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Annual Consumer Price Index (CPI) Rate Adjustments In order to remain fiscally solvent in the Sewer Fund, staff is recommending starting July 1, 2016, the City annually increase the above sewer rates based on the increase in the consumer price index (CPI). It is proposed that the City Manager be authorized and directed to increase these rates and charges based upon the percentage change reflected in the Annual Consumer Price Index (CPI) — All Urban Consumers for the San Francisco - Oakland -San Jose, CA area available as of March 31. The rates will be recalculated in April of each year and will be effective the following July 1 of that year. Customers will be notified on the billing they receive prior to July 1. Pass Through of Future Regional Rate Increases The City does not own or operate a wastewater treatment plant. Instead a majority of the City's wastewater is treated by Dublin San Ramon Services District (DSRSD) and the remaining area is treated by City of Livermore. Government Code §53756 (AB 3030 [2008]) permits the City to automatically pass- through the increases or decreases in DSRSD and City of Livermore wholesale regional sewer treatment charges. This law still requires that the City provide rate payers with notice 30 days prior to such automatic adjustments taking effect. And, this law only allows for such pass- through for five years until the need for Council reauthorization. The City is proposing that for the next five years anytime DSRSD or the City of Livermore increase their regional sewer rates that apply to Pleasanton customers; the City will notify its customers 30 days prior to such automatic adjustments taking effect. Structural Changes — Ruby Hill Local Sewer Rates The City of Pleasanton is required to maintain the collection system within Ruby Hill which receives treatment services from Livermore. Based on this Pleasanton staff have been charging Ruby Hill customers an administration fee in order to pay Pleasanton for the maintenance of the local collection system. This fee, however, is not sufficient to pay for the costs which the service to Ruby Hill incurs. Given this, the City is proposing to transition the customers in Ruby Hill to the full single family local collection charge over the next two years. Effective October 15, 2015, the Ruby Hills local sewer collection fee will be increased from $4.32 to $12.60 and on July 1, 2016, will be increased to match the full single family rate. Consequently, the City will no longer collect the administration fee from the customers. Staff received several complaints from residents in the Ruby Hills area regarding this increase. They are proposing to protest the increase and are asking the Council to leave their rate at $4.32 rather than increasing their rate to the same rate as the other sewer customers in the sewer utility. Proposition 218 does not allow subsidies amongst rate payers; all rates must be fair and equitable and reflect the cost of services provided to that ratepayer. If the Council decides not to implement the same local sewer rates for the Ruby Hills area, then the City General Fund will have to fund this subsidy equal to approximately $110,000 per year. Page 15 of 18