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THE CITY OF 16 PLEASANTON. MEMORANDUM Date: November 2, 2023 To: Mayor and City Council Id From: Gerry Beaudin, City Manager Norm Dorais, Interim Director of Public Works Subject: Continued from September 19, 2023 City Council Meeting - Proposed Water and Sewer Rate Increases and Adopt Resolutions to Amend the Master Fee Schedule for Water and Sewer Rates Effective January 1, 2024 Background The September 19, 2023, City Council meeting agenda included Item #13 (Attachment 3) for the City Council to hold a public hearing and consider proposed increases to water and sewer rates. That agenda report included a staff recommendation for rate increases over a three-year period as well as an alternative recommendation to implement only the first two years of the three-year rate study. Following the presentation, the public hearing was opened, during which the City Council accepted public comments and protests (in addition to those previously received); the public hearing was then formally closed. A total of 202 official protests were received (from a total of 22,484 customer accounts). After discussion, the City Council continued the item to its November 7, 2023, meeting, requesting additional information be provided, including a `sensitivity analysis' (discussed below). Since the September 19 City Council meeting, a Pleasanton Bi-Monthly Water Bill Calculator (Attachment 4) and updated Frequently Asked Questions (Attachment 5) were made available. Sensitivity Analysis Staff worked with Raftelis to perform a sensitivity analysis that focused on replenishing the reserve in the near term while addressing ratepayers' concerns about the annual and compounded rate increases. The sensitivity analysis looked at the debt financing assumptions and extending the reserve replenishment to one additional year (four years, instead of three years). Extending the reserve replenishment out to year four and extending the payback period of the $6 million debt to 20 years would allow for the second-year rate revenue adjustment to be lowered to 12%, or 8% lower than the recommended 20% in the second year.