West Sacramento City Council
March 18, 2026

establishing back-office operations, a customer service center, and an outreach campaign to educate the public about how the toll lanes will work.

To date, CARTA’s administration been funded by a $2.6 million loan from SACOG, with SACOG staff serving to manage the JPA’s activities. It is estimated that over the next 3-4 years, CARTA’s startup operations will require an additional investment of up to $14 million to reach full revenue service, which refers to the point when a toll lane project is fully open and collecting revenues.

As a new public entity requiring initial investment to begin receiving revenue, CARTA lacks the credit necessary to secure traditional public financing sources. However, the business approach CARTA is following has been a proven model in other regions of California for reaching financial viability and for generating significant excess revenue for the benefit of transportation investments in affected communities.

In spring 2025, CARTA approached the City and other jurisdictions in Yolo County about the possibility of receiving short-term loans of approximately 10 years to finance the $14 million needed to fully stand-up CARTA’s business operations and implement the Yolo 80 managed lanes project. While CARTA’s request was met with general interest and a spirit of cooperation among the Yolo jurisdictions, due to budget constraints and other factors it became clear that raising the total funding needed would not be possible without significant investment from at least one entity.

Staff determined that West Sacramento is uniquely positioned to make a significant investment in CARTA, up to the total amount needed for startup costs, due to the ongoing collection and availability of Measure V revenue.

Measure V was passed by voters in 2008 as a 25-year, one-quarter cent transactions and use tax (sales tax add-on), with advisory language requiring the funds to be expended on future light rail operations and flood protection improvements. Thus far, Measure V has been programmed for these purposes, and more recently has also been used to advance Measure O-sponsored road transportation projects through a short-term loan.

Under that arrangement, future Measure O funds will repay the Measure V fund with interest, effectively extending the life of Measure V beyond its 2033 expiration date and creating additional funds for eligible Measure V expenditures.

Staff derived a similar approach in which available Measure V revenue could be loaned to CARTA for the full $14 million in startup costs over a 10-year period, with the City receiving interest returns to be reinvested in Measure V uses. In furtherance of this concept, staff approached CARTA with a proposed loan framework and over the past several months negotiated more detailed terms. In December, the CARTA board approved a loan term sheet for public agency loans and authorized its staff to develop one or more loan agreements with the Yolo jurisdictions. The proposed Loan Agreement (Attachment 2) between the City and CARTA is the result of this process. At this point it is unclear and questionable if Yolo County or the other Yolo cities will be in a financial position to provide loans, thus the proposed Loan Agreement includes the total amount requested by CARTA.

ANALYSIS
This section includes a summary of the proposed loan terms and the relative benefits and risks to the City associated with the proposed startup loan to CARTA.

Loan Terms
Under the Loan Agreement, the City will provide CARTA with a principal amount of $14 million, with draws occurring in four installments of up to $1 million by May 2026, up to $4 million by July 2026, up to $5 million by July 2027, and up to $4 million by July 2029. The loan funds will be utilized by CARTA for the startup costs described earlier, with the goal to support the buildup to revenue service by 2030.

Repayment of the loan will commence three years after each draw followed by a 10-year repayment period, generally following the amortization schedule included in Attachment 1 of the Loan Agreement and with no prepayment penalty. The commencement of repayment on the first loan draw may be extended until toll revenue receipts begin, but for no longer than two years. Repayment of the City’s loan will take priority over any future CARTA debt, except for the $2.6 loan previously made by SACOG which will be repaid first. The Loan Agreement also acknowledges the possibility that Yolo County and the other Yolo cities could make simultaneous loans to CARTA and receive equal repayment priority in proportion to their loan amount. The agreement also stipulates that, should other toll corridors join CARTA prior to the City’s loan being repaid, any payments received by CARTA from those corridors for initial operating costs will be prioritized to debt service payments on the City’s loan.
703
CARTA Loan Agreement
March 18, 2026

The loan will accrue interest at a fixed rate of 8 percent. CARTA’s initial request was for public agencies to lend at the Local Agency Investment Fund rate (currently about 4.2 percent), but the City’s recent total investment portfolio has achieved a much higher return consistent with the proposed rate. Staff negotiated the 8 percent interest rate in consideration of the opportunity cost of shifting these funds from the City’s investment pool to a loan with a total potential repayment period of 10-15 years and the relative risk of lending to a startup agency.

According to the estimates in the amortization schedule, if CARTA draws the full loan amount of $14 million, the City will net interest earnings of at least $13.3 million over the life of the loan.

Benefits
The primary and most direct benefit to the City from the proposed loan is the interest earned over the repayment period, estimated at approximately $13.3 million in total. This amount is equivalent to a 2.5-year extension of Measure V’s current annual revenue in today’s dollars, and will be a valuable source of funding for future investments in transportation and flood protection in West Sacramento under Measure V. Also, once CARTA reaches revenue service and the potential risk of loan default is minimized, the rate of return on the loan’s interest will be arguably more secure and certainly more stable than the variable amount the City would receive from its investment pool.

The loan will also benefit the City, the other jurisdictions within Yolo County, and by extension the entire region by making possible CARTA’s successful launch and full implementation of revenue service. CARTA will ultimately provide significant funding from excess toll revenue for future transportation investments benefitting West Sacramento, including multi-modal projects and transit operations.

Risks
CARTA is a startup entity with no current revenue or credit rating, but with a business model that has been successfully implemented in other areas, and with a clear and near-term path to creating significant revenue that will be more than sufficient to fund its operating costs including debt service payments to the City. Still, there remains at least a nominal risk for the City to not recoup the initial portions of the loan should those funds be expended and the managed lanes project not be implemented for some unforeseen reason. However, in staff’s assessment, this scenario would be very unlikely.

The most likely and primary risk to the City is that CARTA’s buildup to revenue service will take longer than the 3-4 years currently projected. Under this scenario, the City’s loan would still be fully secured by the Loan Agreement, but the initial pace of repayment could be slower than projected. The Loan Agreement addresses this concern by allowing limited extensions to the loan repayments scheduled to begin after each draw, and even with an initial delay it would be likely that excess revenues would be sufficient in the outer years of the loan term to fully repay the City by the end of the established repayment period.

There is also a theoretically possible, but abstract, risk of major legislative or legal changes that could impact how toll roads operate and allocate revenues in California, but even under such an unlikely scenario, the City would have a binding loan agreement entitling it to receive full repayment from the toll revenues.

Next Steps
If the City Council approves the recommended actions, the CARTA Board is expected to approve the Loan Agreement at its next meeting on April 27, 2026. Staff and legal counsel representing CARTA will be present for this Council meeting and will be prepared to respond to questions directed to CARTA.

Environmental Considerations
N/A
Commission Recommendation
N/A
Strategic Plan Integration
N/A
Alternatives
The primary alternative to the recommended action is to decline approval of the proposed loan to CARTA. This alternative is not recommended because it would effectively prevent CARTA from proceeding with startup operations, which ultimately would not allow the authority to begin toll revenue service, funding from which will provide significant and sustainable revenue for transportation investments in West Sacramento and Yolo County. 704
CARTA Loan Agreement
March 18, 2026

Coordination and Review
This item was coordinated by the City Manager’s Office in consultation with the City Attorney and the Finance Department.

Budget/Cost Impact
The proposed loan to CARTA will be disbursed in four installments between May 1, 2026 and July 1, 2029, coinciding with the scheduled ramp up in CARTA operations. There is sufficient balance in the Measure V fund to meet CARTA’s proposed draw schedule without impacting planned Measure V allocations to other City projects, including the light rail extension project, flood protection improvements, and other projects currently being financed with a loan from the Measure V fund to the Measure O fund.

Budget Resolution 26-25 (Attachment 3) authorizes an appropriation of $5 million in FY 2025-26 funds from Measure V for the initial two loan draws. In accordance with the draw schedule outlined in the Loan Agreement, the upcoming budget for FY 2026-27 will include a $5 million appropriation for the third loan draw, and the budget for FY 2028-29 will include a $4 million appropriation for the fourth loan draw, for a grand total of $14 million.

Attachment 1 to the Loan Agreement includes a detailed amortization schedule based on the terms of the loan and the anticipated draw schedule. According to this schedule, CARTA will fully repay the City’s loan no later than June 30, 2040, with total interest payments to the City of approximately $13.3 million. All principal and interest payments related to the loan will be deposited into the Measure V fund and used for projects that are eligible under the voter-approved advisory language for Measure V.

ATTACHMENTS

1. CARTA Background Information

2. Loan Agreement

3. Budget Resolution 26-25
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Toll Lanes Planned for the
Sacramento Region by 2050
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707
The Capital Area Regional Tolling Authority
(CARTA) is a Joint Powers Authority (JPA)
responsible for developing, operating, and
maintaining express toll lanes in the Sacramento
region.

What is CARTA?
CARTA was created through a partnership between the
Sacramento Area Council of Governments (SACOG),
the Yolo Transportation District (YoloTD), and Caltrans District 3.

Its governing board also includes non-voting members
from the Sacramento Transportation Authority (STA),
Placer County Transportation Planning Agency (PCTPA),
and the El Dorado County Transportation Commission
(EDCTC).

CARTA provides a regional, centralized approach to
roadway pricing that improves mobility, provides reliable travel choices, and generates dedicated funding for
reinvestment in local transportation improvements.

Managed lanes help maintain reliable traffic flow by
ensuring travel speeds of at least 45 mph in tolled
lanes, while also reducing congestion in adjacent
free lanes. Unlike traditional widening projects,
which often worsen congestion over time, managed
lanes offer a long-term, reliable solution.

Managed lanes, like express toll lanes, are special
lanes next to regular, free lanes to help keep traffic
moving. Drivers can choose whether or not to use
them. To use an express toll lane, drivers pay a fee
that changes based on how busy the road is—
helping keep traffic in the lane flowing at a steady
speed. The regular lanes remain free for anyone
who chooses not to pay the toll.

Managed Lanes in the Region
Over the next 20 years, managed lanes are planned
on the region’s most congested corridors, including
Interstate 80, Interstate 5, State Route 65, State
Route 99, and Highway 50. Three managed lanes
projects are currently under development:
• Yolo 80 Project (I-80 from Davis to West
Sacramento) – Construction began in 2024,
operations expected in 2028.
• I-5 Express Lanes (Airport to downtown
Sacramento) – Currently in environmental review.
• SR-65 Express Toll Lanes (Placer County) –
Currently in environmental review.

Regional Projects
Email [email protected]
or visit our website at carta.ca.gov.

Join the CARTA mailing list to receive updates.

Tolling in the Sacramento region will use FasTrak®,
the same system currently operating in the Bay Area
and Southern California. Existing FasTrak® account
holders can use their transponders in new toll lanes,
and new customers can sign up for a transponder to
access the system.

Payment System
By law, toll revenues must remain in the corridor
where they are collected. Revenues first cover
operations and maintenance costs, with remaining
funds reinvested into corridor-specific transportation
improvements. CARTA will adopt an expenditure
plan through a transparent public process.

Use of Toll Revenue
CARTA is committed to ensuring that roadway
pricing policies and projects are shaped by the
communities they serve. Public input is sought at
every major stage of planning, environmental
review, and project development.

Residents, drivers, and stakeholders are encouraged
to share feedback through public workshops,
online surveys, community meetings, and public
hearings. This collaborative approach helps CARTA
design managed lanes projects that reflect
community values, address equity concerns, and
maximize regional benefits.

Public Input and
Community Engagement
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LOAN AGREEMENT
THIS LOAN AGREEMENT (“Loan Agreement”) is made and entered into as of the 29th day of April, 2026, by and between the CAPITAL AREA REGIONAL TOLLING AUTHORITY, a California joint powers agency (“Borrower”), and the CITY OF WEST SACRAMENTO (“Lender”).

RECITALS
WHEREAS, Borrower is a joint powers agency formed on February 15, 2024, by the Sacramento Area Council of Governments (SACOG), Yolo Transportation District (YTD), and the California Department of Transportation (CalTrans) for the purpose leading the implementation of toll facilities in the Sacramento region; and
WHEREAS, Yolo County, and the cities within Yolo County, are the member agencies of the Yolo Transportation District and have a vested and continuing interest in the public benefits provided by the Yolo Transportation District; and
WHEREAS, the development of toll lanes within Yolo County, particularly on the I-80, will provide a public benefit to the County and all cities within the County by enabling more throughput of individuals and vehicles, reducing greenhouse gas emissions, and generating revenues that can be used to improve various transportation modes within the I-80 corridor, including but not limited to public transit; and
WHEREAS, YTD and CalTrans initiated a project to develop a toll lane on the I-80 corridor in Yolo County (“Yolo80 Project”), and the California Transportation Commission approved CARTA’s application to operate toll services once the toll lane is developed for the Yolo80 Project; and
WHEREAS, CARTA has obtained two Traffic & Revenue studies that demonstrate that the Yolo80 Project is expected to provide sufficient revenue to cover its operating costs inclusive of debt from the time the Yolo80 Project opens, and YTD is commissioning a third study to further refine the Traffic & Revenue forecast; and
WHEREAS, Lender desires to provide initial funding that is needed for CARTA to develop, administer and operate toll lanes within Yolo County, and Borrower intends to repay this debt as an operating expense payable from future toll revenues.

NOW, THEREFORE, in consideration of the promises and covenants herein, Borrower and Lender agree as follows:
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ARTICLE I

1.01 Definitions. When used in this Loan Agreement, the following terms shall have the indicated definitions:
(a) “Borrower” means Capital Area Regional Tolling Authority, a California joint powers agency.
(b) “Loan” means the financial accommodation being made by the Lender to the Borrower in accordance with the terms and provisions of this Loan Agreement.
(c) “Loan Documents” means this Loan Agreement, the Note and all other documents executed in connection with the Obligations or under this Loan Agreement, with all addendums, modifications and amendments thereto. (d) “Note” means the Promissory Note from the Borrower as maker, to the Lender, as payee executed concurrently with this Agreement, and all amendments, extensions or renewals thereof.
(e) “Obligations” means all obligations under the Note, all of the obligations hereunder and all other obligations and liabilities of the Borrower, or any guarantor, surety, endorser or accommodation party, to the Lender, its successors and assigns, arising from or evidenced by the Loan Documents, whether direct or indirect, primary or secondary, joint or several, absolute or contingent, or now or hereafter existing or due or to become due in connection therewith.

ARTICLE II
Terms of Loan

2.01 Loan Amount. Lender hereby agrees to loan funds to Borrower in a total amount not-toexceed FOURTEEN MILLION DOLLARS ($14,000,000), subject to the terms and conditions stated herein and in the Promissory Note set forth as Attachment 2.

2.02 Draw Schedule. Borrower may draw upon the Loan in accordance with the following schedule:
(a) Initial Draw: Up to $1,000,000, no later than May 1, 2026 (b) Second Draw: Up to $4,000,000, no later than July 1, 2026 (c) Third Draw: Up to $5,000,000, no later than July 1, 2027 (d) Fourth Draw: Up to $4,000,000, no later than July 1, 2029 Borrower is under no obligation to make a draw and may draw less than the stated amount. Upon giving notice of its intent to draw upon the Loan funds, Lender shall promptly release the funds to Borrower.
710
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2.03 Conditions Precedent to Disbursement of Loan. Lender shall not be obligated to make any disbursements of Loan proceeds or take any other action under this Agreement, unless the following conditions precedent are satisfied prior to the disbursement for loan:
(a) Borrower has executed and delivered to Lender this Agreement and the Promissory Note;
(b) There exists no Borrower Event of Default nor any act, failure, omission or condition that would constitute an Event of Default.

2.04 Repayment. The Loan shall have an initial three-year moratorium on repayment for each draw, followed by a ten (10)-year repayment period. The moratorium period shall be extended until twelve (12) months following Borrower’s initial receipt of toll revenue, if greater than three years from Borrower’s initial draw of Loan funds. The extension shall not exceed five years in total from the initial draw of Loan funds. Borrower may prepay the outstanding amount or any portion thereof, at any time prior to the repayment term without penalty. (a) As set forth in the amortization schedule (Attachment 1), during the repayment period, Borrower shall make quarterly payments of principal and interest until the Loan is fully repaid. Each quarterly payment shall consist of (i) accrued interest, and (ii) a graduated portion of the outstanding principal balance. Lender shall provide Borrower with an amortization schedule reflecting the quarterly payment amounts, the allocation of each payment between principal and interest, and the remaining outstanding balance after each payment, at the time of each draw. (b) Consistent with California Streets and Highways Code section 149.7(e)(4) revenue generated from Borrower’s toll facility on I-80 within Yolo County shall take priority over all other debt, unless otherwise agreed to in writing by Lender. Lender recognizes and agrees that the SACOG has previously loaned funds to Borrower in an amount up to $2.6 million, and repayment of this SACOG loan shall take priority over the Loan. Additionally, Lender recognizes and agrees that the County of Yolo and the other cities within the County intend to make Loans to Borrower which shall be deemed on equal priority to the Loan. A schedule indicating the allowable draws from each agency is attached hereto as Attachment I and incorporated herein by reference. Lender agrees that repayments will be made proportionally for each lending agency.
(c) Should other corridors join CARTA prior to repayment of the Loans, any payments received by CARTA for initial operating costs shall be prioritized to make regular debt service payments for these loans before any other debt service, unless otherwise agreed to in writing by Lender.
(d) Borrower shall make payments by wire to Lender, or by any other method specified by Lender.
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2.05 Interest. The Loan shall accrue interest at the fixed annual rate of eight percent (8%).

Interest shall begin accruing upon Borrower’s draw of the Loan funds and only upon the amount of funds actually drawn by Borrower.

2.06 Promissory Note. Repayment of the Loan shall be secured by a Promissory Note in substantially the form in Attachment 2. The Note has been executed and was delivered by the Borrower contemporaneously with the execution and delivery of this Loan Agreement.

2.07 Default. Each of the following shall constitute an Event of Default under this Agreement:
(a) Borrower fails to make any payment when due.
(b) Borrower fails to comply with or to perform any other term, obligation or covenant or condition contained in this Agreement or any of the Loan Documents.
(c) The dissolution or termination of the Borrower’s existence as a joint powers agency, insolvency of the Borrower, the appointment of a receiver for any part of Borrower’s property, any assignment for the benefit of Borrower’s creditors or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

2.08 Lender’s Rights.. Upon an Event of Default by Borrower, Lender's obligation to disburse further Loan proceeds shall terminate, and Lender may proceed with any or all of the following remedies in any order or combination. Lender may choose in its sole discretion without demand on or notice to Borrower, or any other party: (a) accelerate the Maturity Date in which event the entire principal amount outstanding under the Promissory Note and all other amounts due and payable by Borrower hereunder shall immediately become due and payable in full; or (b) pursue any other remedy allowed at law or in equity. Except as may be prohibited by applicable law, all of Lender's rights and remedies shall be cumulative and may be exercised singularly or concurrently.

2.09 Interest Upon Default. Any sum which shall become due immediately hereunder at the option of Borrower, together with any sum in default hereunder, shall bear interest at the rate of eight percent (8%) per annum from and after the date of such default.

2.10 Use of Funds. The Loan shall be used by Borrower to develop, operate, and administer toll facilities in the Sacramento region in a manner that will ultimately be beneficial to users of the toll facilities and members of the general public in Yolo County.

2.11 Security. The Loan shall be unsecured.

ARTICLE III
Miscellaneous

3.01 Indemnity. Borrower undertakes and agrees to defend, indemnify, and hold Lender harmless from and against all suits and causes of action, claims, losses, demands, costs and 712
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expenses, including, but not limited to, attorneys’ fees and costs of litigation, damage (including any personal injury or death related to any work performed on the Yolo80 Project) or liability of any nature whatsoever, arising in any manner by reason of or incident to the performance of this Agreement on the part of the Borrower or any contractor or subcontractor of the Borrower, whether or not contributed to by an act or omission of Lender.

3.02 Non-Liability of Officials, Employees and Agents. No official, agent or employee of Lender shall be personally liable to the Borrower for any obligation created under the terms of this Agreement except in the case of actual fraud or willful misconduct by Lender.

3.03 No Implied Waiver. Neither failure to exercise nor any delay on the part of Lender in exercising any right, power or privilege, nor any single or partial exercise of any right, power or privilege under this Agreement, nor under any of the documents executed by Borrower in connection herewith, shall preclude any further exercise thereof by Lender or the exercise of any other right, power or privilege.

3.04 Changes Must Be In Writing. No provisions of the Loan Documents may be changed, waived, discharged or terminated orally, by telephone or by any other means except an instrument in writing signed by the party against whom enforcement of the change, waiver, discharge or termination is sought and then the same shall be effective only in the specific instance for which it is given.

3.05 Applicable Law. This Agreement shall be deemed to be a contract made in the State of California and entered into under and pursuant to the laws of such state, and to be governed, construed and enforced in accordance with the laws of the State of California. All parties to this Agreement agree that all actions or proceedings arising in connection with this Agreement shall be tried and litigated only in the County of Yolo or the United States District Court for the Eastern District of California

3.06 Counterparts. This Agreement and any of the other Loan Documents may be executed in any number of counterparts, each of which shall constitute an original.

3.07 Survival of Covenants. This Agreement and all covenants, agreements, representations and warranties made herein in any other Loan Document, shall survive the making by the Lender of the Loan and the execution and delivery to the Lender of the Note, and shall continue in full force and effect so long as the Note and any other indebtedness of the Borrower to the Lender hereunder is outstanding and unpaid.

3.08 Successors and Assigns. Except as herein provided, this Agreement and the other Loan Documents shall be binding upon and inure to the benefit of Borrower and Lender and any other successors and assigns. Notwithstanding the foregoing, Borrower or any other person other than Lender, without the prior written consent of the Lender, which consent may be withheld in Lender’s sole discretion, may not assign, transfer or set over to another person, in whole or in part, all or any part of its benefits, rights, duties and obligations hereunder, including, without limitation, performance of and compliance with conditions hereof and the right to receive the proceeds of current or future advances. Whenever in this Agreement or in any of the other Loan Documents any of the parties hereto or thereto is referred to, such reference shall be deemed to include the successors and assigns of such party (but without any implied consent to any transfer or other action which violates the term of any Loan Document); and all covenants, promises and 713
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agreements contained in this Agreement, or in any of the other Loan Documents by or on behalf of Borrower or any other Person other than Lender, shall inure to the benefit of the respective successors and assigns of Lender.

3.09 Severability. Any provision of this Agreement or of any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.

3.10 Amendment, Waiver or Consent. No waiver, consent, modification, or amendment shall be effective as against the Lender unless the same is in writing and signed by an authorized officer.

No such waiver, consent, modification, or amendment shall extend to or affect any obligation or right except to the extent expressly provided for therein.

3.11 Costs of Enforcement. Borrower agrees to pay the costs and expenses, including but not limited to reasonable attorneys' fees and legal expenses incurred by Lender in the exercise of any right or remedy available to it, whether or not suit is commenced, including, without limitation, reasonable attorneys' fees and legal expenses incurred in connection with any appeal of a lower court's order or judgment.

3.10 Further Assurances. Borrower will execute and deliver such other and further instruments and documents, and will do such other and further acts as in the opinion of the Lender may be necessary or desirable to carry out more effectively the purposes of this Loan Agreement.

3.11 Binding Effect. This Loan Agreement shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of the Lender and the benefit of its successors and assigns, including any subsequent holder or holders of the Note or any interest therein.

3.12 Survival. All representations, warranties, covenants, and agreements made herein shall survive the execution and delivery of this Loan Agreement, the Loan Documents and the issuance of the Note.

3.13 Integration of Loan Documents. The Parties agree that this Loan Agreement shall incorporate by reference all of the terms, covenants, conditions, obligations, stipulations and agreements contained in the Loan Documents, to the same extent and effect as if fully set forth herein and made a part of this Loan Agreement.

3.14 Entire Contract. This Loan Agreement with the Loan Documents constitutes the entire Loan Agreement between the parties. No oral representation shall be binding on any Party hereto, and all parties acknowledge that no reliance will be placed on any oral representations of any person or entity which vary, in any manner whatsoever, any portion of this Loan Agreement.

