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demand has gone down is a fundamentally different scenario compared to the normal one where all customer segments uniformly drove up the costs, where your method could be defended. I know this is coming at the last hour before the council meeting. However, I think it is critical to do proper due diligence on the concern I raised above to avoid the possibility of an avoidable legal challenge based on hugely disproportionate rate increases that don't seem to align with equitable COS allocation regulatory requirements. On the plus side, we can come up with a pragmatic Prop-218-compliant solution based on our discussion: • 1 validated the approximate $4 million depreciation amount Tamara mentioned on yesterday's call. No one would dispute the need for the city to boost its revenues by such an amount, plus an additional amount,to hire the staff to run its operations for the near term. • Separately, creative solutions exist to address the accounting and operational requirements to replenish the reserve fund. Yet,the total emergency funds needed for 2024 would be much less than the proposed non-uniform 30% rate increase would generate. • Since it is a REDUCED amount, it could be raised without a lengthy Prop 218 process and using a temporary and equitably allocated surcharge plus other city-internal funds borrowings. Simultaneously, the subsequent rate study examining the core rate structures (fixed vs. variable, tier structures, etc.) must be advanced and begun right away. NOTE: The current study preceded the most recent council decision to invest in digging wells for alternative water sources. It calls for a much more significant capital investment than what was factored in the current study.This should be reason enough not to rush rate changes based on the current study other than the temporary surcharges to meet the urgent 2024 needs while the water plans for 2025 and subsequent are worked out. Sincerely, Sanjay Kamat On Mon, Nov 6, 2023 at 1:12 PM Tamara Baptista <tbaptista@cityofpleasantonca.gov>wrote: Hi Sanjay, Thank you for meeting with us and attached are the Questions and Answers for today's meeting. Thanks, 3