CITY COUNCIL REGULAR AGENDA PACKET

Page 1 of 9 Item #13 CITY COUNCIL AGENDA REPORT October 7, 2025 Public Works - Utilities Division TITLE: PUBLIC HEARING: ADOPT RESOLUTIONS TO AMEND THE MASTER FEE SCHEDULE FOR WATER RATES AND CONNECTION FEES AND SEWER RATES, EFFECTIVE JANUARY 1, 2026 SUMMARY In September 2024, the City contracted with Water Resources Economics, LLC (WRE) to perform a comprehensive water rate study to establish cost-based, fair, and legally defensible rates and connection fees to support the long-term financial sustainability of the City's water program. The proposed water rates and connection fee schedules are included in the 2025 Water Rate Study report and the Proposition 218 Public Hearing Notice. The impact on customer bills is discussed in the Discussion section of this agenda report. Per Proposition 218, the City must notify all customers of record of proposed changes to water rates and hold a public hearing to consider adoption. If a majority of customers submit a formal written protest, the proposed rate changes cannot be adopted. If a majority of formal written protests are not received, the City Council may adopt the proposed changes, but is not obligated to do so. The City mailed its Proposition 218 Public Hearing Notice to all customers on August 1, 2025, with a public hearing date set for October 7, 2025. In addition to proposed water rates, the notice included a proposed annual Consumer Price Index (CPI) increase for sewer rates. Later this year, the City will conduct a sewer rate study to determine any necessary rate adjustments moving forward to meet the City's sewer collection system needs. Although the proposed changes to the water connection fees are not subject to Proposition 218 public notification and hearing requirements, they have been included for informational purposes. RECOMMENDATION 1. Hold a public hearing to consider proposed water and sewer rates. 2. Adopt resolutions to amend the Master Fee Schedule for water rates and connection fees and sewer rates, effective January 1, 2026 BACKGROUND The City provides water service to its customers for residential, commercial, industrial, and irrigation type uses. In November 2022, the City elected to discontinue using its groundwater supply wells because of the presence of per- and polyfluoroalkyl substances (PFAS) at concentrations above the upcoming regulatory requirements. Since tha time, the City has purchased 100 percent of its potable water supply from the Zone 7 Water Agency (Zone 7). The City purchases its recycled water supply from the Dublin San Ramon Services District (DSRSD)- East Bay Municipal Utility District (EBMUD) Recycled Water Authority (DERWA) and the City of Livermore. The City owns, operates, and maintains distribution systems that Page 208 of 376