IN WITNESS WHEREOF, the Parties hereto have caused this Loan Agreement executed and delivered as of the day and year first above written.
[SIGNATURES ON NEXT PAGE]
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CITY OF WEST SACRAMENTO
Aaron Laurel, City Manager
APPROVED AS TO FORM:

Jeff Mitchell, City Attorney

CAPITAL AREA REGIONAL TOLLING AUTHORITY
Oscar Villegas, Board Chair
APPROVED AS TO FORM:

Michael Maurer,
General Counsel
Best Best & Krieger
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ATTACHMENT 1

AMORTIZATION SCHEDULE
Fiscal
Year Quarter Quarter End
Quarterly
Payment
Quarterly
Interest
Quarterly
Principal
Cumulative
Payment Ending Balance
2026 Q1 9/30/2025 $0.00 $20,000.00 -$20,000.00 $0.00 $270,000.00 2026 Q2 12/31/2025 $0.00 $20,000.00 -$20,000.00 $0.00 $540,000.00 2026 Q3 3/31/2026 $0.00 $20,000.00 -$20,000.00 $0.00 $810,000.00 2026 Q4 6/30/2026 $0.00 $20,000.00 -$20,000.00 $0.00 $1,080,000.00 2027 Q1 9/30/2026 $0.00 $101,600.00 -$101,600.00 $0.00 $2,181,600.00 2027 Q2 12/31/2026 $0.00 $101,600.00 -$101,600.00 $0.00 $3,283,200.00 2027 Q3 3/31/2027 $0.00 $101,600.00 -$101,600.00 $0.00 $4,384,800.00 2027 Q4 6/30/2027 $0.00 $101,600.00 -$101,600.00 $0.00 $5,486,400.00 2028 Q1 9/30/2027 $0.00 $209,728.00 -$209,728.00 $0.00 $6,946,128.00 2028 Q2 12/31/2027 $0.00 $209,728.00 -$209,728.00 $0.00 $8,405,856.00 2028 Q3 3/31/2028 $0.00 $209,728.00 -$209,728.00 $0.00 $9,865,584.00 2028 Q4 6/30/2028 $0.00 $209,728.00 -$209,728.00 $0.00 $11,325,312.00 2029 Q1 9/30/2028 $35,453.57 $306,506.24 -$271,052.67 $35,453.57 $12,596,364.67 2029 Q2 12/31/2028 $35,453.57 $306,506.24 -$271,052.67 $70,907.13 $13,867,417.35 2029 Q3 3/31/2029 $35,453.57 $306,506.24 -$271,052.67 $106,360.70 $15,138,470.02 2029 Q4 6/30/2029 $35,453.57 $306,506.24 -$271,052.67 $141,814.26 $16,409,522.70 2030 Q1 9/30/2029 $179,749.58 $328,190.45 -$148,440.88 $321,563.84 $16,557,963.57 2030 Q2 12/31/2029 $179,749.58 $328,190.45 -$148,440.88 $501,313.42 $16,706,404.45 2030 Q3 3/31/2030 $179,749.58 $328,190.45 -$148,440.88 $681,062.99 $16,854,845.33 2030 Q4 6/30/2030 $179,749.58 $328,190.45 -$148,440.88 $860,812.57 $17,003,286.20 2031 Q1 9/30/2030 $369,599.88 $340,065.72 $29,534.15 $1,230,412.45 $16,973,752.05 2031 Q2 12/31/2030 $369,599.88 $340,065.72 $29,534.15 $1,600,012.32 $16,944,217.90 2031 Q3 3/31/2031 $369,599.88 $340,065.72 $29,534.15 $1,969,612.20 $16,914,683.75 2031 Q4 6/30/2031 $369,599.88 $340,065.72 $29,534.15 $2,339,212.07 $16,885,149.60 2032 Q1 9/30/2031 $537,286.13 $337,702.99 $199,583.14 $2,876,498.20 $16,685,566.46 2032 Q2 12/31/2031 $537,286.13 $337,702.99 $199,583.14 $3,413,784.33 $16,485,983.32 2032 Q3 3/31/2032 $537,286.13 $337,702.99 $199,583.14 $3,951,070.46 $16,286,400.19 2032 Q4 6/30/2032 $537,286.13 $337,702.99 $199,583.14 $4,488,356.59 $16,086,817.05 2033 Q1 9/30/2032 $574,896.16 $321,736.34 $253,159.82 $5,063,252.75 $15,833,657.23 2033 Q2 12/31/2032 $574,896.16 $321,736.34 $253,159.82 $5,638,148.91 $15,580,497.42 2033 Q3 3/31/2033 $574,896.16 $321,736.34 $253,159.82 $6,213,045.06 $15,327,337.60 2033 Q4 6/30/2033 $574,896.16 $321,736.34 $253,159.82 $6,787,941.22 $15,074,177.78 2034 Q1 9/30/2033 $615,138.89 $301,483.56 $313,655.33 $7,403,080.11 $14,760,522.45 2034 Q2 12/31/2033 $615,138.89 $301,483.56 $313,655.33 $8,018,219.00 $14,446,867.12 2034 Q3 3/31/2034 $615,138.89 $301,483.56 $313,655.33 $8,633,357.89 $14,133,211.78 2034 Q4 6/30/2034 $615,138.89 $301,483.56 $313,655.33 $9,248,496.78 $13,819,556.45 2035 Q1 9/30/2034 $658,198.61 $276,391.13 $381,807.48 $9,906,695.39 $13,437,748.97 2035 Q2 12/31/2034 $658,198.61 $276,391.13 $381,807.48 $10,564,894.00 $13,055,941.49 2035 Q3 3/31/2035 $658,198.61 $276,391.13 $381,807.48 $11,223,092.61 $12,674,134.00 2035 Q4 6/30/2035 $658,198.61 $276,391.13 $381,807.48 $11,881,291.22 $12,292,326.52 2036 Q1 9/30/2035 $704,272.51 $245,846.53 $458,425.98 $12,585,563.74 $11,833,900.54 2036 Q2 12/31/2035 $704,272.51 $245,846.53 $458,425.98 $13,289,836.25 $11,375,474.55 2036 Q3 3/31/2036 $704,272.51 $245,846.53 $458,425.98 $13,994,108.76 $10,917,048.57 2036 Q4 6/30/2036 $704,272.51 $245,846.53 $458,425.98 $14,698,381.28 $10,458,622.59 2037 Q1 9/30/2036 $753,571.59 $209,172.45 $544,399.14 $15,451,952.87 $9,914,223.45 2037 Q2 12/31/2036 $753,571.59 $209,172.45 $544,399.14 $16,205,524.46 $9,369,824.31 716
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Fiscal
Year Quarter Quarter End
Quarterly
Payment
Quarterly
Interest
Quarterly
Principal
Cumulative
Payment Ending Balance
2037 Q3 3/31/2037 $753,571.59 $209,172.45 $544,399.14 $16,959,096.05 $8,825,425.17 2037 Q4 6/30/2037 $753,571.59 $209,172.45 $544,399.14 $17,712,667.64 $8,281,026.03 2038 Q1 9/30/2037 $806,321.60 $165,620.52 $640,701.08 $18,518,989.24 $7,640,324.95 2038 Q2 12/31/2037 $806,321.60 $165,620.52 $640,701.08 $19,325,310.84 $6,999,623.87 2038 Q3 3/31/2038 $806,321.60 $165,620.52 $640,701.08 $20,131,632.44 $6,358,922.79 2038 Q4 6/30/2038 $806,321.60 $165,620.52 $640,701.08 $20,937,954.04 $5,718,221.71 2039 Q1 9/30/2038 $793,021.58 $114,364.43 $678,657.15 $21,730,975.63 $5,039,564.56 2039 Q2 12/31/2038 $793,021.58 $114,364.43 $678,657.15 $22,523,997.21 $4,360,907.41 2039 Q3 3/31/2039 $793,021.58 $114,364.43 $678,657.15 $23,317,018.80 $3,682,250.26 2039 Q4 6/30/2039 $793,021.58 $114,364.43 $678,657.15 $24,110,040.38 $3,003,593.11 2040 Q1 9/30/2039 $569,562.98 $60,071.86 $509,491.11 $24,679,603.36 $2,494,102.00 2040 Q2 12/31/2039 $569,562.98 $60,071.86 $509,491.11 $25,249,166.33 $1,984,610.88 2040 Q3 3/31/2040 $569,562.98 $60,071.86 $509,491.11 $25,818,729.31 $1,475,119.77 2040 Q4 6/30/2040 $569,562.98 $60,071.86 $509,491.11 $26,388,292.28 $965,628.65 TOTAL $26,388,292.28 $13,353,920.94 $13,034,371.35
717
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ATTACHMENT 2

PROMISSORY NOTE
Loan Amount: $14,000,000.00 April 29, 2026

1. FOR VALUE RECEIVED, the CAPITAL AREA REGIONAL TOLLING AUTHORITY, a California joint powers agency (“Borrower”), promises to pay to the order of CITY OF WEST SACRAMENTO (“Lender”), the Principal sum of FOURTEEN MILLION DOLLARS ($14,000,000) with interest from the date first above written until paid at the fixed annual rate of eight percent (8%) (“Rate”).

2. The Principal sum borrowed pursuant to this Promissory Note, together with all interest due on it, is due and payable on or before ___________.

3. Borrower will use the Principal sum borrowed pursuant to this Promissory Note for Borrower’s operations in implementing toll services on the I-80 within Yolo County.

4. Borrower will timely pay to Lender all sums owing under this Promissory Note without deduction, offset, or counterclaim of any kind.

5. All payments on this Note will be in accordance with the Loan Agreement between Lender and Borrower.

6. Failure to pay any part of the Principal of this Promissory Note when due, or failure to carry out any of the terms, covenants, or conditions of this Promissory Note, shall authorize the holder of this Promissory Note to declare as immediately due and payable the then-unpaid Principal and to exercise any and all of the rights and remedies provided by the California Commercial Code as well as all other rights and remedies either at law or in equity possessed by the holder of this Promissory Note.

7. If Lender incurs fees and expenses for legal services by any attorney to enforce or construe any provision of this Note or as a consequence of any event of default, with or without the filing of any legal action or proceeding, then Borrower will immediately pay to Lender on demand all attorneys' fees and other costs incurred by Lender, together with interest from the date of the demand until paid.
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8. Borrower hereby waives presentment, notice of dishonor, and protest.

9. This Note may be prepaid in whole or in part without penalty.

Dated: ______________
By:

Name: Oscar Villegas
Title: Chair, Capital Area Regional Tolling Authority
719
Attachment 3
RESOLUTION 26-25

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WEST SACRAMENTO

APPROVING A LOAN OF MEASURE V FUNDS TO THE CAPITAL AREA REGIONAL TOLL AUTHORITY (CARTA) JPA AND RELATED BUDGET ADJUSTMENTS FOR FY 2025/26 WHEREAS, CARTA is a Joint Powers Authority (JPA) established between the Sacramento Area Council of Governments (SACOG), the Yolo Transportation District (YTD), and Caltrans, established in January 2024 and intends to construct and operate toll lanes which will traverse from Davis to West Sacramento at the Interstate 80/Highway 50 split; and WHEREAS, CARTA requires startup funds to implement the project and anticipates collection of toll revenue beginning in 2028, with revenue expected to fully ramp up by 2030; and

WHEREAS, CARTA has requested startup funding in the form of loans from impacted cities, repayable over a ten-year period from toll revenue, and SACOG has provided a loan to CARTA in the amount of $2.6 million; and
WHEREAS, the City of West Sacramento has a sufficient balance of Measure V funds, collected for the purpose of implementing flood control improvements and constructing a light rail extension into West Sacramento; projects which have significant future funding requirements but for which cash expenditures are not anticipated in the near term; and WHEREAS, the City Manager has evaluated the anticipated timing of project expenditures and determined that a portion of these funds may be temporarily loaned to CARTA without affecting the City’s ability to meet the future cash flow needs of the Measure V projects; and WHEREAS, the repayment of the loan, including interest, will return funds to the Measure V fund over time, ensuring that adequate funds will be available when required to implement the flood control and light rail improvements, as approved by voters in 2012; and WHEREAS, the City Council has considered all information related to this matter, as presented at the public meetings of the City Council identified herein, including any supporting reports by City staff, and any other information provided during public meetings.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of West Sacramento as follows:

1. The City Council hereby approves a loan of up to $14 million from Measure V funds to the Capital Area Regional Toll Authority (CARTA) JPA, to be repaid in accordance with the terms of the loan agreement.

2. The City Council hereby approves the following related appropriations for FY 2025/26 to fund the initial two loan draws anticipated to occur by June 30, 2026:

SOURCES
$5,000,000 109-0000-3060 Measure V Fund Balance
USES
$5,000,000 109-9910-5310 Contributions to Other Agencies

3. The City Council hereby finds that the facts set forth in the recitals to this resolution are true and correct and establish the factual basis for the City Council’s adoption of this resolution.

4. This Resolution shall take effect immediately upon adoption. 720
Resolution 25-41 –FY 2024/25 Midyear Budget

PASSED AND ADOPTED by the City Council of the City of West Sacramento this 18th day of March 2026, by the following vote:

AYES:

NOES:

ABSENT:

Martha Guerrero, Mayor
ATTEST:

Jennifer Cusmir, City Clerk
721

CITY COUNCIL AGENDA REPORT
MEETING DATE: March 18, 2026 ITEM # 11
SUBJECT:

CONSIDERATION OF UPDATED ADMINISTRATIVE POLICIES UNDER CITY COUNCIL

AUTHORITY IN ACCORDANCE WITH LAWS, PROCESSES, AND BEST PRACTICES INITIATED OR REQUESTED BY: REPORT COORDINATED OR PREPARED BY:
[ ] Council [X] Staff
[ ] Other
Amanda Berlin, Asst. City Manager – Admin. Services
City Manager’s Office
ATTACHMENT [X] Yes [ ] No [ ] Information [ ] Direction [X] Action

OBJECTIVE
The purpose of this report is to present for the Council’s consideration and approval Administrative Policies under City Council authority that have been updated in response to updated laws, processes, and best practices.

RECOMMENDED ACTION
Staff respectfully recommends that the City Council:

1. Approve the new Administrative Policy: IX-A-09 City Sponsored Events

2. Approve the revisions to the following Administrative Policies:
• I-D-4 Employee Use of Passes or Tickets
• IX-A-06 Community Events Fee Waivers

3. Approve the deletion of the following Administrative Policies:
• XII-B-01 Tax Increment Use of Housing Set-Aside
• XII-B-02 Development Assistance
• XII-C-01 Selection of Title Companies
• XII-C-02 Index of Past Studies Conducted by City and Consultants

BACKGROUND
The City maintains a manual of administrative policies. The primary benefit of these policies is to provide consistency in the performance of key City functions, resulting in greater efficiency. When laws, processes, or best practices change, this can trigger a new, updated or deleted policy. Administrative Policies are approved by authority of either the City Council or by the City Manager. Policies under City Council authority are those that have the potential to create public controversy or materially affect Council initiatives or strategic priorities whereas the policies under City Manager approval authority are those that affect departmental processes (Administrative Policy I-A-00, 2022). When policies under City Council authority are added or amended, they must be brought to the City Council for approval.

ANALYSIS
The Administrative Policies under City Council authority requiring review and approval at this time are listed below with their key reasons for updates.

New Administrative Policies:
 IX-A-09 City-Sponsored Events: This new policy outlines the processes and criteria to establish when an event may be City-sponsored.

Revisions to Administrative Policies:
 I-D-4 Employee Use of Passes or Tickets: Includes updated language such as the name change to Sutter Health Park from Raley Field, as well as the removal of the Economic Development Tickets allocation now addressed in a separate policy regarding use of the City Suite at Sutter Health Park.  IX-A-06 Community Events Fee Waiver: This policy includes updated language establishing an annual funding source for fee waivers with a yearly application period. The City Council designee will review the fee waivers based on a variety of factors that emphasize a diverse community-wide benefit. It also adds additional obligations for event organizers to acknowledge the City in any publicity materials and ensures events are held within the City and open to the general public.

Deletion of Administrative Policies: 722
Updated City Council Authority Administrative Policies
March 18, 2026

 XII-B-01 Tax Increment Use of Housing Set-Aside: Following the dissolution of the Redevelopment Agency (RDA) of the City, this requirement no longer exists, but the requirement for, and production of, affordable housing is now included as part of the City’s Housing Element of the General Plan and related Inclusionary Housing Ordinance (Ordinance 14-4) adopted on April 30, 2014. The Inclusionary Housing Ordinance, which is codified in Chapter 15.40 of the City’s Municipal Code, describes the requirements and procedures to comply with the City’s goals related to the production of affordable housing in the City.  XII-B-02 Development Assistance: Following the dissolution of the Redevelopment Agency, the City has taken multiple actions and adopted new policies to inform and guide investment of public funds that now supersede the Development Assistance Administrative Policy. This includes establishing a Community Investment Fund in 2012 and adopting the related Community Investment Action Plan which includes Community Investment Project Criteria, adopting both Infrastructure and Enhanced Infrastructure Financing Districts which include budget policies, identify priority projects and incorporate the City Council’s annual strategic planning process for prioritizing the investment of public funds.  XII-C-01 Selection of Title Companies: This policy was adopted in 1996 and since then, procurement policies and procedures have changed significantly, making this policy no longer necessary. The City’s current Procurement Policy ensures a fair and open solicitation process for all vendors/consultants. For real estate activities, the City Attorney’s Office and Real Estate Manager work with staff to ensure title companies comply with City requirements.
 XII-C-02 Index of Past Studies Conducted by City and Consultants: This policy was adopted in 1996, long before the City had access to technology, software and equipment that could search, store and share records both internally and externally. The City now has multiple procedures and programs in place to store and share files, including OnBase and OpenGov, shared and cloud-based drives that support fast and easy record searches, and specific procedures for real estate files. The City’s current Record Retention Program includes an annual review of files that are eligible to be destroyed and identifies key staff responsible for locating, destroying and confirming status of files. Additionally, the City Clerk’s Office is in the process of scanning hard copies of files, which will provide even great access to older documents.

Environmental Considerations
This action is not a project that is subject to CEQA because it is not an activity that may cause either a direct or reasonably foreseeable indirect physical change in the environment. (Pub. Resources Code, § 21065; CEQA Guidelines §§ 15060(c), 15378(a).)
Commission Recommendation
N/A
Strategic Plan Integration
N/A
Alternatives
The Council’s primary alternatives are summarized below:

1. Approve new Administrative Policies IX-A-09, approve proposed revisions to Administrative Policy I-D-4 and IX-A-06, and approve deletion of policies XII-B-01, XII-B-02, XII-C-01, and XII-C-02.

2. Direct staff to modify selected policy(ies) and return at a future Council meeting.

3. Decline to approve all Administrative Policies and direct staff to return at a future Council meeting.

Alternative 1 is staff’s recommendation. Staff is prepared to effectuate Alternative 2 at the Council’s direction.

Staff does not recommend Alternative 3.

Coordination and Review
This report was prepared by the City Manager’s Office based on input from appropriate department staff.

Budget/Cost Impact
N/A

ATTACHMENTS

1. IX-A-09 City-Sponsored Events

2. I-D-4 Employee Use of Passes or Tickets

3. IX-A-06 Community Events Fee Waivers

4. XII-B-01 Tax Increment Use of Housing Set-Aside 723
Updated City Council Authority Administrative Policies
March 18, 2026

5. XII-B-02 Development Assistance

6. XII-C-01 Selection of Title Companies

7. XII-C-02 Index of Past Studies Conducted by City and Consultants 724
1 CITY OF WEST SACRAMENTO
ADMINISTRATIVE POLICY NUMBER: IX-A-09
DATE: March 18, 2026
SUBJECT: CITY-SPONSORED EVENTS AUTHORITY: City Council

PURPOSE
The City annually organizes and produces a number of City-sponsored events, which are public events, programs, or activities which are directly related to a recognized function of the City, which is initiated, and in major part financed and executed by the City. Implementing such events takes substantial staff and budget investment. The purpose of this policy is to set processes and criteria to guide the City Council and staff when determining appropriate City-sponsored events by balancing the benefits of organized events and their associated impacts on the staff and fiscal resources.

POLICY
The City produces events that focus on engaging with West Sacramento residents across the city and promote the city’s diverse community. Most events are planned and implemented through the Parks & Recreation Department and described in the semi-annual Parks & Recreation Playbook. Examples of City-sponsored events include the Holiday Tree Lighting, Earth Day & Spring Celebration, Annual Juneteenth Celebration, West Sac Kinders Go to College, Rhythm on the River Summer Concert Series, West Sac Arts in the Heart and Safe Trick-or-Treat Street.

PROCEDURE
In general, City-sponsored events are those events that recur annually and cost of the staff time and other resources are funded through the City’s annual budget. As such, any changes to the annual City-sponsored events would require City Council consideration for budget amendments, for adding new events, reappropriating resources from existing events to a new event, etc.

CRITERIA
All City-sponsored events shall meet three or more of the following criteria:
• Public benefit, serving the community’s general welfare, not private gain; • Promote cultural diversity;
• Promote exercise and outdoor activity;
• Enhance City pride;
• Attract visitors to the riverfront;
• Encourage utilization of city amenities (trails, parks, etc.); • Create economic opportunities for West Sacramento residents or businesses; • Support environmental sustainability;
• Support education and academic achievement; and/or
• Enhance or promote public health or public safety.

City-sponsored events shall not include political activities. See Administrative Policy II-E-2.

PROCESS
725
Administrative Policy IX-A-9
City-Sponsored Events
(continued)
2 Requests for new City-sponsored events may be initiated through the budget process or by City Council through the “Request for Future Agenda Item” process outlined in Administrative Policy I-A-10.
726
1 CITY OF WEST SACRAMENTO
ADMINISTRATIVE POLICY NUMBER: I-D-4
DATE: August 1, 2000
Revised: August 1, 2005
Revised: April 1, 2009
Revised: January 1, 2013
Revised: March 18, 2026
SUBJECT: EMPLOYEE USE OF PASSES OR TICKETS AUTHORITY: City Council

PURPOSE
The purpose of this policy is to specify the general conditions and procedure for distribution of passes and/or tickets to entertainment venues received by the City. This policy applies, but is not limited to, tickets to Sacramento River Cats home games provided pursuant to the City’s Local Baseball Agreement (LBA) and other Raley FieldSutter Health Park events. Additionally, this policy ensures that all passes or tickets are distributed in furtherance of a governmental and/or public purpose, in compliance with FPPC Regulation 18944.1.

POLICY
“City Manager” means City Manager or his/her designee.
“Public Official” means Mayor or member of the City Council, Mayoral appointed Board Member or Commissioner, Council appointed member to an ad hoc committee or advisory group and City employees.
“Ticket or Pass” means admission to a facility, event, show, or performance for an entertainment, amusement, recreational, or similar purpose.

This policy applies to tickets or passes that have been:

1. Gratuitously provided to the City by an outside source;

2. Acquired by the City by purchase;

3. Acquired by the City as consideration pursuant to the terms of a contract; or

4. Acquired by the City in any other manner; and

5. For which no consideration of equal or greater value is being provided by the City official.

Consideration of equal or greater value is deemed to be the face value of the ticket or pass. If the ticket or pass does not have a face value stated or states something to the effect of “complimentary” or “promotional,” then the City Manager or his/her designee shall set the value based on the reasonable cost for attendance at such an event for which the ticket or pass is being provided.

Exception to Policy
Tickets or passes provided to public officials as part of their official duties, or tickets provided so that the City official may perform a ceremonial role or function on behalf of the City shall not be subject to this policy. This also applies to spouses, domestic partners or dependent children, including foster children who may be accompanying the public official to the event. These tickets or passes are exempt from any disclosure or reporting requirements. 727
Administrative Policy I-D-4
Employee Use of Passes or Tickets
(continued)
2 Tickets provided directly to public officials shall be reported as a gift in compliance with FPPC regulations and Administrative Policy I-D-1.

Employees may also reimburse the City for the face value of the ticket. The City will still be subject to the reporting requirements noted below.

City Manager Authority
The City Council has delegated authority to the City Manager or his/her designee to distribute any tickets or passes in accordance with this policy.

Public or Governmental Purpose
City -acquired ticket tickets or passes that are distributed to, or at the request of a City official, must be in furtherance of one or more of the following governmental or public purposes:

A. Promotion of local and regional businesses, economic development and tourism activities within the City, including conventions and conferences.

B. Promotion of City- sponsored and community programs and resources available to City residents, including non-profit organizations and youth programs.

C. Marketing programs highlighting the achievements of local residents and businesses.

D. Promotion of public facilities available for City resident use.

E. Promotion of special events in accordance with any City contract.

F. Exchange programs with foreign officials and dignitaries.

G. Promotion of City recognition, visibility, and/or profile on a local, state, national, or worldwide scale.

H. All written contracts where the City, as a form of consideration, has required that a certain number of tickets or suites be made available for City use.

I. Encouraging or rewarding significant academic, athletic, orathletic, or public or volunteer service achievements by City students, residents or businesses.

J. Attracting and retaining highly qualified employees in the City service.

K. Recognizing or rewarding exemplary service by a City employee or retiree.

Spouses, domestic partners, dependent children, including foster children of City officials, may also receive tickets in order to accompany the City official to an event that meets the criteria noted above.

Return of Tickets/Passes
Any City official or spouse, registered domestic partner or dependent child of a City official may return an unused ticket or pass to the City for redistribution pursuant to this policy.

Prohibition
Under no circumstances may either the public official or his/her spouse, domestic partner, or dependent child sell or further transfer any ticket or pass provided under this policy.

Website Posting
This policy shall be posted on the City’s website in a prominent fashion, and a link to the website shall be provided to FPPC.

Website Disclosure
The distribution of tickets or passes pursuant to this policy shall be posted on the City website in a prominent fashion within 45 days after the ticket distribution and shall include all information required by FPPC Section 18944.1. All postings shall use FPPC Form 802 as amended. These 728
Administrative Policy I-D-4
Employee Use of Passes or Tickets
(continued)
3 forms shall be posted for seven years and may be removed at the City’s discretion anytime thereafter. Tickets or passes distributed during 2012-2015 were reported on Form 802 and forwarded to the FPPC for posting on their website.

PROCEDURE
Tickets Received Pursuant to Local Baseball Agreement
Pursuant to the Local Baseball Agreement (LBA) executed on April 13, 1999, between the City of West Sacramento (City), West Sacramento Redevelopment Agency (Agency) and Sacramento River Cats, the Sacramento River Cats agreed to provide to the City and Agency 750 tickets a year to promote economic development. The 750 economic development tickets are allocated evenly among all home games. A block of at least ten economic development seats per game is available.

The Sacramento River Cats also provide the City with 1500 ticket vouchers per year for honor underprivileged students in West Sacramento. The LBA provides that the distribution of said tickets shall be solely with the control and discretion of City and Agency.

