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She briefly discussed increases of the average sewer residential account for everybody other than Ruby Hills which is serviced by DSRSD. She then briefly described the water rate increases of $10.73 every two months or$5.37 per month starting October 15, 2015. Regarding discounts, the City provides a 20% senior discount at age 65 as well as a low income discount of 30%. It is proposed that the senior discount be reduced from 20% to 15% and that the low income discount remains as is. Both discounts are subject to a 4100 cubic feet maximum. If the customer consumes more than this in a two-month period, they do not receive the discounts. The General Fund subsidy will be about $310,000 and it is currently $370,000, so there is some reduction in that subsidy. Proposition 218 requires fair and equitable rates so one ratepayer cannot subsidize another ratepayer. Ms. Wagner then discussed Ruby Hill local sewer rates, stating the City maintains the sewer collection system within Ruby Hill and services are provided contractually by the City of Livermore and in that contract, it allows the City to charge an administrative fee of $4.32 and also allows the City to charge the local sewer collection fee which is about $24, increasing to $25. Per the study, the administrative fee does not cover costs to maintain the collection system. In order to have fair and equitable rates, it is proposed that Ruby Hill customers fee transition to the full single family collection charge over the next 2 years. Effective October 15, 2015, their fee would go from $4.32 administrative fee to $12.60, and on July 1, 2016, the charge would be increased to match the full single family rate effective at that time. Regarding future increases from outside agencies such as Zone 7, DSRSD and the City of Livermore, staff is proposing that 100% of the annual Zone 7 water rate increases are passed through as well as 100% of DSRSD and the City of Livermore Regional Sewage Rate increases. Ms. Wagner then presented a slide and briefly discussed how the City compares with neighboring agencies, noting there are spreads between the agencies for water and sewer, especially given equipment and gravity flow systems. Regarding outreach to ratepayers since the Council reviewed the item on July 21, 2015, the Proposition 218 notice was mailed to ratepayers on proposed changes on August 1st. Staff held 4 public workshops and meetings with the Chamber of Commerce and the Economic Vitality Committee to educate ratepayers on changes to water and sewer rates. Consistent response was received from the business community who were appreciative that the proposed rates were fair and equitable among classifications. They also appreciated that the rates encourage a fiscally sound water and sewer utility by funding repair and replacement of the system, and they were very excited about implementation of a recycled water system that benefits all customers. The City did receive opposition from seniors regarding the decrease in the senior discount. To date the Council has received 12 written protests as of 2PM today regarding this item. The Council can decide to maintain the discount at 20% and the annual cost to do that is $60,000 which would take the $310,000 subsidy to $370,000 annually. Staff also received opposition from sewer ratepayers in the Ruby Hill area on the increase from $4.32 to the same sewer rates of similar City customers. The Council can decide to not increase their rates; however, Proposition 218 does not allow one ratepayer to subsidize another so the General Fund will have to pick up that subsidy at an annual cost of approximately $110,000. Lastly, the City had initially received 90 written protests and this increased to 144 protests as of 2:00 p.m. today. The City Clerk will advise if any additional protests have been received. Staff recommends that the City Council hold the public hearing and accept 144 written protests received and those included at this public hearing. Assuming there are not more than 50% written protests which would be approximately 13,000 written protests, staff recommends the Council adopt by resolution the proposed changes in the water and sewer rates and amend the Master Fee Schedule to become effective October 15, 2015. City Council Minutes Page 21 of 28 October 6,2015