. Temporary Coverage During Absences
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In the event that the assigned School Resource Officer (SRO) is absent due to illness, vacation, training, or any other approved leave:

1. Notification: The City shall notify the District’s Director of Special Programs and Student Services as soon as reasonably possible, and no later than the first day of the SRO’s absence, regarding the nature and expected duration of the absence.

2. Interim Coverage: The City will make reasonable efforts to provide interim law enforcement coverage during extended absences (defined as exceeding three consecutive workdays), subject to personnel availability. Such coverage may include:
○ Assignment of a temporary replacement officer with similar qualifications; or ○ Designation of a point of contact within the West Sacramento Police Department who can respond to urgent school-related safety needs.

3. Coordination: In cases where interim coverage is not feasible, the City and District will coordinate to determine temporary alternatives for campus safety and response protocols.

4. Communication: The City and District shall jointly communicate any temporary SRO coverage adjustments to affected school administrators to ensure continuity of safety support.

X. Joint Responsibilities and Provisions
The District and the City further agree:

1. To conduct quarterly evaluation meetings to review collaboration outcomes.

2. To provide the District with opportunities to give feedback on the overall program, ensuring continuous improvement and responsiveness to school community needs.

3. That the SRO shall not engage in school discipline, student supervision (e.g., hall monitoring, lunch duty), or have routine access to student records. Exceptions require principal/designee approval and must comply with applicable state and federal laws.

4. That enforcement of criminal statutes shall be performed in accordance with legal and departmental policy.

5. That the SRO and supervisor will consult with school administration before initiating any new school-based program.

6. That all regular campus law enforcement investigations can be coordinated with the school principal whenever feasible, including appropriate levels of access to information systems in concurrence with student privacy laws.

7. To jointly deliver presentations to the respective governing bodies upon request.

8. To actively collaborate on community policing initiatives that support the goals of this agreement.

9. To collaborate through joint meetings to address and resolve any issues or concerns that may arise in a timely and proactive manner.

10. To jointly participate in the selection process for the School Resource Officer assigned to the program. 423
XII. Indemnification

1. City Indemnification: The City agrees to indemnify and hold harmless the District from any liabilities arising from City actions, omissions, officers, or representatives.

2. District Indemnification: The District agrees to indemnify and hold harmless the City from any liabilities arising from District actions, omissions, employees, or representatives.

XIII. Termination
This Memorandum of Understanding (MOU) may be terminated by either party upon written notice delivered to the addresses specified below. Unless otherwise mutually agreed in writing, termination shall not result in the immediate cessation of services. Instead, upon receipt of notice, the program shall continue to operate through XIV. Notification Contacts
City of West Sacramento
Chief Robert Strange
West Sacramento Police Department
550 Jefferson Boulevard
West Sacramento, CA 95605
Washington Unified School District
Dr. Cheryl Hildreth, Superintendent
930 Westacre Road
West Sacramento, CA 95691
XV. Amendment Clause
This MOU may be amended only through mutual written consent by both the District and the City.

XVI. Signatures
By signing below, the Parties affirm their understanding of and agreement to the terms outlined in this MOU.

For the City of West Sacramento
424
Aaron Laurel, City Manager
Date:

City Attorney
Date:

For the Washington Unified School District
Dr. Cheryl Hildreth, Superintendent
Date:

District Legal Counsel
Date:
425

CITY OF WEST SACRAMENTO

ERRATA MEMORANDUM
TO: Mayor Guerrero and City Council Members
FROM: Robert Strange, Police Chief
CC: Aaron Laurel, City Manager
Amanda Berlin, Assistant City Manager
Ariana Adame, Assistant City Manager
Doug Drozd, Deputy City Manager
Jeff Mitchell, City Attorney
Jennifer Cusmir, City Clerk
DATE: December 2, 2025
SUBJECT: City Council Meeting Agenda – Item #11: WORKSHOP AND CONSIDERATION

OF APPROVAL OF A MEMORANDUM OF UDERSTANDING BETWEEN THE

CITY OF WEST SACRAMENTO AND THE WASHINGTON UNIFIED SCHOOL

DISTRICT FOR A SCHOOL RESOURCE OFFICER POSTION
Attachment 2 – the draft MOU between the Washington Unified School District and the City of West Sacramento contains an accidental omission.

On page 5, in section XIII. Termination, a substantive portion of the final sentence was accidentally omitted. This section, in its entirety, should read as follows:

MEMORANDUM OF UNDERSTANDING
Between the Washington Unified School District and the City of West Sacramento Police Department This Memorandum of Understanding (MOU) is entered into by and between the Washington Unified School District (hereinafter referred to as the “District”) and the City of West Sacramento Police Department (hereinafter referred to as the “City”), collectively referred to as “the Parties.” I. Purpose
The purpose of this MOU is to establish a collaborative partnership between the District and the City to support the safety, protection, and educational development of youth, staff, and community within the District through the assignment of a School Resource Officer (SRO).

II. Term
This MOU shall be effective from July 1, 2026, through June 30, 2031, covering a total period of five (5) school years.

Non-Coverage Days (Monday or Friday)
The SRO will maintain a four-day, ten-hour work schedule Tuesday through Friday, with their designated day off occurring on Monday each week. On non-coverage days when the SRO is not on duty, standard procedures will remain in effect: school staff should call 911 in the event of an emergency or use the non-emergency number for routine law enforcement matters. Additionally, the Director of Special Programs and Student Services will coordinate with the Deputy Chief and the assigned Lieutenant to follow up on any school-related law enforcement interactions occurring on these days. A debrief with the SRO will be conducted upon their return to duty to ensure continuity of service and awareness of incidents. 427
Summer Responsibilities for the SRO
When school is not in session during the summer months, the SRO will be encouraged to take approved vacation time, attend relevant SRO-specific trainings, support ongoing District summer programs, and assist with the implementation of youth engagement initiatives. These activities are intended to maintain a visible and supportive presence in the community and promote continued proactive engagement with students outside the regular academic year.