A. Economic Development Tickets: As a general rule, economic development tickets are only to be used as a marketing tool. City and Agency staff and elected officials engaged in economic development work may make use of them to promote the city to their qualified guests. Priority for these tickets will be given to the business recruitment and retention effort. Qualified guests include, but are not limited to, to the following groups of individuals:

1. Representatives of companies targeted for economic development recruitment.

2. Representatives of large and small companies targeted for retention in the City of West Sacramento.

3. Employees of companies or organizations involved in business recruitment, retention or economic development efforts.

4. Other individuals who directly or indirectly further the goals of the city’s economic development program, including but not limited to, efforts and programs to encourage the patronage of local businesses.

The City Manager will develop an internal procedure to ensure that the tickets are used for their intended purpose.

The City Manager will maintain a database of available economic development tickets and their use. Departments requesting use of the economic development tickets for one of the purposes noted above will make a request to the City Manager by providing the information required by Parts 3 & 4 of FPPC Form 802.

In the event that the tickets are not being used for economic development purposes, they will be made available for use to further any of the public or governmental purposes specified in this policy. All distributed tickets will be recorded on FPPC Form 802 by City Manager’s Office staff and posted to the City’s website within 30 days of distribution.

B.A. Student Tickets: The 1500 student ticket vouchers are forwarded to the Washington Unified School District where they are managed and distributed to honor and underprivileged students based on the District’s criteria. These tickets will be recorded on 729
Administrative Policy I-D-4
Employee Use of Passes or Tickets
(continued)
4 FPPC Form 802 by City Manager’s Office staff and posted to the City’s website within 30 days of distribution.

Every year, prior to the start of the season the District’s criteria for distribution will be reviewed by the members of the City/School 2x2. In the event that the City appointees do not believe the criteria meets the intent of the Council for use of these tickets, the matter shall be discussed and hopefully resolved at the 2x2. If the parties are unable to reach resolution, the matter shall be returned to the City Council for further discussion.

Other Tickets or Passes that May Be Received/Distributed Miscellaneous tickets that are determined to meet a defined government purpose will be distributed in a manner that pairs the specific event to an appropriate purpose.

ATTACHMENT
FPPC Form 802
730

CITY OF WEST SACRAMENTO
ADMINISTRATIVE POLICY NUMBER: IX-A-06
DATE: June 17, 2015
Revised: January 17, 2024
Revised: March 18, 2026
SUBJECT: COMMUNITY EVENTS FEE WAIVERSFEE

WAIVER FOR SPECIAL EVENTS
AUTHORITY: City Council

PURPOSE
City staff anticipatesanticipate that on certain occasions, applicants for special event permits will request a waiver of all or a portion of the service fees associated with the production of an event. The City Council wishes to allow fee waivers by a standardized process outlined in this policy. City Ordinance chapter 12.08 allows for the collection of an application fee, permit fee, late fees (if applicable) and payment for anticipated costs the City will incur in connection with the event. Typical costs incurred by the City may include but are not limited to administrative fees, Additional Processing fees, park rental fees, traffic control, street cleaning, litter clean-up, street metered parking, and staff time for public safety, parks and public works personnel. The granting of waivers will be dependent upon budget and operating impacts. To the extent a reduction or waiver can be granted without negatively impacting department budgets or operations, this policy will guide the City Council’s discretion. The purpose of the Community Events Fee Waiver this policy is to facilitate City support of events that promote City Council policy goals, including encouraging community gathering and ensuring the city’s diversity is valued and celebrated.

The Policy and associated funding has been created and designed to support the development of the events sector in a manner that is accessible, transparent, and accountable. This policy seeks to ensure that event waivers set forth the factors and procedure for City Council to consider when administering special event fee waivers to ensure they are approved, limited, or denied in a fair, non-discriminatory, and consistent manner, and to establish mutually beneficial partnerships between the City, event organizers, and the community.

POLICY
On June 17, 2015, City Council approved Admin Policy IX-A-6 to waive special event fees. The intent of the revised policy is to provide organizations hosting cultural and community events identified and selected by the City Manager as the City Council designee that take place in West Sacramento, focus on engaging with West Sacramento residents across the city, and promote the city’s diverse community with an opportunity to request the policy to waive special events fees as prescribed in this policy.

Per City of West Sacramento Municipal Code 12.08.00, permit conditions for a special event will consider the benefits of special events, while reasonably balancing the city’s obligation to protect the public health, safety and peaceful enjoyment of residents and businesses. Permit conditions will also consider the area of the city where the event is proposed and the types of events and activities that were contemplated for that area. Past performance in the use and treatment of City facilities will be considered annually for future grant funding awards.

PROCEDURE

GENERAL PRINCIPLES
731
2 Administrative Policy IX-A-6
Fee Waiver for Special Events
(continued)

1. Fee waiver/reductions will be limited to one (1) per organization, per event, per year.

2. Fee waiver/reductions will generally not be considered; • For organizers intending to profit from an event.
• For events or activities that are not open to the general public. • For events based outside of the West Sacramento City limits. • For organizers who have failed to fulfill their obligations during previous events for which fees were waived or reduced.

I. APPLICATION PROCESS
A. Special Event Fee Waiver application period will occur on an annual basis.

A. 1. Applicants may request a full or partial waiver of the requirement to pay the special event permit fee.

2. A request for a fee waiver must be submitted in writing (Attachment A) along with a special event permit application.
• 3. Organizations must have with a non-profit status must and submit a copy of the IRS 501(c)3 determination letter at the time the request is made. • 4. Incomplete applications will not be considered for waiver/reduction of fees. • 5. Staff will review the fee waiver request and the City Council; designee will approve the Special Event Fee Waivers based on the criteria outlined in Section II. forward a recommendation to the Council for consideration. • The City Council may, at its discretion, approve all, part, or none of a fee waiver request.

B. If funds remain in the annual budget, additional Special Event Fee Waiver applications may be accepted throughout the year, consistent with the criteria in section A 2-5 above, and will be awarded based on funding availability.

1. Fee waiver request must be received a minimum of 30 days prior to the event II. CONSIDERATION
A. The City Manager City Council will consider the following factors in its review of a request for a fee waiver/reduction.
• The benefit to the community from the event.
• Positive publicity for the City from the event.
• The City’s cost of services for/to the event.
• Whether there are revenues that can be used to offset the impact of the waiver on the City’s general fund.
• Whether the event promotes education, public health, or public safety. • Whether the event is operated by a non-profit organization. • Whether, in the past, the event has performed in accordance with the previously approved permit.
• Whether event admission is free or there is a charge. • Whether the event is expected to have a local or regional draw. • Whether the event involves the use of a park/park facility and will not unreasonably interfere with or detract from general public enjoyment of the park. • Whether Tthe event addresses Council priorities as set forth in the Strategic Plan. 732
3 Administrative Policy IX-A-6
Fee Waiver for Special Events
(continued)
B. For purposes of Section A, the City Council designee will consider the following in determining the benefits to the community in its review of a request for a fee waiver/reduction:Fee waiver/reductions will also be considered if the organizer provides in-kind or other contribution of goods, services, or programs that will benefit the City of West Sacramento or its residents. In-kind contributions may include, but are not limited to, equipment or materials, promotional opportunities, free attendance to event, or service projects that improve or provide programs benefitting the City or its residents.
• Promoting cultural diversity;
• Promoting exercise and outdoor activity;
• Enhancing City pride;
• Attracting visitors to the riverfront;
• Encouraging utilization of city amenities (trails, parks, etc.); • Creating economic opportunities for West Sacramento residents or businesses;
• Supporting environmental sustainability;
• Supporting education and academic achievement;
• Enhancing or promoting public health or public safety; and/or • Provision of in-kind or other contribution of goods, services, or programs that will benefit the City or its residents. In-kind contributions may include, but are not limited to, equipment or materials, promotional opportunities, free attendance to event, or service projects that improve or provide programs benefitting the City or its residents.

C. Fee waiver/reductions will generally not be considered for:
• Organizers intending to profit from an event;
• Events or activities that are not open to the general public; • Events based outside of West Sacramento city limits; and/or • Organizers who have failed to fulfill their obligations during previous events for which fees were waived or reduced.

D. Funding support for a special event may be revoked at any time if it is determined that the event does not fit within the criteria of the policy, the event applicant falsified information provided to the funding program or non-compliance of Special Event Permit policies and procedures.

B.

III. NOTIFICATION
A. Applicant shall be notified within 5 business days after the application period closes OR within 5 business days of submitting an application outside of the application period.24 hours of Council’s decision to grant a full or partial waiver, or deny the request.

IV. OTHER OBLIGATIONS
A. All applicants in receipt of a waiver/reduction of fees will acknowledge the City of West Sacramento in all publicity relating to the special event. Acknowledgement 733
4 Administrative Policy IX-A-6
Fee Waiver for Special Events
(continued)
includes City logo on promotional material, statements in advertising, media releases or other promotional contexts.

B. Events that include political activities shall not be eligible for fee waiver. However, a sponsor of an event that includes political activities (e.g., campaign events, candidate tabling, distribution of campaign materials, etc.) is not prohibited from renting City facilities for the published rates and in accordance with all rules and regulations pertaining to rental of City facilities. See Administrative Policy II-E-2.

A.C. Any waiver/reduction of fees will not affect the applicant’s obligation to comply with the remaining qualifications, restrictions, or criteria as outlined in the City’s special event ordinance, including the payment of other City costs or obligation to provide insurance.

B.D. Applicant must pay for fees applied by other jurisdictions including County Health Department fees or fees related to the sale or distribution of alcohol.

C.E. All applicants in receipt of a waiver/reduction of fees will acknowledge the City of West Sacramento in all publicity relating to the special event. Acknowledgement includes City logo on promotional material, statements in advertising, media releases or other promotional contexts.
734
1 CITY OF WEST SACRAMENTO
ADMINISTRATIVE POLICY NUMBER: XII-B-01
DATE: September 8, 1992
SUBJECT: TAX INCREMENT USE OF HOUSING SETASIDEAUTHORITY: City Manager

PURPOSE
State law requires that 20% of Tax Increment property taxes collected by set-aside for low and moderate-income housing purposes. Any capital improvement benefiting this purpose may be applied against these restricted funds.

POLICY
All Capital Projects shall be reviewed for possible Redevelopment funding from the 20% restricted for Low and Moderate Income Housing.

PROCEDURE
All Capital Projects shall be reviewed for possible benefit to low and moderate income housing by completing the worksheet (attached as Exhibit A), and sending it first to the Director of Redevelopment for approval, and second to the Director of Finance for appropriate action. 735
1 CITY OF WEST SACRAMENTO
ADMINISTRATIVE POLICY NUMBER: XII-B-02
DATE: October 9, 1991
Revised: August 1, 1996
SUBJECT: DEVELOPMENT ASSISTANCE AUTHORITY: City Council

PURPOSE
To establish policies and guidelines for Redevelopment Agency and City assistance to develop projects.

POLICY
The Redevelopment Agency was established to assist and encourage the orderly redevelopment of the project area. In this regard, the Agency may offer financial or other assistance to further the Agency’s and City’s redevelopment and revitalization goals. To conserve scarce Agency resources, private development projects seeking assistance will be carefully scrutinized to ensure they meet the Agency’s development goals and criteria. The Redevelopment Agency may offer financial or other assistance to projects which meet these goals and criteria, but which require some Agency help to make them financially feasible.

PROCEDURE
A. Evaluation Criteria
Project Characteristics

1. Land Uses for Which Cities Must Compete
Does the project include uses which the Agency wishes to encourage either (a) because they are beneficial to the community’s image, or (b) because they offer needed community facilities, or (c) because they are fiscally beneficial to the City (generating high tax revenues and low public service costs)?
A full-service hotel with meeting rooms, for example, meets all three of the above criteria.

A regional shopping center would meet criterion (c), and possibly (a). To successfully attract such uses, the Redevelopment Agency may need to offer development assistance to match what is available in nearby competitive locations.

2. Pioneering and Target Land Uses or Projects
Does the project represent a new land use the Agency wishes to attract? It is often difficult to change the real estate development industry’s perception of what types of projects are feasible in a given community. If, for example, luxury housing has not been built before it may be perceived as offering greater risk. If the Agency wishes to attract a pioneering land use, it can reduce the developer’s level of risk by offering financial or other assistance. In general, Agency assistance will not be available for land uses for which the City has an established reputation and competitive position, such as warehouse and distribution facilities, without other considerations such as new sales tax or similar revenues. 736
Administrative Policy VII-A-2
Development Assistance
(continued)
2 The City of West Sacramento currently focuses on attraction of four primary land use types: retail, hotel, office (in certain locations), and selected types of industrial uses. The development of offices along the City’s riverfront and in the Triangle area is a priority. The City’s Targeted Industry Study has identified three key industrial sectors on which to focus recruitment efforts: food processing, computers and electronics, and biomedical products.

Although these are high priority land uses, the Agency is always willing to discuss possible assistance to other types of projects which may offer unique benefits to the community.

3. Agency Desire for Reduced or Increased Density
Does the Agency wish to reduce the density of a project to a level below that supported by the market and the zoning, or increase the density above market demand? In general, the Agency is interested in developing the land in the redevelopment area to its highest and best use. There may be instances, however, where it desires a different or less intensive use. An example would be the development of low and moderate income housing on a site suitable for commercial use. The reduced density may make the project unfeasible unless financial assistance is provided. If the Agency believes the provision of housing is in the City’s best interest, then it could offer assistance to compensate the developer for the difference in land value between the two uses. Alternatively, the Agency may wish to develop an office or commercial project with densities greater than justified by market studies.

4. Agency Desire for Enhanced Project Quality
Does the Agency desire a higher level of quality in a project than that supported by the marketplace? For example, a developer may propose a Class B office building to be located near a busy highway intersection. If the Agency wishes to have a granite facade on the building due to its visibility and importance to the City’s image, then providing assistance to accomplish that goal is a logical use of redevelopment funds. The question of quality upgrades may be raised either by the Agency or the developer. The key factor is the level of quality currently supported by the marketplace. If market rents support buildings with granite facades, then provision of a subsidy to obtain that quality of construction would be unnecessary.

Compatibility with Agency Goals and Policies

5. Type of Assistance Requested
What kind of assistance is the developer seeking? Given the limited funds available for redevelopment purposes, the Agency will look most favorably on those projects which require use of redevelopment powers, rather than redevelopment monies. The acquisition of land through eminent domain and the assembly of small, disparate parcels into a developable whole is a use of redevelopment powers which does not require a cash outlay (when fully funded by the developer.) Developers seeking assistance which requires the expenditure of Agency or City funds or the foregoing of revenues, i.e., waiving of fees, will be asked to substantiate the need for such assistance.

As a general rule, the Agency will seek to provide the developer with the type of assistance which helps the developer the most while prudently using Agency resources. A significant factor is whether the assistance provided is fundable by tax-exempt bonds. Those activities not fundable by tax exempt bonds incur interest costs several percent higher and reduce the funding available by approximately 25%. The general types of assistance fundable by tax-exempt bonds, and those which are excluded, are as follows:
737
Administrative Policy VII-A-2
Development Assistance
(continued)
3 Assistance Fundable by Tax
Exempt Bonds
Assistance Not Fundable by
Tax Exempt Bonds
• Grants (such as land writedown) to private businesses• Loans (with repayment obligation) to private
businesses
• Funding of public
infrastructure
• Funding of public fees
• Low and moderate income
housing

6. Low and Moderate Income Housing
Does the project include the development or rehabilitate of low and moderate-income housing? Redevelopment agencies are required by law to devote 20% of their tax increment funds to low and moderate-income housing. Private development of such housing is generally an efficient and low cost means of meeting the Agency’s requirement.

The Agency will encourage the construction of affordable housing by looking favorably upon those projects which include the provision of affordable housing. Agency staff can provide guidance to developers regarding current development priorities.

7. Compatibility with Redevelopment Program and Existing Development Is this project compatible with redevelopment objectives and with other redevelopment projects the Agency is pursuing? An obvious example would be the proposed construction of two hotel projects when the market support for only one exists. Alternatively, a proposed shopping center may negatively affect the prospects for an older retail center the Agency is renovating. The Agency’s policy will reserve development assistance for those projects which complement the redevelopment program. Agency staff and commissioners can provide guidance to developers regarding current development priorities.

8. Agency Desires Greater Control
Does the Redevelopment Agency want some ongoing control in the development or management of a project? For example, the Agency may wish to have a voice in tenant selection or property management for a shopping center. A developer who would ordinarily not share such responsibility may be willing to do so in return for greater Agency participation in the project.

Financial and Developer Characteristics

9. Development Feasibility
Does this project appear likely to succeed, assuming the Agency provides assistance? This involves examining closely the supporting documentation provided by the developer.

The Agency may ask the following questions, as well as others relevant to individual projects:
738
Administrative Policy VII-A-2
Development Assistance
(continued)
4 • Is there demand for this use and have market studies been completed? Are the market studies adequate? Has any of the proposed space been pre-leased? • Are the key financial assumptions (rents, vacancy, operating expenses, construction costs, etc.) reasonable and is a development pro forma available to the Agency for review?
• Has the developer secured any financing commitments from lenders? • Does the site and architectural design meet the community’s expectations and standards?
• Is the developer’s development fee reasonable in light of those achievable in the private marketplace?
• Is the amount of the developer’s equity sufficient? What is its source?

10. Developer Track Record
Experience is a key element in assessing the ability of a developer to successfully complete a project. The Agency will carefully evaluate the developer’s record with regard to other similar projects. While there may be cases where the Agency will choose to cooperate with a prospective developer with limited experience (for example, a non-profit housing organization seeking to develop affordable housing), assistance will typically be reserved for those developers demonstrating a strong record of success developing the type of project (retail, office, etc.) which they are proposing.

11. Unanticipated Problems Have Adversely Affected the Project Is this a problem the developer should have anticipated and planned for, or is it something unforeseeable? Review of a developer’s supporting documentation can reveal whether the development plan contains adequate reserves and coverage to weather common problems such as a longer than expected lease-up period. But there are also circumstances which cannot be reasonably foreseen and planned for. Examples include:
• Unforeseen adverse changes in development rights or significant new development fees.
• A dramatic change in market conditions such as a severe recession. • The discovery of toxics not revealed by earlier tests.

If such problems have substantially changed the project’s feasibility, the Agency may wish to consider extending additional assistance.

Fiscal and Economic Impacts

12. Efficient Use of Existing/Planned Public Services
Does the project make use of existing public facilities with surplus capacity? Would it help to fully utilize already planned public facilities? The classic example of a project which does not meet these criteria would be a new subdivision on the outskirts of town, built so far from existing fire stations that adequate fire protection would require the construction of an additional station in the vicinity of the new project. Due to the high cost of constructing and operating public infrastructure, the Agency will review projects seeking assistance to ensure they make efficient use of existing or planned services.

13. Project Provides Good Jobs for Local Residents
739
Administrative Policy VII-A-2
Development Assistance
(continued)
5 Does the proposed project provide well-paying jobs with career ladders which match the skills and interests of local residents? The Agency’s interest in providing employment and advancement opportunities for its citizens is a legitimate factor in considering how to spend redevelopment resources. The Agency will examine the employment creation aspects of projects seeking assistance.

B. When Development Assistance May Not Be Warranted
A redevelopment agency is a public entity which uses public powers and funds to facilitate private development. It works at the margin, using its limited resources to make feasible projects which come close, but do not meet private market feasibility standards.

Redevelopment agencies are not designed and do not have the resources to make every proposed project financially feasible. Some situations in which assistance may not be warranted include the following:
• Developer believes development within a redevelopment area carries with it an automatic right for Agency assistance. This is an incorrect assumption and is not supported by redevelopment law.
• Developer is proposing a land use currently in plentiful supply. An example of such a project would be the proposed construction of a budget motel on West Capitol Avenue.

Redevelopment assistance should be reserved for unique or innovative uses the City currently lacks or wishes to encourage.
• Developer wishes to be “bailed out” from a poor real estate investment. Occasionally, a developer will have overpaid for a property, incurred unforeseen development costs, or otherwise experienced the downside of real estate investment and will seek redevelopment assistance as a way of being made whole. The Redevelopment Agency has no obligation to ensure the success of each project in the redevelopment area, even if it participated in making the project possible. In some cases it may wish to step in and help rescue the project, particularly if it is important to the overall redevelopment effort. In other cases, it may not be in the Agency’s interest.
• Developer is unable to raise the required equity. Often a project will be economically viable, but the developer has insufficient experience and/or net worth (or is unwilling to provide sufficient credit) to raise the equity dollars necessary. Agency assistance would take the place of such equity, but the developer wishes to treat it as a grant rather than more properly as an equity investment.

The Agency has two choices in this case: (1) avoid making such equity investments; or (2) obtain an ownership interest in the project in return for the equity funding. • Tax revenues to the City and the Agency over a five-year period are less than the Agency’s cost in assisting the project. The Agency will weigh the fiscal benefits conveyed by a particular project against the amount of financial assistance requested. Projects which would only return the Agency’s investment over a period longer than five years may not justify the investment required.

C. Assistance Request Procedure
The Agency will consider only written requests for development assistance for projects within the redevelopment area. Developers should note that the more information available to the Agency about an individual project, the more quickly and definitively a decision can be 740
Administrative Policy VII-A-2
Development Assistance
(continued)
6 rendered. In order for the Agency to have sufficient information to adequately consider the merits of each application, developers must submit at a minimum the following items.

1. Formal request for assistance.

2. Form of Agency assistance requested.

3. Justification for such assistance.

4. Project description (site plans, renderings, models, landscaping, parking, building materials, finishes, mechanicals, site improvements, etc.).

5. Market studies where appropriate.

6. Project pro forma (confidential and may be reviewed by an economic analyst.)

7. Financing plan (interim and permanent).

8. Timetable (project phasing, lease-up period.)

9. Analysis of property, sales and transient occupancy taxes attributable to the project.

10. Evidence of tenant commitments as appropriate.

11. Information on development entity’s experience.

12. Financial statements (confidential).

13. Partnership agreements (confidential).
741
1 CITY OF WEST SACRAMENTO
ADMINISTRATIVE POLICY NUMBER: XII-C-01
DATE: February 1, 1995
Revised: February 1, 1996
SUBJECT: SELECTION OF TITLE COMPANIES AUTHORITY: City Council Minute Order 95-8 (2/1/95)

PURPOSE
The purpose of this policy is to establish a procedure that ensures responsible selection and use of title companies.

POLICY
The West Sacramento Redevelopment Agency intends to assign work to local title companies on a rotating basis.

PROCEDURE

1. Creation of Rotation List
Only title companies with offices in the Sacramento region who can provide expedient services to the Agency are eligible for placement on the rotation list. Title companies seeking inclusion on the rotation list must complete and return an application. The rotation list will be collated in alphabetical order and assignments allocated on a rotational basis. (For the purposes of the first rotation, one name will be drawn randomly, and that company will be first in the rotation.)

2. For Acquisition of Property
City staff will recommend to the seller that the Title Company preparing the preliminary report be designated as the closing title company. If the seller does not agree, the seller will be requested to select a title company to handle the closing transaction.

3. For Disposition of Property
The company next in alphabetical order (excluding seller chosen title companies) will be assigned.

4. Work Assignments Requested of Title Companies will include, but not be limited to:
a. Preliminary Title Reports
b. Comparative Market Analysis
c. Escrow
d. Drafting of Deeds, Easements, Quitclaims, and Legal Descriptions

5. Fees
Fees for individual services provided by the assigned title company will be paid based on the rate sheet submitted by the title company, provided, however, they do not exceed 105% of the median price for comparable services. The Agency reserves the right to seek competing quotes for projects involving multiple parcels.
742
Administrative Policy VII-B-1
Selection of Title Companies
(continued)
2 6. Non-Performance
Companies not able to respond expeditiously to city work requests will be skipped over and the work assigned to the next company on the rotation list. Repeated non-performance or faulty work may result in a company being dropped from the City's rotation list. 743

CITY OF WEST SACRAMENTO
ADMINISTRATIVE POLICY NUMBER: XII-C-02
DATE: August 1, 1996
SUBJECT: INDEX OF PAST STUDIES CONDUCTED
BY CITY AND CONSULTANTS AUTHORITY: City Council
Minute Order 95-40
POLICY
It is the policy of the City of West Sacramento to maintain a computerized database of all studies conducted by the City of West Sacramento and its consultants.

PURPOSE
It is the intent of the City that each city department avoid the duplication of existing studies as well as facilitate the accessibility of information for future studies.

PROCEDURE

1. Creation of Database
A centralized database format will be developed by Redevelopment Agency staff which will incorporate past and future studies conducted by all City Departments. The centralized system may include, but not be limited to, the following data:
 Name of study
 Consultant/City Department
 Summary of the purpose, findings and conclusions
 Date completed
 Cost
 Use made of plan/study

2. Compilation of Information
Each Department will initially be requested by the Redevelopment Agency to supply information on studies they have completed. This information will be incorporated into the centralized database. (See Exhibit A).

Once the information has been compiled and entered into the database, each Department will then be responsible for updating the database for all studies in progress, as well as future studies.

Upon adoption of this policy, all contracts with City-retained consultants shall include a provision addressing the submission by the contractor of a database report. This provision will require that the consultant provide on disk, upon completion of the study, the required information regarding the conducted study in a compatible database report format. (See Exhibit "B")

3. Timeframe
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Administrative Policy No. VII-B-2
Index of Past Studies Conducted by City and Consultants (continued)
2 All studies, both in progress and future, will be entered into the database within 30 days of completion of the study. This requirement applies to all City departments and any City-retained consultants retained by a department.

4. Training
Each City department will designate a staff person, with an alternate, who will be in charge of entering and maintaining information for the database. Each City department shall ensure that their designee and alternate are trained in Microsoft Access software.

5. Reporting Requirements
Upon completion of the database set-up, staff from each City department shall provide an overview of completed studies to their respective commissions. Thereafter, each City department, on a annual basis, shall report to their commission(s) all studies which have been completed during this past year.

EXHIBIT A
Name of Study
City Department/Consultant
Summary of the purpose, findings and
conclusions (254 characters max.)
Date Completed
Cost
Use made of plan/study (254 characters max.)
745

CITY COUNCIL AGENDA REPORT
MEETING DATE: March 18, 2026 ITEM # 12
SUBJECT:

PUBLIC HEARING AND CONSIDERATION OF RESOLUTIONS 26-23 AND 26-24 MAKING

CERTAIN FINDINGS ABOUT WRITTEN OBJECTIONS AND IMPLEMENTING WATER

AND SEWER RATES FOR THE NEXT FIVE YEARS
INITIATED OR REQUESTED BY: REPORT COORDINATED OR PREPARED BY:
[ ] Council [X] Staff
[ ] Other
Roberta Raper, Finance Director
Jai Chahal, Capital Projects Director
Rebecca Scott, Public Works, O & M Director
Finance, Capital Projects, Public Works O&M
Departments
ATTACHMENT [X] Yes [ ] No [ ] Information [ ] Direction [X] Action

OBJECTIVE
Proposition 218 requires that a public hearing be held to consider and count protests prior to the consideration of adjustments to water and sewer rates. After holding the protest hearing and making findings on written objections received by the City on the proposed rates via Resolution 26-23, the City Council will consider Resolution 26-24 which proposes the maximum water and sewer rates to be implemented over five years, beginning April 1, 2026.

RECOMMENDED ACTION
Staff respectfully recommends that the City Council:
1) Receive the staff report and presentation regarding proposed water and sewer rate adjustments and the written objections submitted pursuant to Government Code Section 537959.1 (AB 2257); 2) Open the Proposition 218 public hearing regarding the proposed water and sewer rate adjustments and accept public comments;
3) Adopt Resolution 26-23 making findings regarding the written objections received and the City’s written responses, determining whether the objections warrant clarification, reduction, or further review of the proposed rates pursuant to Government Code section 53759.1; 4) Close the Proposition 218 public hearing;
5) Recess to tabulate protests; and
6) If a majority protest does not exist, adopt Resolution 26-24 establishing water and sewer service rates for the next five years, beginning April 1, 2026; and
7) Approve the Rate Assistance program for Low-Income and Fixed Income Senior utility customers.

BACKGROUND
The City of West Sacramento provides water and wastewater/sewer collection for West Sacramento customers funded through the Water Utility Fund and Sewer Utility Fund, respectively. These enterprise funds are supported with revenue derived from rates. The utility rates are determined through a process prescribed by state law, which requires a Cost of Service (COS) analysis and Council approval of any rate adjustments at a public hearing.

The goal of the COS analysis and rate adjustments is to ensure that utilities have enough money to operate and maintain reliable and safe utilities, while ensuring customers pay their fair share of the service costs. The enterprise utilities must generate sufficient revenues to maintain ongoing operations; meet financial obligations and City-issued long-term debt obligations; and cover the replacement, upgrade, and expansion of the infrastructure needed to meet current and future needs.

The City Council last approved rate adjustments for the water, sewer and refuse utilities in 2017, and previously on June 1, 2011. At that time, the actions taken were in response to the negative fiscal impacts of the economic downturn and the resulting cost reduction measures. The 2017 rate structure remained among the lowest in the region - third lowest overall, above only Folsom and Roseville. While this history of maintaining low rates has benefited ratepayers, it has also constrained the utilities’ ability to generate sufficient revenue to support an adequate level of service and to invest in preventative maintenance, rehabilitation, replacement, and expansion of critical infrastructure.
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As a result, the utilities have largely operated on a reactive basis, addressing system failures as they occur rather than through planned preventative maintenance. This approach has proven more costly over time, as emergency repairs typically cost at least twice as much as scheduled maintenance.

Significant operational, maintenance, and capital needs now exist across both the water and sewer systems, placing upward pressure on future customer rates. Following a competitive solicitation, the City selected HF&H Consultants to develop comprehensive rate models for the water and sewer utilities. These models forecast operations and maintenance expenses, capital improvement costs, and debt service requirements to determine each utility’s long-term revenue needs.

The Water and Sewer Master Plans, last prepared in 2015 and adopted in 2017, were updated and approved by City Council in January 2025. The Water Master Plan is the crucial document that guides the City’s water system capital program to serve the existing and future needs for the City’s customers. Key goals of the Water Master Plan include maintaining reliable water service, improving water service in currently underserved neighborhoods of the City, replacing aging infrastructure, preparing for new economic development, improving reliability and resiliency, managing infrastructure improvements in a cost effective and responsible manner, and facilitating interdepartmental coordination within the City.

The Sewer Master Plan provides a comprehensive framework for assessing both current and future sewer system needs, identifying capacity constraints, and prioritizing necessary improvements. Furthermore, the City’s Sewer Master Plan supports compliance with regulatory requirements, reduces the risk of sewer overflows, and helps protect public health and the environment.

Upon completion and approval of the Water and Sewer Master Plans, the COS analyses were updated to reflect current operations cost data, recently adopted labor agreements, and necessary infrastructure projects identified in the master plans and prioritized by Capital Projects and Public Works, Operations & Maintenance staff.

Staff and the consultant developed three rate scenarios, each providing different levels of funding for operations and capital investment, and corresponding rate impacts. These scenarios, along with their justifications, fiscal implications, and alternatives, were presented to the Environment & Utilities (EU) Commission’s consideration and feedback on November 12, 2025, and as a result of that feedback, a fourth scenario (EU Proposed) was added for Council consideration.

All four scenarios were presented to and discussed with Council at the Workshop on December 3, 2025. A detailed staff report packet was provided for that item and is accessible on the City’s website at www.cityofwestsacramento.org and included as Attachment 1 for additional background for this report. At that meeting, after lengthy discussion, the Council agreed with the EU Proposed rate scenario and directed staff to move forward with the Proposition 218 process to notify residents of the proposed rate adjustments. The Proposition 218 notice sets the ceiling (maximum) rates the Council may choose to adopt after completion of the required legal notification period and public protest hearing.

This staff report provides a summary of what is included in the COS analyses; the public outreach that has occurred since Council directed staff to begin the Proposition 218 process in December; the rate scenario (maximum rates) proposed by the Council in December 2025; an overview of the written objections received, along with staff’s responses; staff’s recommendation; and the requested next steps in the rate setting process.

ANALYSIS
Careful financial planning is essential to ensuring the long-term sustainability of the City’s public utilities. With the responsibility of delivering critical services such as water and wastewater collection for more than 50,000 residents and maintaining over $100 million dollars’ worth of infrastructure assets, the City must balance the need for reliable infrastructure, regulatory compliance, and operational efficiency with fiscal responsibility.

Strategic financial planning enables utilities to invest in system upgrades, prepare for unseen challenges, and maintain affordability for ratepayers. Without it, the ability to deliver safe, resilient, and equitable service can be compromised, placing both public health and environmental stewardship at risk.

There are several factors influencing proposed rates for the upcoming 5-year period. First, the last COS study performed in 2017 planned for $33 million in water infrastructure projects and $10 million in sewer infrastructure projects over the five-year rate period (2017-2021). The recently adopted Water and Sewer Master Plans propose over $93 million (3x) in infrastructure investment for the water utility and $44 million (4x) for the sewer utility over the upcoming five-year period (2026-2031). Proposed rates fall somewhere in between, funding up to $76.5 million in Water infrastructure projects and $42 million in Sewer projects over the next five years. 747
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The proposed rates reflect the critical need to address aging infrastructure and invest in system resilience to meet present and future demand and regulatory standards, as well as to implement a more proactive investment program focused on appropriate maintenance and replacement of critical infrastructure.

The rates proposed for water and sewer utilities for the next five years are summarized below 748
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As part of the rate analysis, City staff reviewed and is proposing revisions to each utility’s rate stabilization policy to ensure financial stability while minimizing rate impacts to customers, and to better align with industry best practices. Current reserve policies require each utility to maintain a balance of 50% of annual operating costs plus one year of average pay-go CIP spending. This approach required the City to hold a relatively large amount of cash in reserves, which limited flexibility and tied up funds that could otherwise be used for system investments. With the significant increase in capital needs for each utility, higher rate increases would be necessary to maintain reserves at the required levels.

Government Finance Officers’ Association of the United States and Canada (GFOA) and American Water Works Association (AWWA) provide guidance that reserve levels for utilities should be set between 25-50% of annual operating expenses. Lower risk utilities (stable demand, minimal purchased water costs) may set reserve levels lower (20-25%) while higher risk utilities (high purchased water costs, heavy reliance on consumption charges, weather-sensitive demand) should target higher, 40-50%. The City is proposing minimum reserve levels of 25% and target reserve levels of 50% of annual operating expenses for each utility. While reserve levels may dip below the 50% target for the short term, there must be a plan to bring reserve levels back to the 50% target balance.

To put this into perspective, the table below shows current reserve balances, required reserve balances if the same reserve policies are maintained, and the proposed target reserve balances for each utility for FY 2026/27:

Table 2: Target Reserve Levels - Current vs Proposed Rate Stabilization Reserve Policies Utility/Fund Current Minimum Reserve
Balance
Required Reserve Balance Proposed Target Reserve
Balance
Water $4,707,522 $16,568,322 $5,849,322
Sewer $2,353,808 $7,665,579 $2,165,579
By reducing the reserve requirement and maintaining a policy in line with industry standards, the City may release nearly $11 million from the water reserve requirement and $5.5 million from the sewer reserve requirement, significantly reducing impacts to ratepayers. This new framework maintains a prudent financial position for the City and allows the City to spend down reserves to support near-term capital improvement needs in the water and sewer systems. It should be noted that these reserves are currently being used to meet the City’s legally required debt coverage since rates have not been adjusted in several years.

This approach helps lower rates for customers, maintains the long-term financial health of the utilities, and ensures that necessary capital projects can proceed without creating undue rate pressure.

Staff and the consultant have also modeled debt-financing to fund a large portion of the CIP needs for each utility over the next 5 years. The benefit of debt financing for large infrastructure project costs is the ability to smooth 749
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out the impact on rates over a 30-year period rather than putting all the infrastructure costs on ratepayers over the next five years. The revenue requirement maintains at least 135% debt coverage to ensure that fluctuations in water usage and related water and sewer revenues do not impact the City’s ability to maintain the legally required debt coverage (net revenues).

Proposition 218 Process and Outreach Conducted
The City has conducted the rate-setting process in accordance with the requirements of Proposition 218, which mandate that the City provide mailed notice of proposed rate increases, hold a public hearing, and allow property owners to submit written objections or protests prior to the hearing. In addition to these requirements, the City undertook several voluntary outreach efforts to provide information and increase public understanding of the proposed rates.

Prior to the City Council public hearing, the City hosted a “Utility Rates 101” informational webinar on October 28, 2025. The webinar was publicly noticed, recorded, and made available on the City’s website and YouTube channel. Information about the webinar was shared through the City’s website, social media platforms, and the City’s meetings and events calendar.

The City conducted an Environment & Utilities Commission meeting on November 12, 2025, at which staff presented the rate study, proposed options, and recommendations to the Commission and the public and received feedback to inform the City Council workshop.

The City Council held a public workshop on December 3, 2025, to review and discuss the proposed water and sewer rate adjustments. Following Council direction at that meeting, staff mailed the Proposition 218 Notice to all City of West Sacramento property owners and customers of record on January 2, 2026. The notice was provided more than 60 days in advance of the Public Hearing (the minimum is 45 days required by Proposition 218) and included a description of the proposed rates, the basis for the adjustments, the date and location of the public hearing, and instructions for submitting written objections and protests. The notice was provided in English, Spanish, and Russian and was also posted on the City’s website with translation capability for over 100 additional languages.

To further support public engagement, the City hosted two informational Utility Rate Open Houses on February 3, 2026, and February 7, 2026. The open houses were scheduled on both a weekday evening and a weekend day and were held in different locations within the City to accommodate varying schedules and geographic access. These events were noticed through the Proposition 218 mailing, the City’s website, newsletters, email communications, social media, and the City’s events calendar. Information about the open houses was also included in the West Sacramento News-Ledger on January 30, 2026. Spanish and Russian translation services were available at both open houses.

Through the Proposition 218 notice, public meetings, informational webinar, and open houses, the City provided multiple opportunities for property owners and customers to review the proposed rates, ask questions, and submit written objections prior to the close of the public hearing. These outreach efforts were intended to ensure transparency in the rate-setting process and to provide the public with a meaningful opportunity to participate before the City Council considers adoption of the proposed rates.

Proposition 218 (Written Protest) & Assembly Bill (AB) 2257 Written Objection Processes On December 3, 2025, the City Council directed staff to begin the Proposition 218 process, which is a Statemandated legal process requiring the City to mail a notice to all property owners and customers of record. The notice was mailed out well in advance of the 45-day minimum notice period, and detailed the proposed rates, their basis, and information on how to protest and/or object to the rates. If more than 50% of affected owners or customers of record protest, the rates may not be adopted. The protest tabulation must be open to the public.

As of the date of drafting this report (March 10, 2026), the City had received 137 written protests. It is important to note that this is likely not the final number of written protests, as protests may be submitted until the closing of the Public Protest Hearing on March 18, 2026.

AB 2257, which went into effect in 2025, also allows for written objections to be submitted by property owners.

The written objections serve a separate purpose than a written protest. Pursuant to California Government Code Sections 53759.1 and 53759.2, a person or entity is prohibited from bringing a judicial action or proceeding alleging that the proposed rates do not comply with Proposition 218 unless that person or entity submitted a written objection to the proposed rates within the specified time period. The time period for written objection submittal ended on February 19, 2026 at 4:00PM, and at that time, the City had received 89 written objections.

As required by AB 2257, the City must prepare written responses addressing these objections. The City’s written 750
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responses to the written objections are included as Attachment 2, and the written objections are included as Attachment 3.

It is important to note that while Proposition 218 sets the legal minimum guidelines the City must follow in the rate setting process, staff prefer to go further, ensuring that every citizen and customer has a fair voice. Most letters received by the City were counted as both protests AND written objections, unless it was clearly a Protest with no objection noted. Staff have included ALL protests and objections received in the counts provided, without verifying parcel numbers, signatures, or validity of the documents.

Discounts and Programs to Reduce Utility Bills
The City currently provides a Low-Income Rate Assistance program (LIRA) that provides monthly credit of $5 to eligible residential utility customers ($3 for Water and $2 for Refuse). This program is described in more detail in Attachment 1, and a table comparing the City’s rate assistance program with similar programs offered by surrounding jurisdictions is also provided for reference.

As part of the COS process, staff has evaluated potential enhancements to the program to both increase the amount of the monthly credit and to expand assistance to additional households experiencing financial hardship.

Staff proposes restructuring the program to include two assistance tiers to better address the needs of vulnerable customers while maintaining compliance with Proposition 218 cost of service requirements.

Tier 1 – Low-Income Rate Assistance (LIRA)
Eligibility (unchanged from current program)
 Enrollment in PG&E CARE program or Sac Sewer Lifeline Assistance program or  Household income at or below approximately 200% of the Federal Poverty Level Benefit
 Monthly bill credit of $18 per month for water & sewer Tier 2 – Fixed-Income Senior Rate Assistance (FISRA)
Eligibility
 Account holder 62 years of age or older, and
 Primary residence served by the City’s water and sewer utilities, and  Household income at or below approximately 250% of the Federal Poverty Level Benefit
 Monthly bill credit of $15 per month for water & sewer The second program tier is for seniors on fixed income who do not qualify for the LIRA program due to income limits. The addition of this tier allows the City to provide credit to a vulnerable part of the population who otherwise would have no options for utility relief. The credit amount is proposed to be split between water (2/3) and sewer (1/3) bill amounts.

Program Administration
Applicants would submit a simple application and provide documentation verifying eligibility. Existing customers on the LIRA program would not need to reapply to receive the new LIRA benefit. The credit amount will be updated automatically once approved by Council; however, the program will require recertification for LIRA customers periodically to ensure program integrity.

The program would be structured as a bill credit applied to the utility account, which is a common method used by municipal utilities to provide targeted affordability assistance (bill reduction) while maintaining the proportionality requirements of Proposition 218.

Program Cost and Funding
Increasing the Low-Income Rate Assistance (LIRA) program credit from $3 to $18 per month would increase the value of the assistance provided to qualifying households. Based on current participation levels, the estimated annual cost of the increased credit is approximately $35,000, reflecting historically low enrollment in the program.

With an increased credit amount and expanded outreach, participation in the program is expected to increase.

If participation were to reach levels similar to the PG&E CARE Program in Yolo County (approximately 96 percent participation among eligible households), the City estimates that the total annual cost of the LIRA tier could reach approximately $815,000.
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Estimated costs for the proposed Fixed-Income Senior Rate Assistance (FISRA) tier could reach up to $240,000 annually at full participation. However, assistance programs rarely reach full participation, and this estimate is very rough due to limited data regarding the number of potentially eligible households.

Measure K currently allocates approximately $15,000 annually for utility assistance through the LIRA program.

This funding is sufficient to support current program participants at the proposed credit level for the remainder of the fiscal year and allows for a modest increase in enrollment. Program costs will be reviewed annually as part of the City’s budget process to determine the appropriate funding level and source based on participation and available resources.

Utility rates will continue to be established based solely on the cost of operating, maintaining, and replacing the City’s water and wastewater systems. Rates will remain proportionately allocated among customer classes consistent with the requirements of California Proposition 218. Assistance provided through the LIRA and FISRA programs will not be incorporated into the utility rate structure. Instead, the assistance program will be funded through sources outside the rate calculation, including Measure K sales tax revenues or other legally available funding sources.

Because the assistance program is not funded with rate revenue, participation in the program does not affect the proportionality of rates charged to other customers and does not alter the cost-of-service basis used to establish utility rates.

The City also offers several other programs through its Sustainability Division to lower utility bills. Customers can apply for the Smart Irrigation Controller Rebate, the Lawn-Be-Gone program and the Water Wise House Call program. The first initiative helps residents replace their current sprinkler timer with a weather-based sprinkler timer. This rebate ($150) can help residents save thousands of gallons of water per month. Weather-based sprinkler timers automatically adjust schedules to follow the seasons, keeping plants healthy while using the most efficient amount of water. The second program provides up to $300 of compost and mulch to cover and kill unused sections of lawn. The last program provides a free audit of a customer’s water system, including a leakcheck and a survey of their irrigation system. Additional sewer bill assistance is available for West Sacramento residents through the Sac Sewer District’s Sewer Lifeline Rate Assistance Program for sewer treatment costs.

Next Steps
There are several procedural steps required for Council consideration of the proposed water and sewer rates.

First, staff will provide a presentation summarizing the information contained in this report, including the written objections received, staff responses to those objections, and the proposed water and sewer rate adjustments.

Following the presentation, the City Council will have an opportunity to ask questions before the Mayor opens the public hearing on the proposed rates. During the public hearing, members of the public may provide testimony and may continue to submit written protests to the proposed rates until the close of the hearing.

After public comment has concluded, the Council will consider the written objections received and staff’s responses to those objections. Staff recommends that the City Council adopt Resolution No. 26-23 finding that the written objections do not warrant revisions to the Cost-of-Service Study or reconsideration of the proposed rates.

Following Council consideration of the written objections, the Mayor will close the public hearing and announce a brief recess to allow staff to complete the final tabulation of written protests received up to the close of the hearing. Once the tabulation is complete, the Council will reconvene and staff will report the results of the protest count.

If written protests represent fewer than a majority protest (50 percent plus one) of the parcels subject to the proposed rates (8,891 parcels), the City Council will then be asked to consider adoption of Resolution No. 26- 24 establishing the proposed water and sewer rates.

If adopted, the new rates will become effective April 1, 2026.

Environmental Considerations
The actions recommended in the attached resolution are not subject to the California Environmental Quality Act (CEQA), pursuant to Public Resources Code Section 21080 (b)(8), since the activities proposed involve administrative and financial activities that do not constitute a project pursuant to CEQA. 752
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Commission Recommendation
The City Council directed staff to issue Proposition 218 notices using the Scenario proposed by the EU Commission. The numbers in this report are based on that scenario.

Strategic Plan Integration
The proposed rate increase aligns with the "Core Services and Infrastructure” Strategic Principle, which includes sustaining a financially sound city in which everyone feels safe and secure, with quality services and wellmaintained infrastructure.

Alternatives
The City Council may consider the following alternatives:

1. Adopt the proposed water and sewer rates as presented in this report. These rates are consistent with the rate scenario recommended by the Environmental and Utilities Commission and directed by the City Council to be included in the Proposition 218 notice mailed to customers and property owners on January 2, 2026.

2. Adopt lower rates than those proposed in this report. If the Council chooses this alternative, staff recommends selecting one of the rate scenarios presented during the December 3, 2025 City Council workshop.

3. Decline to adopt the proposed rates.

Staff recommends Alternative 1. The proposed rates are designed to provide sufficient revenue to fund ongoing operations, maintain required reserve levels, comply with debt coverage requirements, and complete critical capital improvements identified in the Water and Sewer Cost-of-Service Study.

If the Council wishes to adopt lower rates (Alternative 2), staff recommends consideration of Scenario 2 (Mid) presented at the December 3, 2025 workshop, as it represents the only other scenario analyzed that would reasonably maintain compliance with financial and debt obligations while allowing the City to continue repairing, replacing and improving necessary infrastructure.

Council may choose not to adopt the proposed rates. However, doing so would not generate sufficient funding to support required capital improvements or maintain the financial performance of the utilities. Without the proposed rate adjustments, the Water and Sewer utilities may not generate revenues sufficient to meet required debt service coverage ratios associated with existing and future debt obligations. Additionally, insufficient funding for planned infrastructure investments would increase the risk of emergency repairs at substantially higher costs.

Addressing such emergencies could require diverting funds from other projects or implementing an emergency Proposition 218 rate adjustment to maintain utility operations.

Coordination and Review
The utility rate analysis project has been coordinated between the Finance Department, Public Works, Operations & Maintenance Department, the Sustainability Division of the Community Development Department, the Capital Projects’ Department, the City Attorney’s office and the City Manager’s office.

Budget/Cost Impact
The rate adjustments approved by the City Council will determine the revenues available to support the City’s water and sewer utilities’ operations, maintenance, capital repair, and system replacement needs for the next five years and beyond.

The annual cost of the proposed water and sewer rate assistance programs is estimated to range from approximately $100,000 to $1.1 million, depending on the level of participation by eligible customers. Actual program costs will vary based on enrollment and will be monitored annually.

Staff will implement the rate assistance program for qualifying customers in a manner that maintains the proportionality and cost-of-service requirements of California Proposition 218. The assistance program will be funded from sources outside the utility rate structure, such as Measure K sales tax revenues or other legally available funding sources, to ensure that utility ratepayers are not subsidizing the program.

Program participation levels and the annual credit amount will be reviewed as part of the City’s annual budget process to ensure the program remains financially sustainable and consistent with Proposition 218 requirements. 753
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ATTACHMENTS

1. December 3, 2025 Council Workshop Report and Attachments (Detailed Background and Rate Scenarios)

2. City’s Responses to Written Objections

3. Written Objections Received as of February 19, 2026

4. Resolution 26-23, Findings Related to Written Objections

5. Resolution 26-24 Adopting Water and Sewer Rates
754

CITY COUNCIL AGENDA REPORT
MEETING DATE: December 3, 2025 ITEM # 10
SUBJECT:

WORKSHOP ON WATER & SEWER RATE STUDIES AND PROPOSED RATES INITIATED OR REQUESTED BY: REPORT COORDINATED OR PREPARED BY:
[ ] Council [X] Staff
[ ] Other
Roberta Raper, Finance Director
Jai Chahal, Capital Projects Director
Rebecca Scott, Public Works, O & M Director
Finance, Capital Projects, Public Works O&M
Departments
ATTACHMENT [X] Yes [ ] No [ ] Information [X] Direction [ ] Action

OBJECTIVE
The objective of this report is to hold a workshop on proposed water and sewer rates, receive Council feedback and direction on the desired scenario, and receive approval to begin the Proposition 218 process to adjust utility rates and set the protest hearing for March 18, 2026 at 7:00 PM.

RECOMMENDED ACTION
Staff respectfully recommends that the City Council:
1) Receive the presentation by staff and conduct a workshop on proposed water and sewer utilities rate adjustment scenarios;
2) Provide guidance and direction to staff as to the preferred rate adjustment scenario for the water and sewer utilities;
3) Authorize the City Manager or designee to proceed with the Proposition 218 noticing process and return to Council to conduct the protest hearing and to consider adoption of adjusted utility rate charges for Water and Sewer services;
4) Schedule the protest hearing for March 18, 2026 at 7:00 PM, at the City Council chambers.

BACKGROUND
The City of West Sacramento provides water and wastewater/sewer collection for West Sacramento customers funded through the Water Utility Fund and Sewer Utility Fund, respectively. These enterprise funds are supported with revenue derived from rates. The utility rates are determined through a process prescribed by state law, which requires a Cost of Service (COS) analysis and Council approval of any rate adjustments at a public hearing.

The goal of the COS analysis and rate adjustments is to ensure that utilities have enough money to operate and maintain reliable and safe utilities, while ensuring customers pay their fair share of the service costs. The enterprise utilities must generate sufficient revenues to maintain ongoing operations; meet financial obligations and City-issued long-term debt obligations; and cover the replacement, upgrade, and expansion of the infrastructure needed to meet current and future needs.

The City Council last approved rate adjustments for the water, sewer and refuse utilities in 2017, and previously on June 1, 2011. At that time, the actions taken were in response to the negative fiscal impacts of the economic downturn and the resulting cost reduction measures. The 2017 rate structure remained among the lowest in the region - third lowest overall, above only Folsom and Roseville. While this history of maintaining low rates has benefited ratepayers, it has also constrained the utilities’ ability to generate sufficient revenue to support an adequate level of service and to invest in preventative maintenance, rehabilitation, replacement, and expansion of critical infrastructure.

As a result, the utilities have largely operated on a reactive basis, addressing system failures as they occur rather than through planned preventative maintenance. This approach has proven more costly over time, as emergency repairs typically cost at least twice as much as scheduled maintenance.

Significant operational, maintenance, and capital needs now exist across both the water and sewer systems, placing upward pressure on future customer rates. Following a competitive solicitation, the City selected HF&H Consultants to develop comprehensive rate models for the water and sewer utilities. These models forecast 332 755 Water & Sewer Rate Study Workshop
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operations and maintenance expenses, capital improvement costs, and debt service requirements to determine each utility’s long-term revenue needs.

The Water and Sewer Master Plans, last prepared in 2015 and adopted in 2017, were updated and approved by City Council in January 2025. The Water Master Plan is the crucial document that guides the City’s water system capital program to serve the existing and future needs for the City’s customers. Key goals of the Water Master Plan include maintaining reliable water service, improving water service in currently underserved neighborhoods of the City, replacing aging infrastructure, preparing for new economic development, improving reliability and resiliency, managing infrastructure improvements in a cost effective and responsible manner, and facilitating interdepartmental coordination within the City.

The Sewer Master Plan provides a comprehensive framework for assessing both current and future sewer system needs, identifying capacity constraints, and prioritizing necessary improvements. Furthermore, the City’s Sewer Master Plan supports compliance with regulatory requirements, reduces the risk of sewer overflows, and helps protect public health and the environment.

Upon completion and approval of the Water and Sewer Master Plans, the COS analyses were updated to reflect current operations cost data, recently adopted labor agreements, and necessary infrastructure projects identified in the master plans and prioritized by Capital Projects and Public Works, Operations & Maintenance staff.

Staff and the consultant developed three rate scenarios, each providing different levels of funding for operations and capital investment, and corresponding rate impacts. These scenarios, along with their justifications, fiscal implications, and alternatives, were presented to the Environment & Utilities (EU) Commission’s consideration and feedback on November 12, 2025, and as a result of that feedback, a fourth scenario (EU Proposed) was added for Council consideration.

The City also contracts for refuse collection for residents and businesses. The current contract for refuse collection with Waste Management expires on June 30th, 2027. Because significant lead-time is necessary when shifting from one hauler to another, staff have already begun the process of going out to bid for a new waste hauler contract. In light of this work, the study of refuse rates is paused until a new contract is finalized. Once the new contract is in place, staff will revisit refuse rates to align with the new waste hauler rates, which will commence on July 1, 2027.

This staff report provides a summary of what is included in the COS analyses; the public outreach that has occurred and is planned to occur; the feedback received from the EU Commission, the revised proposed rate scenarios along with risks and benefits of implementing each; staff’s recommendation; and the requested next steps in the rate setting process.

ANALYSIS
Utility Infrastructure/Capital Improvement Program (CIP) The Water and Sewer Divisions are responsible for over 100 million dollars’ worth of infrastructure assets that are critical to the community’s health and the environment, including:
 Over 210 miles of water mainlines  Over 210 miles of sewer pipelines  Over 6,100 water valves  9 wastewater pump stations
 Nearly 3,000 fire hydrants  5 lift stations
 1 water treatment plant
 8 reservoirs and pump stations
 2 clearwells
 1 booster station
 Nearly 100 miles of water service
lines
 More than 16,000 water meters
Careful financial planning is essential to ensuring the long-term sustainability of the City’s public utilities. With the responsibility of delivering critical services such as water and wastewater collection for more than 50,000 residents, the City must balance the need for reliable infrastructure, regulatory compliance, and operational efficiency with fiscal responsibility. Strategic financial planning enables utilities to invest in system upgrades, prepare for unseen challenges, and maintain affordability for ratepayers. Without it, the ability to deliver safe, 333 756
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resilient, and equitable service can be compromised, placing both public health and environmental stewardship at risk.

There are several factors influencing proposed rates for the upcoming 5-year period. First, the last COS study performed in 2017 planned for $33 million in water infrastructure projects and $10 million in sewer infrastructure projects over the five-year rate period (2017-2021). The current infrastructure project list (full ask scenario) proposes over $93 million (3x) in infrastructure investment for the water utility and $44 million (4x) for the sewer utility over the upcoming five-year period (2026-2031), based on recommendations from the recently adopted water and sewer master plans. A portion of the capital cost increase is due to the Construction Cost Index (CCI) increase (approx. 14%) since the last rate adjustment in 2021. These increases reflect the critical need to address aging infrastructure and invest in system resilience to meet future demand and regulatory standards, as well as to implement a more proactive investment program focused on appropriate maintenance and replacement of critical infrastructure.

Key Infrastructure Projects Driving the Rate Adjustments The City’s water and sewer systems are essential public services that residents rely on every day. Much of this infrastructure has been in service for many decades and is nearing or past the end of its useful life. The following high-priority projects represent the most significant investments recommended in the updated Water and Sewer Master Plans and are critical to maintaining system reliability, regulatory compliance, and service quality for the community.

Water System Projects
The City’s drinking water comes from the George Kristoff Water Treatment Plant, which pumps water from the Sacramento River, treats it to meet or exceed state and federal standards, and distributes it throughout the community. Much of the City’s water infrastructure was installed decades ago and has served beyond its intended lifespan. Reinvesting now prevents costly emergency repairs, protects water quality, and ensures the system remains reliable as the community continues to grow and regulations become more stringent.  High Service Vault and Manifold Replacement – $10 Million (Effluent Meter Work Underway – $4.2 Million)
The high service vault and manifold at the treatment plant serve as the “heart” of the City’s distribution system, controlling how treated water flows out to residents and businesses. These components are aging and showing signs of corrosion. The City is already investing $4.2 million to replace the effluent meter and complete investigative work, with the full vault and manifold replacement estimated at $10 million. These improvements will strengthen operational reliability, improve monitoring capabilities to comply with State regulations, and better ensure uninterrupted delivery of safe drinking water citywide.  Central Water Storage Tank Rehabilitation and Recoating – $3 Million The Central Water Tank is a 2,000,000-gallon steel storage tank inherited from Yolo County when the City first incorporated. The tank has not been recoated or repainted since its original installation and is now in dire need of rehabilitation. The protective interior coating has deteriorated over time, leaving the steel structure vulnerable to corrosion and potential contamination. This $3 million project will repair, clean, and recoat the tank—restoring its integrity, extending its service life, and ensuring the continued delivery and emergency storage of clean, safe water.
 Westmore Oaks Water Main Replacement – $8 Million
The Westmore Oaks neighborhood was built with welded steel water mains that are corroding and deteriorating. These aging lines cause leaks, reduce water pressure, and can impact water quality. This $8 million project will replace the failing water mains with new, longer-lasting materials that improve water quality and reliability. The work will follow the successful model used in the State Streets neighborhood, where similar upgrades were recently completed.

Sewer System Projects
The City’s sewer system collects wastewater from homes and businesses and conveys it through a network of underground pipelines and lift stations. These lift stations pump wastewater into the Regional Sanitation District (Regional San) mains, which transport the flow to the regional treatment plant for processing. While the system continues to operate, many of its core components are operating on borrowed time. Proactively upgrading these facilities now avoids environmental risks, regulatory violations, and emergency failures that would be far more expensive to repair.
 Westmore Oaks Sewer Line Rehabilitation – $6 Million
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This project will replace deteriorating and corroded sewer lines in the Westmore Oaks neighborhood after decades of service. The work will improve system reliability and prevent blockages or overflows.

Completing this work at the same time as the water main replacement will minimize construction and restoration costs, and avoid future street closures for repair work.  South Lift Station Rehabilitation – $8.5 Million
Located at Park Boulevard and Stone Boulevard, the South Lift Station is one of the largest and most critical pumping facilities in the City’s sewer network. The station’s mechanical and structural components are heavily corroded and in need of modernization. This $8.5 million project will replace pumps, upgrade electrical and mechanical systems, and add storage capacity to manage high flows during storms or peak periods. Rehabilitating this facility now will prevent potential system failures, help protect the environment, and ensure continuous, reliable wastewater service.
 Bryte Lift Station Rehabilitation – $6 Million
The Bryte Lift Station serves several of the City’s older neighborhoods and plays a vital role in conveying wastewater safely to the Regional San mains. Like the South Lift Station, it has reached the end of its useful life, with pumps, coatings, and structural components showing significant wear. This $6 million project will replace equipment, repair leaks, and improve efficiency and capacity, extending the life of the facility and ensuring dependable wastewater service for years to come.

Other Uses of Water and Sewer Funds and the Importance of Timely Investment In addition to the major infrastructure projects described above, the proposed water and sewer rates will also fund a number of other essential improvements needed to maintain reliable service and address aging infrastructure. On the water side, these funds will support additional tank rehabilitation projects, major emergency repairs to the distribution system, and key upgrades at the George Kristoff Water Treatment Plant. These include improvements to the process drain pump station, sand pump replacements, tube settler enhancements, and plant security upgrades, all necessary to ensure the City’s ability to continue providing safe, clean drinking water to residents and businesses.

On the sewer side, the funds will be used to complete major mainline repairs and provide a contingency for emergency repairs when system failures occur. Much of the City’s sewer system was constructed decades ago and requires proactive maintenance and rehabilitation to prevent backups, overflows, and environmental impacts.

Infrastructure project lists for each utility for each rate scenario are included as Attachment 2 to this report.

If the recommended rate adjustments are not approved, the City would be forced to delay or phase many of these critical projects over multiple years. This approach is not cost-effective. For example, phasing the Westmore Oaks Project into multiple smaller segments would require repeated contractor mobilizations, setup, excavation/restoration, and traffic control for each phase, adding millions of dollars to the total cost. Similarly, sewer lift station rehabilitations are designed to be completed as single, continuous projects. If the City is forced to phase these efforts, it would leave critical infrastructure operating on temporary bypass systems for extended periods, significantly increasing the risk of system failure and emergency response costs.

Delaying projects also drives up costs due to inflation and construction cost escalation. Projects that are shovelready today, such as the High Service Vault Replacement, will only become more expensive if postponed.

Without sufficient rate support, the City would have to rely more heavily on emergency repairs, which are far more costly than planned improvements and provide only temporary relief.

To get the most value for each dollar and to maintain safe, reliable water and sewer service, projects need to be completed in single, coordinated phases. The proposed rate structures under the recommended and full-ask scenarios provide the funding necessary to move these projects forward efficiently and proactively, avoiding future emergencies, reducing long-term costs, and ensuring that West Sacramento’s water and sewer systems remain strong for decades to come.

Together, these projects and reinvestments represent a generational commitment to protecting the City’s water and sewer infrastructure. By addressing aging infrastructure before it fails, the City is reducing long-term costs, protecting public health and the environment, and maintaining the reliability and resilience that residents expect from their essential services. The proposed rate adjustments are designed to fund these critical improvements responsibly, preserving system sustainability and affordability for the community. 335 758
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By incorporating higher levels of capital investment into the proposed rates, the City is taking a forward-looking approach to reinvest in essential infrastructure, reduce the risk of costly emergency repairs, and maintain longterm system sustainability – all while balancing affordability and rate stability for customers.

Utility Operations & Maintenance
On the operations side, there are several factors influencing increases in costs, including:
 18.67% - Consumer Price Increase (CPI) since 2021 rate adjustment  17.19% - CalPERS Employer Rate adjustment since 2021
 22.82% - Local 39 employee general base salary increase (GSI) since 2021 (not including equity adjustments)
 22 new water/sewer positions proposed to be added over the next 5 years to help move from a reactionary to a more proactive approach for maintenance and replacement  Purchase/replacement of several vehicles and large pieces of utility equipment at the end of or past their useful life
If nothing else changes since the last rates were set, each utility would require approximately 20% in rate increases in the first year just to keep pace with the rising primary operating costs of doing business as usual.

As mentioned earlier, previous City Councils have maintained some of the lowest water and sewer rates in the region and prioritized cost cutting measures to maintain low rates for residents. As a result, a higher level of investment is required now to ensure an adequately working and resilient utility system.

Impacts to Sewer Rate Structure
During the previous rate study conducted in 2016, single-family residential water use was significantly lower than in the current COS analysis, partly due to the statewide drought and associated conservation measures. In contrast, recent consumption data shows that single-family residential water use has increased substantially as drought restrictions have eased. As a result, single-family customers now account for most of the total wastewater flow, whereas commercial customers were the dominant class in the prior study.

Although single-family customers are billed a flat monthly rate, their share of total system costs is influenced by the volume of wastewater generated, which is estimated based on their water use. The higher residential water use observed in the current study period therefore results in a greater portion of system costs being allocated to the single-family class, which is addressed through increases to the flat monthly rates that are charged to residential customers. Conversely, the commercial class now represents a smaller share of the total flow and associated costs, leading to a reduction in the commercial rate.

Impacts to Water Rate Structure
Current water rate revenues are driven by revenues collected from water use charges (i.e., consumption charges). A current rate revenue analysis revealed that revenue from consumption charges accounts for more than half of overall water rate revenues. However, the last rate study was designed so that a smaller share of revenue would come from water use, with more coming from fixed monthly charges. Since that time, higher water demand has shifted the balance, making the City’s revenue more dependent on water usage. When revenues depend heavily on how much water people use, they can fluctuate with weather, drought restrictions, and conservation, making it harder for the utility to cover its fixed costs. As an example, while water usage in West Sacramento has increased since 2016, it has followed the Statewide decline over the last 15 years, largely due to more stringent conservation mandates and increased awareness. In recent years, the State has implemented another round of conservation efforts, which may result in further water usage reductions.

To strengthen financial stability, the City is proposing to adjust the balance between fixed and variable charges.

Under the proposed rates, a greater share of total revenue will come from the fixed monthly service charge. This portion of the bill is based on meter size, which reflects the system capacity available to serve each customer.

During the next five years, the City plans major capital investments to maintain and expand that capacity.

Because of this rebalancing, customers will see larger increases in the fixed service charge than in the per-unit cost of water. This change will make water revenues more predictable, helping the City maintain reliable service and plan for long-term system needs.

Cost of Service Study (COS) Results and Rate Reduction Measures The City prepared its initial (full-ask) scenario which would fully fund 100% of proposed operational and capital needs over the next five years based on the analysis of historical service call and response time data; the need to implement industry standard preventative maintenance programs; and the required infrastructure investments outlined in the water and sewer master plans and prioritized by Capital Projects and Public Works O&M staff.

This scenario included funding of $97.5 million in water infrastructure projects and $44 million in sewer 336 759
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infrastructure projects over the next five years, and resulted in a total bill impact over the next five years of 101%, including the following proposed bill impacts by fiscal year:

Table 1: Initial Full-Ask Scenario
Effective Date 4/1/2026 1/1/2027 1/1/2028 1/1/2029 1/1/2030 TOTAL Rate Increase 32% 21% 11% 7% 6% 101%
This proposal, while justifiable, came with a lot of sticker shock. As a result, staff collaborated on ways to reduce the impact to customers while maximizing the revenues available to fund critical infrastructure projects.

As part of the rate analysis, City staff reviewed and is proposing revisions to each utility’s rate stabilization policy to ensure financial stability while minimizing rate impacts to customers, and to better align with industry best practices. Current reserve policies require each utility to maintain a balance of 50% of annual operating costs plus one year of average pay-go CIP spending. This approach required the City to hold a relatively large amount of cash in reserves, which limited flexibility and tied up funds that could otherwise be used for system investments. With the significant increase in capital needs for each utility, higher rate increases would be necessary to maintain reserves at the required levels.

Government Finance Officers’ Association of the United States and Canada (GFOA) and American Water Works Association (AWWA) provide guidance that reserve levels for utilities should be set between 25-50% of annual operating expenses. Lower risk utilities (stable demand, minimal purchased water costs) may set reserve levels lower (20-25%) while higher risk utilities (high purchased water costs, heavy reliance on consumption charges, weather-sensitive demand) should target higher, 40-50%. The City is proposing minimum reserve levels of 25% and target reserve levels of 50% of annual operating expenses for each utility. While reserve levels may dip below the 50% target for the short term, there must be a plan to bring reserve levels back to the 50% target balance.

To put this into perspective, the table below shows current reserve balances, required reserve balances if the same reserve policies are maintained, and the proposed target reserve balances for each utility for FY 2026/27:

Table 2: Target Reserve Levels - Current vs Proposed Rate Stabilization Reserve Policies Utility/Fund Current Minimum Reserve
Balance
Required Reserve Balance Proposed Target Reserve
Balance
Water $4,707,522 $16,568,322 $5,849,322
Sewer $2,353,808 $7,665,579 $2,165,579
By reducing the reserve requirement and maintaining a policy in line with industry standards, the City may release nearly $11 million from the water reserve requirement and $5.5 million from the sewer reserve requirement, significantly reducing impacts to ratepayers. This new framework maintains a prudent financial position for the City and allows the City to spend down reserves to support near-term capital improvement needs in the water and sewer systems. It should be noted that these reserves are currently being used to meet the City’s legally required debt coverage since rates have not been adjusted in several years.

This approach helps lower rates for customers, maintains the long-term financial health of the utilities, and ensures that necessary capital projects can proceed without creating undue rate pressure.

Staff and the consultant have also modeled debt-financing to fund a large portion of the CIP needs for each utility over the next 5 years. The benefit of debt financing for large infrastructure project costs is the ability to smooth out the impact on rates over a 30-year period rather than putting all the infrastructure costs on ratepayers over the next five years. The revenue requirement maintains at least 135% debt coverage to ensure that fluctuations in water usage and related water and sewer revenues do not impact the City’s ability to maintain the legally required debt coverage (net revenues).

The next step taken by staff to maximize revenues to fund necessary infrastructure while minimizing the proposed impact to ratepayers was to develop multiple CIP scenarios for the EU Commission and City Council to consider, each with different levels of funding for infrastructure and a different level of impact on ratepayers.

As a result, staff prepared three (3) possible scenarios: 1) a LOW scenario which drastically reduces the CIP spend for each utility and limits total bill impacts to 9% annually (in an attempt to ensure no double digit increases during the five-year period); 2) a MID scenario which provides a workable reduced CIP scenario that prioritizes the most necessary infrastructure projects for each utility and maximizes debt financing to reduce impact to 337 760
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customer rates, and 3) the revised FULL-ASK scenario which fully funds the initial proposed CIP, but at a lower impact to customers due to the rate-mitigation measures described above. These scenarios were presented to the EU Commission in November, and a fourth scenario (EU Proposed) was developed for Council consideration based on the feedback received.

After implementing the changes to the reserve targets, increasing proposed debt-funding for CIP projects, and adding the fourth scenario, the four options result in the following potential rate increases:

Table 3: Rate Scenarios, Proposed Bill Impacts, and Water and Sewer CIP Funding (in millions) by Fiscal Year As is shown in Table 3 above, by implementing the rate reduction measures previously described, Scenario 3 (FULL ASK) results in reduced bill impacts over the five-year period of nearly 26% compared to the City’s initial full-ask scenario prepared prior to applying any rate-mitigation or reserve policy adjustments. This scenario has the largest total bill impact over the five-year period, the largest initial year increase (at 26%) and the largest CIP funding for each utility. While this is staff’s ideal scenario as it fully funds the proposed CIP for each utility, it is not the scenario recommended at this time due to the significant impact on customers.

Scenario 1 (LOW), while maintaining single digit increases year-over-year, brings in significantly less funding for water and sewer CIP ($54.1 million and $16.5 million, respectively). While this scenario may be ideal for ratepayers, it is simply not workable as it does not generate sufficient revenue to fund the priority projects required for each utility. It also has a slightly higher 5-year bill impact than Scenario 2 (MID), and ideally, the City would prefer not to implement such high increases in each of the five years. For these reasons, the LOW scenario is also not recommended.

Scenario 2 (MID) brings in $63 million in infrastructure funding for the water utility and $36 million in infrastructure funding for the sewer utility while maintaining the lowest overall five-year bill impact for customers. The proposed first-year increase is larger than subsequent years to address a portion of the cost growth that has accumulated since the last rate adjustment in July 2021. Labor, materials, energy, and construction costs have risen roughly 20% during that period, while utility revenues have remained flat. Without a higher initial adjustment, the utilities would operate below cost for several years, forcing deferral of critical maintenance or drawing on reserves.

This approach “resets” rates to current cost levels, stabilizing finances and reducing the need for larger increases later. Once rates reflect actual costs, smaller annual adjustments will maintain system reliability, fund planned capital improvements and meet debt coverage requirements—supporting long-term financial stability while minimizing future rate shocks.

Finally, Scenario 4 (EU Proposed), builds on staff’s recommended Scenario 2 by moving up high-priority capital projects that the Commission believed should be completed sooner rather than phased across multiple fiscal years. The Commission concluded that advancing these projects now—despite the higher near-term rate impact—would ultimately reduce long-term costs by avoiding further escalation, minimizing risk of system failure, and ensuring more efficient use of ratepayer dollars. Under Scenario 4, the five-year total bill impact is approximately 61%, generating $76.5 million for water infrastructure and $42 million for sewer infrastructure.

This represents a total bill increase that is approximately 4% higher than the staff-recommended scenario over the five-year period.

Attachment 1 provides the fund balance graphs for the five-year period for each scenario for both water and sewer funds; projected bill impacts for average water use for residential and commercial customers; and comparisons of the City’s current water and sewer rates to those of nearby jurisdictions. A combined water and sewer utility bill comparison is included to show how the combined bills for City customers would change under the EU Commission’s recommended scenario. In addition to average bill totals at proposed rates for April 1, Effective Date 4/1/2026 1/1/2027 1/1/2028 1/1/2029 1/1/2030 TOTAL Water CIP Sewer CIP Initial Scenario 32% 21% 11% 7% 6% 101% $97.5 $44.0
Scenario 1 (LOW) 9% 9% 9% 9% 9% 56% $39.1 $27.5
Scenario 2 (MID)* 18% 9% 5% 7% 7% 54% $63.0 $36.0
Scenario 3 (FULL-ASK) 26% 13% 7% 7% 7% 75% $93.2 $44.0
Scenario 4 (EU PROPOSED)** 20% 12% 6% 7% 7% 61% $76.5 $42.0 * Scenario recommended by staff to EU Commission
** New scenario recommended by EU Commission
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2026 (year 1), the comparison includes average bill totals at the projected rates for FY 2029-30 (year five) to provide the Council with an additional reference point to compare how residential bills would change over a fiveyear period relative to the bills that customers in neighboring agencies pay today.

It is difficult to show how the proposed 5-year rates would compare to other jurisdictions’ rates in 5 years as each agency updates rates at different times. However, Attachment 4 provides a summary of rate updates (recent, in progress, and planned) for surrounding agencies to the extent they have either adopted rates or are undertaking a rate study.

The attached report (Attachment 5) from the City’s rate consultant, HF&H, provides the COS study for each utility based on Scenario 4 (EU Proposed).

The following charts provide a summary of the four scenarios, total CIP funding for each utility, and proposed rate changes under each scenario to summarize impacts of each proposed option presented to Council for consideration.

Chart 1: 5-Year Scenario Totals
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Chart 2: Annual Compounded Total Bill (Water & Sewer) Impact by Scenario Discounts and Programs to Reduce Utility Bills
The City provides a Low-Income Rate Assistance program (LIRA) to utility customers. This program is described in more detail in Attachment 3, and a table comparing the City’s rate assistance program with similar programs offered by surrounding jurisdictions is also provided for reference.

It is clear from the low utilization of the LIRA program that additional outreach would be helpful in ensuring customers are aware of the program and the benefit to their monthly utility bills. An outreach plan will be established, including emails and bill inserts notifying customers of the program and providing a link to the online application, notification to customers by phone and in person who contact utility customer service, and social media blasts. Additionally, we will ensure information and assistance enrolling is available for customers during the Proposition 218 outreach events which will be scheduled in early 2026.

The City also offers several other programs through its Sustainability Division to lower utility bills. Customers can apply for the Smart Irrigation Controller Rebate, the Lawn-Be-Gone program and the Water Wise House Call program. The first initiative helps residents replace their current sprinkler timer with a weather-based sprinkler timer. This rebate ($150) can help residents save thousands of gallons of water per month. Weather-based sprinkler timers automatically adjust schedules to follow the seasons, keeping plants healthy while using the most efficient amount of water. The second program provides up to $300 of compost and mulch to cover and kill unused sections of lawn. The last program provides a free audit of a customer’s water system, including a leakcheck and a survey of their irrigation system.

Environmental Considerations
The actions recommended in the attached resolution are not subject to the California Environmental Quality Act (CEQA), pursuant to Public Resources Code Section 21080 (b)(8), since the activities proposed involve administrative and financial activities that do not constitute a project pursuant to CEQA.

Commission Recommendation
City staff presented three scenarios (Low, Mid, Full-Ask) to the Environmental Utilities (EU) Commission in November. Staff recommended Scenario 2 (Mid) as the scenario that generates sufficient revenues for both Water and Sewer utilities to fund required operations and maintenance, as well as capital infrastructure projects, ensuring reliable service for ratepayers. The EU Commission recommended enhancing the staff-recommended scenario by adding priority projects at the lowest overall cost, resulting in Scenario 4 (EU Proposed). 340 763
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Strategic Plan Integration
The proposed rate increase aligns with the "Core Services and Infrastructure” Strategic Principle, which includes sustaining a financially sound city in which everyone feels safe and secure, with quality services and wellmaintained infrastructure.

Alternatives
This workshop is intended to gather Council feedback on which rate scenario staff should advance to begin the Proposition 218-required notification and outreach process. The selected scenario will be brought back for formal consideration at a future meeting.

Council may choose any of the four (4) scenarios or provide direction to modify a scenario. Scenario 1 (Low) is not recommended because it would not generate sufficient funding for required projects, leaving the utilities at increased risk of emergency repairs at substantially higher costs. Addressing such emergencies could require diverting funds from other projects or implementing an emergency Proposition 218 rate adjustment to maintain utility operations.

Coordination and Review
The utility rate analysis project has been coordinated between the Finance Department, Public Works Operation & Maintenance Department, the Sustainability Division, the Capital Projects’ Department, the City Attorney’s office and the City Manager’s office.

Budget/Cost Impact
There is no cost impact associated with this item. However, the rate scenario selected by the Council will determine future revenues available to fund the City’s Water and Sewer utilities’ operations & maintenance and capital repair and replacement needs for the next five years and beyond.

ATTACHMENTS

1. Water and Sewer Scenarios Modeled

2. Infrastructure Project Lists

3. Ratepayer Assistance Programs

4. Regional Utility Rate Comparison

5. HF&H Cost of Service Study Report for Water and Sewer 341 764
ATTACHMENT 1
Water Scenarios Modeled
The following four graphs depict the differences in the water enterprise fund balance graph under the four scenarios with varying levels of capital improvements. Consequently, revenue increases recommended over the five-year period change as the amount of capital funding and the level of debt issuance to support these projects changes.

Revenue increases necessary for each funding scenario are derived to ensure the fund balance (green line of the graph) meets the target balance (blue line) by FY 2029-30. Increases are recommended in the initial years even though the fund balance exceeds the target in those years. Raising rates early, despite having available reserves on hand, is a fiscally responsible strategy to avoid larger, more painful increases, in the future.

Following the change in rates in FY 2025-26, rate increases in FY 2026-27 through FY 2029-30 would be applied as uniform percentage increases to all rates.
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ATTACHMENT 1
Water Enterprise – LOW Level CIP Funding Scenario #1
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Water Enterprise - MID Level CIP Funding Scenario #2
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Water Enterprise – Full-Ask CIP Funding Scenario #3
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Water Enterprise – EU Commission Proposed Scenario #4
A comparison of water bill impacts under the four scenarios is provided below to give additional context to the options considered.

The comparison shows how bills would change over a five-year period for residential and commercial customers, under the stated assumptions.
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ATTACHMENT 1
Water Bill Comparison
Water Bill Comparison
Scenario #1
(Low)
Scenario #2
(Mid)
Scenario #3
(Full-Ask)
Scenario #4
(EU Comm)
Average Residential Bill Impact - Year 1 [1]
Average Monthly Bill (Current) $51.34 $51.34 $51.34 $51.34 Proposed Monthly Bill (4/1/2026) $53.54 $61.40 $68.62 $62.99 Per month Increase vs Current $2.20 $10.06 $17.28 $11.65 Average Residential Bill Impact - Year 5 [1]
Average Monthly Bill (Current) $51.34 $51.34 $51.34 $51.34 Proposed Monthly Bill (4/1/2026) $81.87 $79.62 $99.06 $84.70 Per month Increase vs Current $30.53 $28.28 $47.72 $33.36 Average Commercial Bill Impact - Year 1 [2]
Average Monthly Bill (Current) $349.72 $349.72 $349.72 $349.72 Proposed Monthly Bill (4/1/2026) $345.20 $396.19 $430.85 $403.52 Per month Increase vs Current ($4.52) $46.47 $81.13 $53.80 Average Commercial Bill Impact - Year 5 [2]
Average Monthly Bill (Current) $349.72 $349.72 $349.72 $349.72 Proposed Monthly Bill (4/1/2026) $527.88 $513.65 $621.78 $542.67 Per month Increase vs Current $178.16 $163.93 $272.06 $192.95 [1] Residential Bill impacts based on Average Water use of 11 HC F per month [2] Commercial Bill impacts based on Average Water use of 90 HC F per month with a 2" Meter Capital Funding Scenario
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Sewer Scenarios Modeled
The following four graphs depict the differences in the sewer enterprise fund balance graph under the four scenarios with varying levels of capital improvements. Consequently, revenue increases recommended over the five-year period change as the amount of capital funding and the level of debt issuance to support these projects changes.

Revenue increases necessary for each funding scenario are derived to ensure the fund balance (green line of the graph) meets the target balance (blue line) by FY 2029-30. Increases are recommended in the initial years even though the fund balance exceeds the target in those years. Raising rates early, despite having available reserves on hand, is a fiscally responsible strategy to avoid larger, more painful increases, in the future.

Following the change in rates in FY 2025-26, rate increases in FY 2026-27 through FY 2029-30 would be applied as uniform percentage increases to all rates.
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ATTACHMENT 1
Sewer Enterprise - LOW Level CIP Funding Scenario #1
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Sewer Enterprise - MID Level CIP Funding Scenario #2
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Sewer Enterprise – Full-Ask CIP Funding Scenario #3
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Sewer Enterprise – EU Commission Proposed Scenario #4
A comparison of sewer bill impacts under the four scenarios is provided below to give additional context to the options considered.

The comparison shows how bills would change over a five-year period for residential and commercial customers, under the stated assumptions.
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ATTACHMENT 1
Sewer Bill Comparison
Sewer Bill Comparison
Scenario #1
(Low)
Scenario #2
(Mid)
Scenario #3
(Full-Ask)
Scenario #4
(EU Comm)
Average Residential Bill Impact - Year 1 [1]
Average Monthly Bill (Current) $54.88 $54.88 $54.88 $54.88 Proposed Monthly Bill (4/1/2026) $61.30 $63.94 $63.77 $63.85 Per month Increase vs Current $6.42 $9.06 $8.89 $8.97
Average Residential Bill Impact - Year 5 [1,3]
Average Monthly Bill (Current) $54.88 $54.88 $54.88 $54.88 Proposed Monthly Bill (4/1/2026) $83.23 $84.90 $93.72 $89.69 Per month Increase vs Current $28.35 $30.02 $38.84 $34.81 Average Commercial Bill Impact - Year 1 [2]
Average Monthly Bill (Current) $204.24 $204.24 $204.24 $204.24 Proposed Monthly Bill (4/1/2026) $145.06 $161.57 $168.98 $165.28 Per month Increase vs Current ($59.18) ($42.67) ($35.26) ($38.96) Average Commercial Bill Impact - Year 5 [2,3]
Average Monthly Bill (Current) $204.24 $204.24 $204.24 $204.24 Proposed Monthly Bill (4/1/2026) $239.76 $250.54 $320.86 $287.90 Per month Increase vs Current $35.52 $46.30 $116.62 $83.66 [1] Bills include $44 treatment charge from SASD, in additional to City portion [2] Bills include minimum $44 treatment charge from SASD, in additional to City portion, at 49 HC F per month [3] SASD Year 5 rate assumes FY 2026-27 published rate of $47 plus three years of 3% annual increases.

Capital Funding Scenario
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Comparison with Other Agencies
The following tables compare the water and sewer bills of single-family customers across neighboring jurisdictions. Each table includes the bill under the proposed rate increase scenarios for the City.

Residential Sewer Bill Comparison
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Over the five-year period, rate increases for the “Full Ask” scenario will result in larger increases to customer sewer bills than the “Low” scenario and the “Mid” scenario. However, in the FY 2025-26, the sewer bills resulting from the “Mid” scenario will be larger than the sewer bills from the “Full Ask” scenario, as shown in the graph above.

Residential Water Bill Comparison
¹Service charge reflects a rate for meters larger than 5/8-inches. 2 Volumetric charge reflects a monthly consumption of 11 hundred cubic feet. 355 778
ATTACHMENT 1
A combined water and sewer utility bill comparison is included below to show how the combined bills for City customers would change under each of the four rate increase scenarios. In addition to bills at proposed rates for FY 2025-26 (effective Apri 1, 2026), the comparison includes bills at the projected rates for FY 2029-30 (Year 5).

This provides customers with an additional reference point to compare how residential bills would change over a five-year period relative to the bills that customers in neighboring agencies pay today. 356 779
City of West Sacramento

WATER CIP
SCENARIO #3 - FULL ASK
Capital Improvements - Master Plan 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 $11,000,000 $11,000,000 $27,000,000 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 $5,000,000 $2,000,000 $2,000,000 $2,000,000 $11,000,000 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 Project $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 $250,000 $1,250,000 Backwash Equipment $1,000,000 $1,000,000
PSIP Tank and BPS Replacement $6,000,000 $6,000,000 $12,000,000 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 $6,140,000 $28,345,000 $16,250,000 $22,000,000 $20,500,000 $93,235,000 SCENARIO #3 - FULL-ASK TOTAL $6,140,000 $28,345,000 $16,250,000 $22,000,000 $20,500,000 $93,235,000 ATTACHMENT 2
357 780
City of West Sacramento LEGEND
WATER CIP Changes from Scenario #3 (Full-Ask) to Reduce Rate Impacts
SCENARIO #2 - MID
Capital Improvements - Master Plan FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 TOTAL Difference from Full-Ask Annual Water System Repairs/Replacement Projects $7,500,000 $7,500,000 no funding until FY29/30. $7.5m v $27m 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 Reduced funding. $7.5m v $11m 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 Project $500,000 $7,000,000 $7,500,000 Water Meter Upgrade and Replacement Project $1,000,000 $1,000,000 Reduced funding. $1m v $2m WTP VFD Replacement $195,000 $195,000
Water Treatment Building & Pipe Painting $750,000 $250,000 $1,000,000 Reduced funding. $1m v $1.25m Backwash Equipment $1,000,000 $1,000,000
PSIP Tank and BPS Replacement $6,000,000 $6,000,000 Not fully funded. $6m v $12m 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 $6,140,000 $23,845,000 $11,000,000 $11,000,000 $11,000,000 $62,985,000 SCENARIO #2 - MID TOTAL $6,140,000 $23,845,000 $11,000,000 $11,000,000 $11,000,000 $62,985,000 ($30,250,000) ATTACHMENT 2
358 781
City of West Sacramento LEGEND
WATER CIP Changes from Scenario #3 (Full-Ask) to Reduce Rate Impacts
SCENARIO #1 - LOW
Capital Improvements - Master Plan FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 TOTAL Difference from Mid & Full-Ask Annual Water System Repairs/Replacement Projects $0 Not funded. $0 v $7.5m/$27m 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 $7,000,000 $7,000,000 $14,000,000 split over two years. Increase cost of $4m Water Treatment Plant Security $500,000 $500,000
Tank Projects $1,000,000 $1,000,000 $2,000,000 Reduced funding. $2m v $7.5m/ $11m Major Water System Emergency Repairs
$600,000 $1,000,000 $1,000,000 $1,000,000 $3,600,000
Not funded in FY26-27. Emergency would
require defunding a project. $3.6m v $5.1m
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 Project $500,000 $5,500,000 $6,000,000 $12,000,000 Delayed project, increased cost of $4.5m Water Meter Upgrade and Replacement Project ($5,995,000) ($5,995,000) Defunded. Project delayed indefinitely.

WTP VFD Replacement $195,000 $195,000
Water Treatment Building & Pipe Painting $750,000 $750,000 Reduced funding. $.75m v $1m/$1.25m Backwash Equipment $1,000,000 $1,000,000
PSIP Tank and BPS Replacement $3,000,000 $3,000,000 Delayed, not fully funded. $3m vs $6m/$12m Potable Well Refurbishment & Construction $1,500,000 $1,500,000 delayed, reduced funding. $1.5m v $4.6m WTP Altitude Valve Replacement $40,000 $40,000
Water Treatment Plant-Alternative Energy/Solar Cells $0 Not funded. $0 v $3m New Security Fencing for Remote Water Facility Sites $1,000,000 $1,000,000 Reduced funding, fewer sites. $1m v $2.5m TOTAL $6,140,000 $5,000,000 $9,000,000 $9,000,000 $10,000,000 $39,140,000 SCENARIO #1 - LOW TOTAL $6,140,000 $5,000,000 $9,000,000 $9,000,000 $10,000,000 $39,140,000 ($23,845,000)/($54,095,000) ATTACHMENT 2
359 782
City of West Sacramento LEGEND
WATER CIP Changes per EU Commission Feedback
Changes from Scenario #3 (Full-Ask) to Reduce
Rate Impacts
SCENARIO #4 - EU COMMISSION PROPOSED
Capital Improvements - Master Plan FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 TOTAL Difference from Full-Ask Annual Water System Repairs/Replacement Projects $2,000,000 $3,000,000 $5,000,000 $10,000,000 $20,000,000 phase-in annual funding 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 Reduced funding. $7.5m v $11m 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 Project $500,000 $7,000,000 $7,500,000 Water Meter Upgrade and Replacement Project $1,000,000 $1,000,000 $2,000,000 add back in $1m originally reduced WTP VFD Replacement $195,000 $195,000
Water Treatment Building & Pipe Painting $750,000 $250,000 $1,000,000 Reduced funding. $1m v $1.25m Backwash Equipment $1,000,000 $1,000,000
PSIP Tank and BPS Replacement $6,000,000 $6,000,000 Not fully funded. $6m v $12m 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 $6,140,000 $25,845,000 $15,000,000 $16,000,000 $13,500,000 $76,485,000 SCENARIO #4 - EU COMMISSION PROPOSED TOTAL $6,140,000 $25,845,000 $15,000,000 $16,000,000 $13,500,000 $76,485,000 ($16,750,000) ATTACHMENT 2
360 783
City of West Sacramento LEGEND
SEWER CIP SCENARIOS - PROJECT LISTS Changes per EU Commission Feedback Changes from Scenario #3 (Full-Ask) to Reduce Rate
Impacts
SCENARIO #3 - FULL ASK 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 $ 1,000,000 $ 6,000,000 $ 7,000,000 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 $ 8,000,000 $ 16,500,000 Yearly Reoccuring Emergency Sewer Fund $ 250,000 $ 500,000 $ 500,000 $ 500,000 $ 500,000 $ 2,250,000 GIS Utility Infrastructure Surveying And Mapping $ 250,000 $ 250,000 SCENARIO #3 - FULL ASK $ 2,000,000 $ 10,250,000 $ 14,750,000 $ 8,500,000 $ 8,500,000 $ 44,000,000 SCENARIO #2 - MID FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 TOTAL Difference from Full-Ask South Lift Station Rehabilitation Project $ 8,500,000 $ 8,500,000 Westmore Oaks Sewer Rehabilitation Project $ 6,000,000 $ 6,000,000 Reduced funding FY26-27 Bryte Lift Station Sewer Rehabilitation Project $ 1,500,000 $ 1,500,000 $ 8,000,000 $ 11,000,000 delayed, funded over two years, increase in cost of $1.5m
Major Sewer System Repairs (Mainline) $ 250,000 $ 250,000 $ 500,000 $ 7,500,000 $ 8,500,000 funded at half amount of full-ask reducing scope of work and delaying necessary repairs
Yearly Reoccuring Emergency Sewer Fund $ 250,000 $ 250,000 $ 250,000 $ 500,000 $ 500,000 $ 1,750,000 reduced funding. Emergency would require eliminating another project.

GIS Utility Infrastructure Surveying And Mapping $ 250,000 $ 250,000 SCENARIO #2 - MID TOTAL $ 2,000,000 $ 9,000,000 $ 8,000,000 $ 9,000,000 $ 8,000,000 $ 36,000,000 $ (8,000,000) SCENARIO #1 - LOW FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 TOTAL Difference from Mid & Full-Ask South Lift Station Rehabilitation Project $ 7,500,000 $ 7,500,000 delayed & funding reduced. Not fully funded.

Westmore Oaks Sewer Rehabilitation Project $ 1,000,000 $ 6,000,000 $ 7,000,000 Bryte Lift Station Sewer Rehabilitation Project $ 2,250,000 $ 1,500,000 $ 8,000,000 $ 11,750,000 delayed, increase in cost Major Sewer System Repairs (Mainline) $ 250,000 $ 500,000 $ 750,000 reduced fundind. Minimal repairs may be completed putting system at risk.

Yearly Reoccuring Emergency Sewer Fund $ 250,000 $ 250,000 $ 500,000 not funded in several years. Emergency would require pulling funding from necessary projects.

GIS Utility Infrastructure Surveying And Mapping $ - not funded.

SCENARIO #1 - LOW TOTAL $ 500,000 $ 4,000,000 $ 6,000,000 $ 9,000,000 $ 8,000,000 $ 27,500,000 ($8,500,000/ ($16,500,000) SCENARIO #4 - EU COMMISSION PROPOSED FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 TOTAL Difference from Full-Ask South Lift Station Rehabilitation Project $ 8,500,000 $ 8,500,000 Westmore Oaks Sewer Rehabilitation Project $ 6,000,000 $ 6,000,000 Reduced funding FY26-27 Bryte Lift Station Sewer Rehabilitation Project $ 1,500,000 $ 8,000,000 $ 9,500,000 moved back to FY27/28 Major Sewer System Repairs (Mainline) $ 250,000 $ 250,000 $ 8,000,000 $ 7,500,000 $ 16,000,000 Added funding back to FY28/29 to balance annual investment
Yearly Reoccuring Emergency Sewer Fund $ 250,000 $ 250,000 $ 250,000 $ 500,000 $ 500,000 $ 1,750,000 reduced funding. Emergency would require eliminating another project.

GIS Utility Infrastructure Surveying And Mapping $ 250,000 $ 250,000 SCENARIO #4 - EU PROPOSED $ 2,000,000 $ 9,000,000 $ 14,500,000 $ 8,500,000 $ 8,000,000 $ 42,000,000 $ (2,000,000) ATTACHMENT 2
361 784
ATTACHMENT 3
Ratepayer Assistance Program
The City of West Sacramento offers a Low-Income Rate Assistance (LIRA) program for its water, sewer, and refuse utilities. The program is funded through Measure K, the City’s voter-approved transactions and use tax adopted in 2002. LIRA provides a monthly discount for eligible households and is structured to align with existing low-income qualification pathways, including PG&E’s California Alternate Rates for Energy (CARE) program and the Sacramento County Regional Sanitation District’s Sewer Lifeline program.

Customers may also qualify by submitting income documentation that meets the City’s LIRA income limits.

Eligibility requirements generally correspond to households at or below approximately 200% of the Federal Poverty Level or 80% of Area Median Income, consistent with common thresholds used for low-income utility assistance programs across the region. Once approved, qualifying customers receive a $3 monthly discount on their water/sewer bill, equal to just under 5% of the current average residential water/sewer bill. Additionally, a $2 credit is applied to the refuse bill for qualified customers, for a total credit of $5/month.

The City has 15,881 residential utility accounts. Based on demographic data, an estimated 25% of households meet the City’s income eligibility criteria for LIRA. Despite this, only 194 households (1.2%) are currently enrolled, resulting in an annual program cost of approximately $7,000. By contrast, PG&E reports enrollment rates of roughly 96% among eligible households in its CARE program. If LIRA participation reached a similar level, the City’s annual program cost is estimated to increase to just over $137,000.

Table 1 provides a comparison of low-income assistance programs offered by neighboring agencies for water and sewer utilities, benchmarked against the City of West Sacramento’s LIRA program.
362 785
ATTACHMENT 3
Table 1: Regional Utility Ratepayer Assistance Programs Agency Program Name How the Discount Works Eligibility Method Benefit Amount Program Link City of Davis Water Assistance Program Monthly water bill credit; funded partially by voluntary contributions by ratepayers "rounding up" their bill/payment. Income qualification; bill must be in applicant’s name. $10/month https://www.cityofdavis.org/city-hall/finance/city- services/faq-s-for-monthly-utility-billing Elk Grove Water District (EGWD) No discount, payment arrangement offered if customer cannot pay bill N/A N/A N/A https://www.egwd.org/ City of Folsom Low-Income Rate Class Reduced fixed base charge for water for eligible customers City low-income qualififcation. SFR base charge $20.09, Low-income rate $12.65 (37% discount on fixed portion) https://www.folsom.ca.us/government/finance/util ity-billing/utility-relief City of Lincoln No discount, payment arrangement offered if customer cannot pay bill N/A N/A N/A Lincoln had a credit program ($23/mo) which ended February 28, 2025. City of Roseville Water/Sewer Assistance & Protections Water assistance offered via bill protections, payment plans; proposals for fixed-charge discount. Income qualification for water protections. Water discount proposals at ~20% of fixed charge (to be adopted/effective December 1, 2025) https://www.roseville.ca.us/cms/One.aspx?porta lId=7964922&pageId=8717422 City of Sacramento Utility Rate Assistance (URA) Monthly discount on water, sewer, and garbage services. Income qualification or proof of SMUD EAPR enrollment. 40% discount applied to monthly flat fee for each service https://www.cityofsacramento.gov/utilities/pay- your-utility-bill/financial-assistance Sacramento Area Sewer District (SacSewer) Sewer Lifeline Rate Assistance Credit applied to sewer collection/treatment portion of bill. Income qualification, SMUD EAPR, or PG&E CARE/FERA enrollment. Annual credit of $30 ($2.50/mo) for collection. https://www.sacsewer.com/sewer-lifeline-rate- assistance-program/ City of West Sacramento Low Income Rate Assistance (LIRA) Credit applied to water portion of bill Income qualification, Sewer Lifeline or PG&E CARE enrollment
$3/month credit on
water
https://www.cityofwestsacramento.org/governm
ent/departments/finance-department/utility-billing
City of Woodland Utility Assistance Program Monthly utility bill rebate.

Annual application
required, limited
application period.

Must qualify via PG&E
CARE/FERA or
SMUD EAPR; typically
owner-occupant.
$30/month for 12
months.
https://www.cityofwoodland.gov/697/UtilityAssistance-Program?utm_source=chatgpt.com 363 786
ATTACHMENT 4
Other Agency Rate Status
11/4/2025

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 364 787
ATTACHMENT 4
Other Agency Rate Status
11/4/2025

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.
365 788

CITY OF WEST

SACRAMENTO
Water and Sewer Cost-of-Service Study
November 20, 2025
ATTACHMENT 5
366 789
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
ATTACHMENT 5
367 790
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
368 791
Water and Sewer Cost-of-Service Study
City of West Sacramento | November 20, 2025 | Page ii
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
City of West Sacramento | November 20, 2025 | Page iii
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
City of West Sacramento | November 20, 2025 | Page iv

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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City of West Sacramento | November 20, 2025 | Page v

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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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

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 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 4 of 42

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.

ATTACHMENT 5
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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
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.

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.

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 Sewer Enterprise revenue requirement. Consequently, reserves project to decline through FY 2027-28, despite larger revenue increases. Thereafter, the cumulative nature of the multiple years of rate increases will help stabilize the reserve fund balance from FY 2028-29 through FY 2029-30, such that the fund balance increases slightly.

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
ATTACHMENT 5
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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.

ATTACHMENT 5
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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
ATTACHMENT 5
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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
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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
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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.

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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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Responses to Written Objections to Proposed Water and Sewer Rates The City received ___ written objections regarding the proposed water and sewer rate adjustments during the Proposition 218 noticing period. Each objection was reviewed carefully by City staff and the City’s rate consultant, and evaluated against the requirements of Proposition 218 and the supporting Water and Sewer Cost-of-Service Study. The responses below address the substance of the objections received, clarify how the proposed rates were developed, and identify where the rate study and public record provide supporting information. Many of the written objections were essentially identical, or raised substantially similar objections. For convenience we have provided a common response to each substantially similar objection. The City also received two unique sets of objections, and responses to those objections are provided separately below. These responses are intended to inform the City Council’s consideration of the proposed rates and to ensure transparency and clarity for the public.

TRANSPARENCY
Common Objection: the City has not been transparent enough in the rates process The City conducted the rate-setting process in accordance with the requirements of Proposition 218, which mandate that the City provide mailed notice of proposed rate increases, hold a public hearing, and allow property owners to submit written objections and/or protests prior to the hearing. In addition to these requirements, the City undertook several voluntary outreach efforts to provide information and increase public understanding of the proposed rates.

Prior to the City Council public hearing, the City hosted a “Utility Rates 101” informational webinar on October 28, 2026. The webinar was publicly noticed, recorded, and made available on the City’s website and YouTube channel. Information about the webinar was shared through the City’s website, social media platforms, and the City’s meetings and events calendar.

The City conducted an Environmental & Utilities Commission meeting on November 12, at which staff presented the rate study, proposed options, and recommendations to the Commission and the public and received feedback to inform the City Council workshop.

The City Council held a public workshop on December 3, 2025, to review and discuss the proposed water and sewer rate adjustments. Following Council direction at that meeting, staff mailed the Proposition 218 Notice to all City of West Sacramento property owners and ATTACHMENT 2
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customers of record on January 2, 2026. The notice provided more than the minimum 45 days required by Proposition 218 and included a description of the proposed rates, the basis for the adjustments, the date and location of the public hearing, and instructions for submitting written objections and protests. The notice was provided in English, Spanish, and Russian and was also posted on the City’s website with translation capability for over 100 additional languages.

To further support public engagement, the City hosted two informational Utility Rate Open Houses on February 3, 2026, and February 7, 2026. The open houses were scheduled on both a weekday evening and a weekend day and were held in different locations within the City to accommodate varying schedules and geographic access. These events were noticed through the Proposition 218 mailing, the City’s website, newsletters, email communications, social media, and the City’s events calendar. Information about the open houses was also included in the West Sacramento News-Ledger on January 30, 2026.

Spanish and Russian translation services were available at both open houses.

The City Council will hold the Proposition 218 public hearing on March 18, 2026, at 7:00 p.m. in the City Council Chambers. At that hearing, the City Council will consider all written objections received and all public testimony before determining whether to adopt the proposed water and sewer rates.

Additional information regarding the rate study, public meetings, and hearing schedule has been made available on the City’s utility rates webpage and the City’s events calendar.

City’s utility rates webpage:
https://www.cityofwestsacramento.org/government/departments/financedepartment/utility-rate-study#!/ City’s events calendar: https://www.cityofwestsacramento.org/government/city-calendar

ALTERNATIVE FUNDING OPTIONS AND EFFICIENCIES
Common Objection: the City has not looked into alternative funding The City evaluated multiple funding approaches as part of the development of the proposed water and sewer rates, including the use of cash funding, debt financing, and external funding sources where available.

The Water and Sewer Cost-of-Service Study evaluates the full cost of operations and maintainance, as well as necessary rehabilitations to the City’s water and sewer systems, over the five-year study period. As documented in the Study, the City’s capital improvement needs are funded through a combination of pay-as-you-go (cash) funding and planned debt ATTACHMENT 2
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issuance, rather than relying solely on rate revenues in a single year. This blended approach balances rate stability with the need to maintain and replace aging infrastructure over time.

The Study also assumes the continued use of non-rate revenues where legally permissible.

For the water enterprise, the City projects approximately $2.25 million annually in water impact fee revenues to offset a portion of capital costs that can be attributed to new development, thereby reducing the amount that must be recovered through rates.

In addition, the City actively pursues grant funding and other external funding opportunities when available. Recent examples include grant funding used for the Well 22 Rehabilitation Project and the Washington District Utility Rehabilitation Project. While grants can help offset specific capital projects, they are generally limited, competitive, and not available for ongoing operations, maintenance, or systemwide replacement needs. As a result, grants cannot be relied upon as a primary or ongoing funding source for utility services.

Under California law and Proposition 218, water and sewer utilities must be funded through charges that recover the cost of providing service. The proposed rates reflect the City’s evaluation of available funding options and are designed to recover only the portion of costs that cannot be funded through grants, impact fees, or other legally permissible non-rate revenues.

One objection stated that the number of employees per 1,000 residents in West Sacramento is higher than that of other agencies in Yolo County. Comparing the total number of employees per 1,000 residents is not an objective way to assess perceived higher administrative and benefits costs. The number of employees per City varies based on a variety of factors, including population, miles of utility lines, amount of infrastructure, size of service area, number of City departments, etc. In addition, some agencies contract out Police & Fire, while the City of West Sacramento has those services in-house. That would automatically increase the City’s number of employees substantially, as compared to a City that contracts out for those services.

The City is always looking for ways to be more efficient and save costs. As one example, the City is part of a water treatment chemical buying consortium with other regional agencies, which offers the City better pricing, as the region is more of a “bulk buyer” through this group.

Common Objection: the City has not looked into alternative funding, such as Measure O
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The City has considered the potential use of General tax revenues, including Measure O revenues, as part of its broader financial planning. Under California law, the City may choose to subsidize water or sewer utility costs with General Fund revenues, provided that utility rates do not exceed the cost of providing service.

However, the City’s water and sewer utilities are operated as enterprise funds, and the City’s longstanding financial policy is that these utilities should be financially selfsupporting. This approach ensures that the cost of providing water and sewer service is borne by utility customers who receive the service, rather than by the general taxpayer, many of whom may not be utility customers. One exception to this is the historical use of Measure K to provide credit for low-income utility customers, as Measure K included this as an eligible use of the funds when the tax was adopted. The current annual Measure K budget for the Low-Income Rate Assistance program is $15,000 annually.

Measure O is a general tax approved by voters to support a wide range of core municipal services, including road maintenance, public safety, parks, homelessness response, and the maintenance of public spaces. Measure O revenues are finite and are relied upon to support the essential Citywide services listed above. Using these revenues to subsidize ongoing water and sewer operating or capital costs would reduce funding available for those voter-identified priorities and would introduce long-term financial risk by shifting utility costs to a revenue source that is subject to economic fluctuations and competing demands.

In addition, reliance on General Fund subsidies for utility operations can create structural imbalances over time, particularly given the long-term and capital-intensive nature of water and sewer infrastructure. The City’s rate study therefore assumes that utility operations, maintenance, capital improvements, and debt service are funded primarily through utility rates, supplemented by legally permissible non-rate revenues such as impact fees and grants where available.

For these reasons, while the City has the legal authority to use General Fund or Measure O revenues to subsidize utility costs, the City has determined that doing so would not be fiscally prudent or sustainable. A small amount of Measure K sales tax is used to provide credit to low-income customers up to $15,000 annually, as this subsidy is an eligible use of the tax measure approved by voters; however, that is different than using General Tax revenues to construct utility projects. The proposed rates reflect a policy decision to maintain financially stable, self-supporting utility systems while preserving General Fund resources for broader community services.

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FINANCIAL CONSTRAINTS
Common Objection: incomes are not increasing in the area, causing a financial burden
The City recognizes concerns regarding affordability and the financial pressures faced by some households. While these concerns are important, Proposition 218 requires that water and sewer rates be based on the cost of providing service and allocated proportionally to each property. Rates cannot be set based on income or ability to pay and must reflect only the costs necessary to operate, maintain, and invest in the City’s water and sewer systems.

The Water and Sewer Cost-of-Service Study demonstrates that the proposed rates recover only the documented costs of providing utility service and are phased in over a five-year period to moderate year-over-year impacts.

Although affordability considerations cannot be addressed through rate design, the City currently offers a Low-Income Rate Assistance Program that provides a monthly credit of $5 to eligible utility customers. The City is also evaluating potential sizable enhancements to this program to provide greater assistance, subject to further analysis and policy direction by the City Council at the March 18th hearing. Information about available assistance programs is provided to customers through the City’s utility billing resources.

The Low Income Rate Assistance (LIRA) Program website FAQs are available here:
https://www.cityofwestsacramento.org/home/showpublisheddocument/7611/636656209 436730000
LIRA Application:
https://www.cityofwestsacramento.org/home/showpublisheddocument/20951/63896804 3130030000

DISPROPORTIONATE RATES
Common Objection: the rates are disproportionate
The proposed water and sewer rates are based on a cost-of-service analysis and are designed to ensure that each customer class pays no more than its proportional share of the cost of providing service, as required by Proposition 218.

The City’s water and sewer utilities are operated as enterprise funds and are intended to be financially self-supporting. The December 2025 Water and Sewer Cost-of-Service Study (Study) documents all costs specific to each utility and allocates those costs to customer ATTACHMENT 2
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classes in proportion to how customers use and place demands on each system. By law, revenues collected from water rates may only be used to provide water service, and revenues collected from sewer rates may only be used to provide sewer service. Utility revenues cannot be used for other City purposes, nor can costs be shifted between utilities.

Water Rates
The allocation of water rates is described beginning in Section IV of the Study (Water Rate Cost-of-Service Analysis). For FY 2025-26, the total revenue requirement is allocated between two components of the rate structure: a fixed Service Charge and a volumetric Commodity Charge, as shown in Figure IV-1 in the Study.

The City’s existing water rate structure consists of these same two components and no changes to the structure are proposed. Accordingly, the proposed rates apply uniformly to all customers, regardless of whether they are residential or commercial.

As described in Section V of the Study (Water Rate Design), fixed Service Charges recover costs associated with customer accounts and system capacity—costs that must be incurred regardless of how much water a customer uses. These costs are allocated based on meter size, which reflects each customer’s potential demand on the system. Figures V-4 and V-5 in the Study show how unit costs for Service Charges are calculated and applied consistently across all customers.

Commodity Charges recover costs associated with actual water consumption and are applied at a uniform rate per unit of water used. The derivation of the Commodity Charge is described in Section V, beginning on page 33 of the Study. This approach ensures that customers who use more water pay proportionally more for the costs driven by usage.

Sewer Rates
The allocation of sewer rates is described in Section VIII of the Study (Sewer Rate Cost-ofService Analysis). Sewer costs are allocated among four functional categories that reflect how customers contribute to system costs: Accounts, Flow, Biological Oxygen Demand (BOD), and Total Suspended Solids (TSS).

Costs allocated to Accounts represent fixed costs associated with providing sewer service and are analogous to fixed service charges. Costs allocated to Flow, BOD, and TSS are variable costs influenced by the volume and characteristics of wastewater discharged by customers. Figure VIII-4 in the Study summarizes the units of service used to allocate these costs among customer classes.

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As explained in the Study, cost-of-service analyses apply the same unit costs to all customers. Differences in rates among customer classes reflect differences in service demands and wastewater characteristics, not preferential treatment. Figures VIII-5 through VIII-7 in the Study demonstrate how unit costs are applied consistently to each customer class to distribute the revenue requirement proportionally.

The Study concludes that no changes to the City’s existing sewer rate structure are recommended. Sections IX and X describe how the unit costs derived in the cost-of-service analysis are incorporated into the current rate structure so that rates continue to reflect the cost of service and remain proportional.

As a result of updated cost allocations and usage data, some commercial sewer rates decrease while residential rates increase. These changes reflect the results of the cost-ofservice analysis and ensure compliance with Proposition 218 by aligning rates with actual cost responsibility.

Common Objection: the rates shift the financial consequences of past development & capital planning decisions onto current ratepayers
The proposed water and sewer rates do not shift the financial consequences of past development decisions onto current ratepayers. Rather, the proposed rates are based on a cost-of-service analysis that identifies the costs required to operate, maintain, repair, and replace the City’s existing water and sewer infrastructure systems.

Water and sewer utilities are long-lived systems that require ongoing investment to maintain reliable service and meet regulatory requirements. Infrastructure such as pipelines, wells, pump stations, and sewer collection facilities are typically constructed over many decades and must be maintained, rehabilitated, and eventually replaced as they age. The proposed rate adjustments reflect the current and projected costs required to maintain and reinvest in the City’s existing infrastructure so that the system continues to operate safely and reliably for current and future users.

New development contributes its share toward system costs through connection fees and development impact fees. These fees are designed to ensure that growth pays its proportionate share of the cost of providing additional system capacity and constructing new infrastructure needed to serve new development. Because development impact fees must be supported by a nexus analysis under California law, they may only fund the portion of capital improvements that can be reasonably attributed to new growth.

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As a result, development impact fees are primarily used to construct new facilities or expand system capacity needed to serve growth. They generally cannot be used to replace or rehabilitate aging infrastructure that was constructed decades ago and has deteriorated due to normal use over time. Similarly, impact fees cannot be used to correct deficiencies in existing infrastructure that existed prior to new development. At most, only the portion of an improvement attributable to increased demand from new development may be funded through development impact fees.

Additionally, the infrastructure project lists included in the Cost-of-Service Study and proposed to be funded through the proposed rates exclude projects necessary to serve new development. Growth-related infrastructure is instead funded through development impact fees and connection charges paid at the time of development.

The Water and Sewer Cost-of-Service Study incorporates projected revenues from connection and development impact fees and reduce the amount of costs that must be recovered through utility rates. However, the replacement, rehabilitation, and maintenance of the City’s existing infrastructure systems must primarily be funded through utility rates paid by customers receiving service from those systems.

Under Proposition 218, property-related fees such as water and sewer rates must not exceed the cost of providing the service and must be allocated proportionally among customers receiving that service. The proposed rates were developed to comply with these requirements by recovering only the costs necessary to operate and maintain the City’s water and sewer systems and by allocating those costs proportionally among customer classes.

Accordingly, the proposed rates reflect the cost of providing ongoing utility service to current customers while ensuring that new development contributes its fair share toward system capacity and infrastructure improvements.

UNAVOIDABLE INCREASES
Common Objection: the City has not demonstrated that the increases are unavoidable Proposition 218 does not require that the City demonstrate that rate increases are “unavoidable.” The legal standard requires that water and sewer rates not exceed the cost of providing service and that each property pay no more than its proportional share of those costs.

The Water and Sewer Cost-of-Service Study documents the costs required to operate, maintain, and invest in the City’s water and sewer systems and allocates those costs ATTACHMENT 2
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proportionally among customer classes. The proposed rates are based on this cost-ofservice analysis and are designed to recover only the documented costs of providing utility service.

Whether costs could be reduced or deferred through alternative policy choices is not a requirement under Proposition 218. The City’s obligation under the law is to ensure that any adopted rates comply with the proportionality and cost-based requirements of Article XIII D of the California Constitution.

GROWTH
Common Objection: the City has not demonstrated that the increases are the result of properly paced infrastructure planning relative to recent growth.

The proposed water and sewer rate adjustments are not driven by recent growth. Rather, the rates are based on the cost of operating, maintaining, repairing, and replacing the City’s existing water and sewer infrastructure in order to provide reliable service to current customers.

Much of the City’s water and sewer infrastructure was constructed decades ago and requires ongoing rehabilitation and eventual replacement as it ages. The capital improvement projects included in the Water and Sewer Cost-of-Service Study primarily address maintenance, repair, and replacement of existing facilities needed to continue providing reliable service. Projects necessary to serve new development are excluded from the infrastructure project lists used to develop the proposed rates.

Infrastructure needed to serve new development is funded separately through development impact fees, connection charges, and other legally authorized growth-related funding sources. These mechanisms are designed to ensure that new development pays its proportionate share of the cost of expanding system capacity to serve additional customers.

Accordingly, the proposed rates reflect the cost of maintaining and operating the City’s existing water and sewer systems for current users, rather than funding infrastructure needed to accommodate new development.

Response to Written Objection from Katherine Davila
The City appreciates Ms. Davila’s detailed review of the proposed water and sewer rate adjustments and her participation in the open house events and the Proposition 218 ATTACHMENT 2
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process. The City has reviewed her objection letter carefully and offers the following response to address the specific calculations and comparisons raised.

Overview of the Objection (Full letter included in Attachment 3) Ms. Davila’s objection compares percentage and dollar increases across residential, multifamily, and commercial customers and concludes that the proposed increases are unreasonable and disproportionate. The objection references:
• a relatively small monthly increase for certain commercial customers, • significantly larger dollar and percentage increases for single-family and multifamily residential customers, and • separate references to water usage charges and fixed charges.

These comparisons are premised on comparisons that are not “apples to apples”. They combine different utilities (water and sewer), different rate components (fixed versus usage-based charges), and different time horizons (first-year versus final-year rates). The following sections clarify how the proposed rates are structured and how the cited figures are derived.

Water Rates – Fixed and Commodity Charges
Water rates consist of two components that form a single water rate:

1. a fixed Service Charge, based on meter size; and

2. a Commodity Charge, based on the amount of water used.

These are not two separate rate increases; they are the two components of the same rate structure, which is unchanged under the proposal.

Commodity (Usage) Charge
The commodity charge is applied uniformly to all customers on a per-unit basis. The proposed increase includes a $0.03 per HCF (hundred cubic feet) adjustment beginning April 1, 2026, which applies equally to residential, multi-family, and commercial customers. The dollar impact of this charge varies by customer solely because customers use different amounts of water.

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For example, a commercial account that uses relatively little water will see a small dollar change, while a customer with higher usage will see a larger dollar change, even though the per-unit rate is the same.

Fixed Service Charge
The fixed service charge recovers costs associated with maintaining system capacity, meters, billing, and infrastructure that must be maintained and available regardless of water use. These charges are based on meter size, not customer type. Residential customers with ¾-inch or 1-inch meters pay the same service charge as any other customer with the same meter size.

Beginning April 1, 2026, the increase in fixed water service charges ranges from approximately $11 per billing period for small meters to higher amounts for larger meters, reflecting each meter’s relative demand on system capacity. These increases apply uniformly to all customers with the same meter size, whether residential or commercial.

Sewer Rates – Residential, Multi-Family, and Commercial Sewer rates are structured differently from water rates and differ by customer class because sewer costs are driven by wastewater flow and characteristics.

Residential and Multi-Family Sewer Rates
Residential sewer rates are charged on a per-dwelling-unit basis. The current monthly sewer charge is:
• $10.88 for a single-family residence, and
• $8.16 per dwelling unit for multi-family properties.

Under the proposed rates:
• Single-family sewer rates increase to $19.85 in the first year and to $38.33 by the final year of implementation.
• Multi-family sewer rates increase to $13.53 in the first year and to $26.13 by the final year.

The percentage increases cited in the objection (approximately 352% for single-family and over 300% for multi-family) compare the current rates to the final-year rates. While those calculations are mathematically accurate, they reflect the cumulative effect of multiple annual increases applied over several years and do not represent a single-year rate change.

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These large percentage changes are also driven in part by the fact that existing residential sewer rates are historically low relative to the cost of providing sewer collection service.

Commercial Sewer Rates
Commercial sewer rates are not charged on a per-dwelling basis. Instead, they are structured based on:
• fixed account-related costs, and
• usage-related factors such as wastewater flow and strength.

As documented in the Water and Sewer Cost-of-Service Study, updated cost allocation results show that some commercial customers are currently paying more than their proportional share of sewer collection costs. This is the reason the City periodically completes these types of rate studies. As a result, certain commercial sewer rates decrease under the proposed rates.

These decreases are not preferential treatment; they are required to ensure compliance with Proposition 218, which prohibits charging any customer class more than its proportional share of the cost of service.

Comparison Across Customer Classes
The objection compares residential “per dwelling” sewer charges to selected components of commercial sewer rates. These comparisons are not directly equivalent because:
• residential sewer rates are flat per-unit charges, while • commercial sewer rates vary based on wastewater usage and characteristics.

When rates are compared consistently—using the same time horizon, the same rate components, and the same definition of service—the proposed rates align each customer class’ charges with its share of system costs.

Proposition 218 Compliance
The proposed water and sewer rates were developed to comply with Proposition 218 by ensuring that:
• rates do not exceed the cost of providing service; and • each property pays no more than its proportional share of those costs.

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In some cases, this results in larger percentage increases for customer classes whose current rates are significantly below cost, and smaller or negative changes for classes whose current rates exceed cost. This outcome reflects the purpose of a cost-of-service study and is not an indication of unfairness or disproportionality.

Conclusion
The City understands concerns regarding the magnitude of the proposed rate changes.

However, the comparisons cited in the objection reflect differences in rate structure, usage patterns, and time horizons rather than inequities in rate design. The proposed rates are phased in over multiple years and are based on a detailed cost-of-service analysis that ensures proportionality and compliance with Proposition 218.

Response to Written Objection from Susan Rushakoff (West Capitol Shopping Center, LLC)
The City appreciates Ms. Rushakoff’s written objection and her participation in the Proposition 218 process. The City has reviewed the objection letter carefully and offers the following response to address the specific concerns raised regarding the application of sewer rates to the commercial parcel located at 1282 W. Capitol Avenue.

Overview of the Objection (Full letter included in Attachment 3) Ms. Rushakoff’s objection asserts that the proposed sewer rates violate the proportionality requirements of Article XIII D of the California Constitution because the charges applied to the parcel are not demonstrated to reflect the actual cost of service attributable to it.

The objection further states that:
• the parcel is classified as a commercial account but operates a laundromat whose customers are primarily residential households;
• the City’s cost-of-service analysis relies on customer class classifications rather than parcel-specific cost causation;
• residential sewer customers are charged flat per-dwelling-unit rates while commercial customers are charged fixed and volumetric charges; and • as a result, the parcel may pay higher sewer charges than residential users who ultimately generate the wastewater discharged from the facility.

The objection also includes information regarding laundromat water usage, the number of customers served, and demographic characteristics of the surrounding neighborhood to support ATTACHMENT 2
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the assertion that the facility primarily serves extremely low-income residential households.

Sewer Cost-of-Service Methodology
The City’s Water and Sewer Cost-of-Service Study prepared by HF&H Consultants allocates the cost of providing wastewater collection service among customer classes using standard cost-ofservice principles consistent with Proposition 218 which ensures that customers who share similar use characteristics are charged similarly.

Under this methodology, wastewater system costs are allocated among four functional categories that represent the primary drivers of sewer system costs:

1. Accounts – customer service and billing costs;

2. Flow – the volume of wastewater discharged to the system;

3. Biological Oxygen Demand (BOD) – organic strength of wastewater; and

4. Total Suspended Solids (TSS) – the concentration of solids in wastewater.

Unit costs are calculated for each functional category and then applied consistently to each customer class based on the proportionate share of system demand attributable to that class.

This approach ensures that each customer class pays its proportional share of wastewater system costs based on measurable service characteristics.

Customer Classifications in Cost-of-Service Analysis
Cost-of-service studies do not assign individualized sewer costs to each parcel. Instead, they allocate system costs among groups of customers with similar service characteristics, commonly referred to as customer classes.

Customer classes are widely used in municipal utility rate design because wastewater system costs are driven by the aggregated demand placed on the system by groups of customers with similar usage patterns. This approach allows utilities to allocate costs proportionally while maintaining a practical and administratively feasible rate structure.

Commercial properties, including laundromats, are classified within the commercial customer class because their wastewater discharge patterns and operational characteristics differ from those of typical residential accounts.

Application to Laundromat Operations
The objection notes that the laundromat primarily serves individual residential customers and therefore suggests that the sewer charges associated with the parcel should be treated similarly to residential sewer rates.

ATTACHMENT 2
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However, sewer service is provided to the commercial parcel itself, and the wastewater discharged to the sewer system results from the aggregated operations of the facility. Facilities such as laundromats typically generate concentrated wastewater flows associated with business operations rather than the dispersed wastewater generation typical of individual residential households.

Accordingly, the property is appropriately classified within the commercial customer class for purposes of allocating sewer system costs under the cost-of-service methodology.

Comparison of Residential and Commercial Sewer Charges
The City does not meter wastewater discharge for either residential or commercial properties.

Instead, utilities commonly use metered water consumption as a reasonable proxy for commercial wastewater flow because water that enters a building typically exits through the sewer system.

Residential sewer rates are structured as fixed charges per dwelling unit because residential water use often includes substantial outdoor irrigation that does not enter the sewer system. If sewer charges were directly tied to total residential water use, customers could be charged sewer fees for water used for landscaping, swimming pools, or other outdoor purposes that never reaches the wastewater system.

Proposition 218 Compliance
Proposition 218 requires that property-related fees such as sewer rates:
• not exceed the cost of providing the service; and
• allocate costs among properties in proportion to the demand placed on the system.

The City’s Water and Sewer Cost-of-Service Study evaluates wastewater system costs and allocates those costs among customer classes using established cost-of-service principles. The resulting rates reflect each customer class’s proportionate share of wastewater system costs.

Proposition 218 does not require utilities to determine sewer rates on a parcel-by-parcel basis.

Instead, the law permits utilities to allocate costs among customer classes with similar service characteristics so long as the resulting rates are proportional to the cost of providing service.

Based on the cost-of-service analysis, the proposed sewer rates comply with Proposition 218 requirements and allocate wastewater system costs proportionally among customer classes.

Conclusion
Based on the cost-of-service analysis documented in the Water and Sewer Cost-of-Service Study, the proposed sewer rates allocate wastewater system costs among customer classes in ATTACHMENT 2
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proportion to the demand those classes place on the system. The use of customer classes, including classification of laundromat operations within the commercial customer class, is a standard and accepted utility rate-setting practice and is consistent with the requirements of Proposition 218. Accordingly, the information presented in the objection does not demonstrate that the proposed sewer rates exceed the cost of providing service or allocate costs in a manner that is disproportionate under Article XIII D of the California Constitution.

OVERALL CONCLUSION
After reviewing all written objections, staff conclude that none of the objections demonstrate that the proposed water or sewer rates fail to comply with the requirements of Proposition 218. The objections primarily raise concerns related to affordability, policy preferences, comparative rate outcomes among customer classes, or interpretations of how costs should be allocated to individual parcels. While several objections include detailed calculations or comparisons of rate impacts, those analyses do not demonstrate that the proposed rates exceed the cost of providing service or that the rates allocate costs in a manner inconsistent with the proportionality requirements of Proposition 218.

The Water and Sewer Cost-of-Service Study documents that the proposed rates do not exceed the cost of providing service, allocate costs proportionally among customer classes based on measurable service characteristics, and were developed through a process that satisfies all procedural and noticing requirements of Proposition 218.

Accordingly, while the City Council may consider the objections as part of its policy deliberations, the objections do not present a legal basis to reject or invalidate the proposed rates under Proposition 218.

ATTACHMENT 2
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Date: 2-12-26
Dear City Clerk,
I am the owner of the property identified below and a ratepayer for City of West Sacramento water and sewer services. Pursuant to Article XIII D of the California Constitution (Proposition 218), this letter constitutes my formal written protest of the proposed water and sewer rate increases currently under consideration. You can copy and paste.

I object to the proposed rate increases because they place an unreasonable financial burden on existing residents and small businesses and because the City has not adequately demonstrated that the increases are proportionate, unavoidable, or the result of properly paced infrastructure planning relative to recent growth. I further object to shifting the financial consequences of past development and capital planning decisions onto current ratepayers without exhausting reasonable alternatives, including grants and development-aligned funding mechanisms.

For these reasons, I formally protest the proposed water and sewer rate increases and request that this protest be counted toward the determination of whether a majority protest exists under Proposition 218.

Sincerely,
Praperty Owner Name: MarTiN SwiNgle
Property Address: 337 Bridge place
Assessor's Parcel Number (APN): 045-330-043-000
Eirait
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Date: 2-12-26
Dear City Clerk,
I am the owner of the property identified below and a ratepayer for City of West Sacramento water and sewer services. Pursuant to Article XIII D of the California Constitution (Proposition 218), this letter constitutes my formal written protest of the proposed water and sewer rate increases currently under consideration. You can copy and paste.

I object to the proposed rate increases because they place an unreasonable financial burden on existing residents and small businesses and because the City has not adequately demonstrated that the increases are proportionate, unavoidable, or the result of properly paced infrastructure planning relative to recent growth. I further object to shifting the financial consequences of past development and capital planning decisions onto current ratepayers without exhausting reasonable alternatives, including grants and development-aligned funding mechanisms.

For these reasons, I formally protest the proposed water and sewer rate increases and request that this protest be counted toward the determination of whether a majority protest exists under Proposition 218.

Sincerely,
Property Owner Name:MarTiN SwiNgle
Property Address: 3557 Bridgeway Lakes DN
Assessor's Parcel Number (APN):045-831-007-000
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ATTACHMENT 4
RESOLUTION NO. 26-23

A RESOLUTION OF THE CITY OF WEST SACRAMENTO

FOLLOWING CONSIDERATION OF TIMELY SUBMITTED WRITTEN OBJECTIONS AND

CITY RESPONSES AND DETERMINING TO PROCEED TO
THE PROPOSITION 218 PROTEST HEARING ON MARCH 18, 2026
WHEREAS, in 2024, the California Legislature adopted Assembly Bill ("AB") 2257, which created a set of procedures that local agencies can elect to follow when adopting rates pursuant to Proposition 218. The purpose of AB 2257 is to create an exhaustion of administrative remedies procedure that, if a local agency chooses to implement, requires ratepayers to bring a Written Objection regarding a proposed property-related fee to the local public agency governing body’s attention prior to the deadline established by the local public agency as part of the rate process. The purpose of AB 2257 is also to provide an opportunity for the local public agency to address or resolve the timely received Written Objection(s) before its governing body makes a final decision on whether to establish a new, or amend a current, property-related fee or special assessment pursuant to Proposition 218. AB 2257 became effective January 1, 2025; and
WHEREAS, on November 19, 2025, the City Council adopted Resolution 25-121 Establishing A Procedure For Ratepayer And Property Owner Objections To Proposed Utility Fees Or Special Assessments, consistent with the procedures required by Assembly Bill 2257 (Government Code section 53759.1, et seq.), which requires any property owner or ratepayer that may wish to bring a judicial action challenging the rates compliance with Article XIII D of the California Constitution to submit a Written Objection to the proposed water and sewer rates prior to the deadline established by the City Council as part of the ratemaking process. The Written Objection must include all of the information specified in the Proposition 218 Notice. Prior to or during the Proposition 218 Protest Hearing, the City must respond to all timely submitted Written Objections, in writing, including the grounds for which a challenge is not resulting amendments to the proposed rates, and the City Council must consider all Written Objections and City responses. Any judicial action or proceeding to challenging the water and sewer rates shall be subject to the time limits and requirements set forth in Government Code sections 53759.1 and 53759.2; and
WHEREAS, pursuant to Assembly Bill 2257, if the City complies with the requirements of Government Code section 53759.1, then ratepayers must bring a written objection regarding the proposed water and sewer rates to the City's attention prior to the deadline established by the City as part of the ratemaking process and any judicial action or proceeding to review, invalidate, challenge, set aside, rescind, void, or annul the water and sewer rates shall be subject to the requirements set forth in Government Code sections 53759.1 and 53759.2; and WHEREAS, in compliance with Government Code section 53759.1, the City did all of the following:
1) On November 19, 2025, the City Council adopted Resolution No.25-121, electing to follow the procedures of Assembly Bill 2257, codified at Government Code sections 53759.1 and 53759.2.
2) The City established a deadline of February 19, 2026 to submit Written Objections to the proposed water and sewer rates.
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ATTACHMENT 4
3) On January 2, 2026, the City made its proposed water and sewer rates, the Rate Study, the Proposition 218 Notice, which includes the written basis for the water and sewer rates required by Government Code section 53759.1, a bill calculator, and a list of FAQ s and answers available to the public on its website. This date is more than 45 days before the February 19, 2026 deadline to submit a written objection. 4) On January 2, 2026, the Proposition 218 Notice was mailed to all property owners and customers of record. This date is more than 45 days before the February 19, 2026, deadline to submit a written objection, and more than 45 days before the March 18, 2026 Proposition 218 Public Hearing.
5) The posted and mailed Notice fully complied with the requirements of Proposition 218 and contained the following information:
a. A link to the Rate Study
b. A prominently displayed statement that all written objections must be submitted to the City by the February 19, 2026 4:00PM deadline and that a failure to timely object in writing bars any right to challenge the proposed water and sewer rates in court.
c. All substantive and procedural requirements for submitting a written objection to the proposed water and sewer rates.

6. The City has, therefore, provided at least 45 days for a ratepayer or property owner to review the proposed water and sewer rates and the Rate Study and to timely submit to the City a Written Objection to the water and sewer rates that specifies the grounds for alleging that the water and sewer rates do not comply with Proposition 218 or any other applicable law.

WHEREAS, by the February 19, 2026, deadline for Written Objections to be received by the City, the City had received a total of 89 timely submitted Written Objections that complied with the substantive and procedural requirements detailed in the Proposition 218 Notice; and WHEREAS, the City considered and responded in writing to all timely submitted Written Objections, including the grounds for which a challenge is not resulting in amendments to the proposed rates, and the City's response explained the substantive basis for retaining the proposed fee; and
WHEREAS, during the Proposition 218 Public Hearing on March 18, 2026, City staff presented all timely submitted Written Objections and City responses to the City Council.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of West Sacramento, as follows:

1. The City Council hereby finds that the facts set forth in the recitals to this Resolution are true and correct and that the staff report and attachments presented to the City Council and the public this date are true and correct, and hereby incorporates the recitals and the staff report and attachments by reference, to establish the factual basis for the City's adoption of this Resolution.
960
ATTACHMENT 4

2. The City Council hereby finds that the City and City Council have complied with the requirements of AB 2257, located at Government Code section 53759.1.

3. The City Council hereby finds that this resolution is exempt from CEQA as there is no possibility for causing a significant effect on the environment, per CEQA Guideline Section 15061(b)(3).

4. The City Council hereby finds that the City has considered and responded to all timely received Written Objections and has presented them to the City Council during the March 18, 2026 Proposition 218 Public Hearing.

5. Pursuant to Government Code section 53759.1(d), in exercising its legislative discretion, the City Council hereby determines and finds, after presentation and consideration of all timely received Written Objections and City responses, that the Written Objections and City responses do not warrant clarifications to the proposed fee, that the written objections and City responses do not warrant a reduction to the proposed fee , and that further review is not required.

6. Pursuant to Government Code section 53759.1(d), in exercising its legislative discretion, the City Council hereby determines and finds, after presentation and consideration of all timely received Written Objections and City responses, that the City Council can proceed with the Proposition 218 Protest Hearing.

PASSED AND ADOPTED on this 18th day of March, 2026. I, Martha Guerrero, Mayor of the City of West Sacramento, hereby certify the foregoing resolution was introduced and passed at a regular meeting of the City Council by the following roll call vote:

AYES:

NOES:

ABSTAIN:

ABSENT:
_____________________________
Mayor, Martha Guerrero
ATTEST:

By: _________________________________________
Aaron Laurel, City Manager
APPROVED AS TO FORM:

By: __________________________________________
Jeff Mitchell, City Attorney
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RESOLUTION 26-24

A RESOLUTION OF THE CITY OF WEST SACRAMENTO

DETERMINING THAT THE PROPOSED WATER AND SEWER RATES
COMPLY WITH CALIFORNIA'S PROPOSITION 218, THAT THERE WAS NO MAJORITY

PROTEST AGAINST THE PROPOSED WATER AND SEWER RATES,

AND ADOPTING THE PROPOSED WATER AND SEWER RATES
WHEREAS, the City of West Sacramento ("City") imposes water and sewer rates on its customers to cover the cost of providing water services. The City contracted with HF&H Consultants ("Water Consultant") to develop the December 22, 2025 Water and Sewer Cost-ofService Study ("Rate Study"). The Rate Study includes a comprehensive cost of services review of the City's water and sewer rates that are compliant with all legal requirements, including Article XIII-D, Section 6 of the California Constitution ("Proposition 218"); and WHEREAS, the City took numerous steps at workshops and public meetings throughout this process to ensure public transparency and participation, including:

On October 28, 2025, the City hosted a Utility Rates 101 Informational Webinar for members of the public to learn about City water and sewer services, as well as how customer rates are determined. The Webinar was hosted virtually, via Zoom or phone, and has been available online for viewing since the Webinar was originally hosted.

On November 12, 2025, the City's Environment & Utilities Commission heard an item for a workshop on the water and sewer rate study and the proposed rates.

The workshop presented information on the status, costs, projections, and proposed rate structures. The Commission received a presentation from City staff, conducted the workshop, and provided feedback to City staff on the recommended rates for water and sewer utilities.

During the November 19, 2025, City Council meeting, the City Council adopted Resolution No. 25-121, Establishing A Procedure For Ratepayer And Property Owner Objections To Proposed Utility Fees Or Special Assessments, consistent with Government Code sections 53759.1 and 53759.2. These procedures help ensure the public has a clear opportunity to voice any potential concerns about non-compliance with Proposition 218 or any other law, as well as gives the City an opportunity to respond before it considers the proposed rates. The public was given the opportunity to comment on this item.

On December 3, 2025, the City Council heard an item for a workshop on the water and sewer rate study and the proposed rate adjustments. City staff gave a presentation on the proposed rate adjustments. Council gave feedback and direction on the desired scenario, authorized the City Manager or designee to proceed with the Proposition 218 noticing process, and gave approval to begin the Proposition 218 process using the water and sewer rates set forth in Exhibit A to this resolution.

On Friday, January 2, 2026, the City mailed the Proposition 218 Notices (including the water and sewer rates set forth in Exhibit A) to property owners of ATTACHMENT 5
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4902-0448-7569.3 007203.039
record and water and sewer customers of record, which is at least 45-days before Public Hearing on March 18, 2025.

On February 3, 2026, the City hosted an informational open house in preparation for the Public Hearing. City staff and financial consultants answered questions from the public one-on-one. This provided an opportunity for members of the public to gain insight into system improvements and understand how proposed rates may impact their bill. Residents also learned more about water and sewer service, proposed rate increases, and the investments needed to ensure reliable service for years to come.

On February 7, 2026, the City hosted a second informational open house in preparation for the Public Hearing. City staff and financial consultants answered questions from the public one-on-one. This provided an opportunity for members of the public to gain insight into system improvements and understand how proposed rates may impact their bill. Residents also learned more about water and sewer service, proposed rate increases, and the investments needed to ensure reliable service for years to come.

During the March 18, 2026 Proposition 218 Public Hearing, City staff presented to the City Council all timely received written objections and City responses, the City Council considered all timely received written objections and City responses before the close of the public hearing, and in exercising its legislative discretion determined to proceed with the Proposition 218 Public Hearing.

WHEREAS, the Rate Study and Exhibit A to this resolution sets forth proposed water and sewer rates that do not exceed the City's reasonable cost of service, proportionally allocates those costs to the City's customers, complies with Proposition 218, and includes the written basis for the proposed water and sewer rates; and WHEREAS, pursuant to the provisions of Proposition 218, prior to extending, imposing or increasing water and sewer rates, the City must hold a public hearing to consider the rates and must mail written notice of the public hearing ("Proposition 218 Notice") to impacted rate payers and property owners at least 45 days prior to the public hearing to consider such modifications to the water and sewer rates together with an explanation of:
(1) the amount of the proposed rates
(2) the basis on which the rates are calculated
(3) the reason for the rate modifications
(4) the date, time and place of a public hearing to consider the rate modifications; and WHEREAS, under Proposition 218, ratepayers and owners of property receiving City water and sewer services may protest the proposed rates by submitting a written protest prior to the close of the public hearing. While both ratepayers and property owners may submit protests, pursuant to Government Code section 53755, only one protest per parcel will be counted; and
ATTACHMENT 5
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WHEREAS, additionally, the City is choosing to comply with Assembly Bill 2257 (Government Code section 53759.1, et seq.), which requires any property owner or ratepayer that may wish to bring a judicial action challenging the rates compliance with Article XIII D to submit a written objection to the proposed water and sewer rates prior to the deadline established by the Council as part of the ratemaking process. The Council adopted Resolution No. 25-121 on November 19, 2025, adopting and establishing the procedures required by Assembly Bill 2257; and
WHEREAS, notice of the proposed water and sewer rates has been published on March 6, 2026 in substantial compliance with Government Code section 54354.5, in the News-Ledger as evidenced by Proof of Publication on file with the City Clerk with the subsequent notice published on March 13, 2026; and
WHEREAS, during the March 18, 2026, Proposition 218 Public Hearing, City staff presented to the Council all timely received Written Objections and City responses, and the Council, exercising its legislative discretion, found and decided by adopting Resolution No. 26- 23 that the City complied with the requirements of Government Code section 53759.1 and to complete the Proposition 218 Public Hearing; and
WHEREAS, on March 18, 2026, the City conducted a Proposition 218 Protest Hearing, considered all information related to this matter, including any supporting reports by City staff, any written comments or protests submitted by members of the public, all written objections and responses, all comments provided during the meeting, and at the conclusion of the hearing determined that a majority protest did not exist.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of West Sacramento, as follows:

1. The City Council hereby finds that the facts set forth in the recitals to this Resolution are true and correct, finds that the staff report and attachments are true and correct, incorporates the recitals and staff report and attachments to the staff report herein by reference, and finds the above establishes the factual basis for the City Council's adoption of this Resolution.

2. The City Council hereby finds that this Resolution is not a project as defined by Public Resources Code Section 21065. Pursuant to CEQA Guidelines section 15378(b)(4), the Resolution creates government funding mechanisms which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. This Resolution is policy-oriented and would create a funding mechanism for the development of future water facilities. When and if specific water projects are developed and proposed for implementation, the environmental impacts of such facilities would be evaluated in accordance with CEQA and City practice at that time. If found to be a project under CEQA, the resolution is exempt from CEQA as there is no possibility for causing a significant effect on the environment, per CEQA Guideline Section 15061(b)(3). Finally, the action is exempt from CEQA Guidelines Section 15273(a) as the resolution is adopting updated water and sewer rates that are necessary to meet the operating, maintenance, and capital project funding needs of the City's water and sewer utilities and to maintain service within the City's existing service area.

ATTACHMENT 5
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3. The City Council hereby determines that the water and sewer rates set forth in Exhibit A to this Resolution are in compliance with the California Constitution Article XIII D and California Government Code sections 53755 and 53759.1.

4. The City Council finds and determines that, based on the entire record before the City Council, including but not limited to the Rate Study and the Staff Report and attachments thereto, which are incorporated by reference as if fully set forth herein:
a. Revenues derived from the proposed water and sewer rates will not exceed the funds required to provide the respective water service. b. Revenues derived from the proposed water and sewer rates will not be used for any purposes other than that for which they were imposed. c. The amount of the water and sewer rates imposed upon any parcel of land or person as an incident of property ownership will not exceed the proportional cost of the service attributable to the parcel. The water and sewer rates imposed for a service or services that are actually used by, or immediately available to, the owner of the property in question.
d. The water and sewer rates are not being imposed for general government services.

5. After receiving and considering documentary and oral testimony, the City Council declared the public hearing closed and considered whether written protests were received from property owners or customers of record representing a majority of owners of the identified parcels.

6. There are 17,979 parcels within the City. For a majority protest, 8,991 protests must be received by the City. The City Clerk has counted _____ written protests, and based upon this number of written protests, the City Council hereby finds that a majority protest to the water and sewer rates does not exist.

7. The City Council hereby adopts the water and sewer rates set forth in Exhibit A to this Resolution, and finds the rates are not discriminatory or excessive, and will be sufficient under Government Code Section 54515 and will comply with the provisions of Government Code Section 54340 et seq. and will be sufficient under the provisions or covenants of any outstanding revenue bonds of the City payable from the revenues of the enterprise and will be in compliance with law.

8. The City Council hereby directs the City Manager, or his designee, to take all appropriate actions to carry out the purpose and intent of this Resolution.

9. Levy of Charges. Pursuant to Title 5, Division 2, Part 1, Chapter 6 of the Government Code, the City's police power, and Sections 8.08.150, 13.04.591, and 13.08.386 of the West Sacramento Municipal Code, the increased rates are hereby approved.

10. Delinquent Charges Constitute a Lien. Delinquent charges and penalties when recorded in accordance with the provisions of the Revenue Bond Law (Government Code Section 54300 et. seq.) and Sections 13.04.710 and 13.08.460 of the West Sacramento Municipal Code shall constitute a lien upon the real property served.

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11. If any provision, section, paragraph, sentence or word of this Resolution, or the application thereof to any person or circumstance, is rendered or declared invalid by any court of competent jurisdiction, the remaining provisions, sections, paragraphs, sentences or words of this Resolution, and their application to other persons or circumstances, shall not be affected thereby and shall remain in full force and effect and, to that end, the provisions of this Resolution are severable.

12. Effective Date. This Resolution shall take effect on March 18, 2026. The water and sewer rates set forth in Exhibit A to this Resolution will go into effect on April 1, 2026.

PASSED AND ADOPTED on this 18th day of March, 2026. I, Martha Guerrero, Mayor of the City Council for the City of West Sacramento, hereby certify the foregoing resolution was introduced and passed at a regular meeting of the City of West Sacramento City Council by the following roll call vote:

AYES:

NOES:

ABSTAIN:

ABSENT:
_____________________________
Mayor, Martha Guerrero
ATTEST:

By: _________________________________________
Aaron Laurel, City Manager
APPROVED AS TO FORM:

By: __________________________________________
Jeff Mitchell, City Attorney
ATTACHMENT 5
966

EXHIBIT A
TABLE 1: Proposed 5-Year Schedule of Monthly Water Fixed Charges The fixed charge covers the cost of providing service, including water treatment, system maintenance, meter reading, billing, and customer service. Table 1 shows the current and proposed monthly water service charge by meter size over the next five years. Most city water customers have a 3/4-inch or 1-inch metered connection. 111111111111111111
Up to 3/4" $24.61 $35.93 $41.32 $43.80 $45.99 $48.29
1" $40.98 $58.42 $67.18 $71.21 $74.77 $78.51

1.5" $81.78 $114.65 $131.85 $139.76 $146.75 $154.09
2" $131.02 $182.12 $209.44 $222.01 $233.11 $244.77
3" $262.13 $362.06 $416.37 $441.35 $463.42 $486.59
4" $409.61 $564.48 $649.15 $688.10 $722.51 $758.64
6" $818.94 $1,126.78 $1,295.80 $1,373.55 $1,442.23 $1,514.34 8" $1,310.45 $1,801.53 $2,071.76 $2,196.07 $2,305.87 $2,421.16 10" $1,883.65 $2,588.74 $2,977.05 $3,155.67 $3,313.45 $3,479.12 TABLE 2: Proposed 5-Year Schedule of Monthly Water Consumption (Volumetric) Rates Table 2 shows the current and proposed monthly water consumption (volumetric) rate, which is the amount each Residential and Commercial customer pays per hundred cubic feet of water used. NOTE: The consumption water rate is in dollars per hundred cubic feet ($/hcf). One hundred cubic feet is equal to 748 gallons.

CONSUMPTION
RATES
All Cultalllers
$/HCF (1 HCF = 748 gallons) $2.43 $2.46
TABLE 3: Proposed 5-Year Schedule af Monthly Water Flat Rates $2.83 $3.00 $3.15 $3.31
Table 3 shows the current and proposed monthly water flat rate over the next five years for customers with a meter that does not measure consumption.

RAT WATER RATES ($/month) MM
Relklentlal (1, 2, ar 3 dwellng units)
Up to 3/4" $59.23
1" $58.26
Additional Dwelling Units $33.61
rii'fi'idi'firi+tii'fi'iit¼i#H
$71.08 $81.74 $86.64 $90.97
$69.91 $80.40 $85.22 $89.48
$40.33 $46.38 $49.16 $51.62
I I
$95.52
$93.95
$54.20
Table 4. Proposed 5-Year Schedule of Monthly Sewer Fixed Charges and Volumetric Rates far All Customers Table 4 shows the current and proposed monthly sewer service charges and volumetric rates over the next five years.

The volumetric sewer rate is in dollars per hundred cubic feet ($/hcf). NOTE: These rates and charges do not include Sacramento Area Sewer District treatment costs that are included as a pass-through on customer bills.

Customers with a Fixed Charge and a Flat
ar Valumetrlc Rate
Relldentlal
Single-Family Fixed Charge
Multi-family Rxed Charge (per dwelling unit)
Co1111111rclal
Rxed Charge per Account
Metered Rate per HCF
other Nan-Relldentlal (Nan-Metered)
Rxed Charge per ESD•
Mffif&i,fiMMi,fiiNi'kiMi'ffi
I $10.881 $19.851 $25.81 I $32.261 $35.491
I $8.161 $13.531 $17.591 $21.99 I $24.191
I $5.40 I $3.191 $4.151 $5.191 $5
.
71 I I $3.161 $2.41 I $3.141 $3.931 $4.321
I $10.881 $19.851 $25.81 I $32.261 $35.491
I I
$38.33
$26.13
$6
.
17 $4.67
$38.33
*ESD = 1 Equivalent Single-Family Dwelling as defined by Sacramento Area Sewer District in the Treatment and Resource Recovery Ordinance
ATTACHMENT 5
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CITY COUNCIL AGENDA REPORT
MEETING DATE: March 18, 2026 ITEM # 13
SUBJECT:

PUBLIC HEARING AND CONSIDERATION OF FIRST READING OF
ORDINANCE 26-1 AMENDING TITLE 8 (HEALTH AND SAFETY), TITLE 17 (ZONING) AND TITLE 18 (FLOODPLAIN MANAGEMENT) OF THE

MUNICIPAL CODE
INITIATED OR REQUESTED BY: REPORT COORDINATED OR PREPARED BY:
[ ] Council [ X ] Staff
[ ] Other
Daniel Berumen, AICP, Senior Planner
Community Development Department
ATTACHMENT [ X ] Yes [ ] No [ ] Information [ ] Direction [ X ] Action

OBJECTIVE
The purpose of this item is to facilitate the Council’s consideration of Ordinance 26-1 regarding proposed amendments to Title 8 (Health and Safety), Title 17 (Zoning), and Title 18 (Floodplain Management) of the Municipal Code.

RECOMMENDED ACTION
Staff respectfully recommends that the City Council:

1. Waive first reading and read by title only Ordinance 26-1 amending Title 8 (Health and Safety), Title 17 (Zoning), and Title 18 (Floodplain Management) of the Municipal Code; and

2. Find that the project is exempt from California Environmental Quality Act (CEQA) review pursuant to §15305 (Minor Alterations in Land Use Limitations) and §15061(b)(3) (where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment) of the CEQA Guidelines.

BACKGROUND
The Municipal Code requires regular updates to keep up with ongoing changes in the City. There are existing regulations that are no longer applicable that require updating due to changes in State law, or that require process improvements. No changes to the zoning of property are proposed in this omnibus code update process.

The City’s General Plan 2035 and Housing Element call for code improvements to support housing production, economic development, increased public engagement, and environmental quality. Updating the code helps implement these long-term policy goals and ensures that zoning regulations do not become a barrier to achieving adopted plans. There are also amendments based on feedback from City staff and the public that make sense to implement to improve efficiency and increase the public’s knowledge of planning efforts. Staff’s proposed changes to the Municipal Code are noted and summarized below:

1. Chapter 8.18.040 – Amending definition of hazardous materials

2. Chapter 17.09.020 – Allowing Low Barrier Navigation Centers in Commercial and Mixed-Use Zones

3. Chapter 17.22.030– Amending the language for Development on Lots Divided by Zone Boundaries

4. Chapter 17.27.050 (G) – Adding AB 2097 language to Parking Reductions

5. Chapter 17.30.100(A)(2)(a) – Compliance with state law regarding parking for emergency shelters

6. Chapter 17.31.080 – Amending the definition of Sign Face (Temporary Signage)

7. Chapter 17.31.090 – Adding General Requirements as new subsection A (On-Site Temporary Signs)

8. Chapter 17.31.110 – Adding Statement of Responsibility (Temporary Signage)

9. Chapter 17.35.040(1)(d) – Amending the language for Expiration of Application

10. Chapter 17.35.040(A)(2) – Amending the language for Complete Applications

11. Chapter 17.35.060 (A)(2) – Include all site addresses in mailed notices

12. Chapter 17.35.100D (Extensions) – Zoning Administrator extension of permits and approvals

13. Chapter 17.51.020 (Definitions) – Adding definition of Low Barrier Navigation Center

14. Chapter 18.20.040 (Floodplain Management) – Standards on manufactured homes, remove section B(2) On February 19, 2026, the Planning Commission held a public hearing on this item. After staff’s presentation, the public hearing was opened. Staff presented one minor change to the ordinance language for amendment #2 which was noted for the record via a desk memo. No public comment was provided on this item. The planning commission had no questions for staff. Resolution 26-1PC was unanimously approved for City Council adoption of this item. 968
Omnibus Code Amendments
March 18, 2026