CITY COUNCIL WORKSHOP AGENDA PACKET 4-21-26

Water Resources Economics Page 1 Memo To: Nick Ajluni, Assistant Director of Public Works – City of Pleasanton From: Nancy Phan, Principal Consultant – Water Resources Economics, LLC Date: April 1, 2026 Re: Sewer Rate Scenarios Technical Memo INTRODUCTION Water Resources Economics, LLC (WRE) was engaged by the City of Pleasanton (City) to conduct a sewer rate study to develop an updated multi-year schedule of sewer rates. The purpose of the study is to evaluate the financial condition of the sewer enterprise, ensure long-term financial sustainability, and establish rates that equitably recover the cost of providing service to all customer classes. City staff is seeking City Council input on the proposed sewer rates, rate structure changes, and policy considerations to complete the sewer rate study process. The results of this analysis are intended to support the development of a sewer rate structure that is financially sufficient, cost-based, and consistent with the City’s policy objectives. The proposed sewer rates have been developed with the following objectives: • Maintaining financial sufficiency to support ongoing operations and maintenance (O&M) and capital improvement program (CIP) needs to implement the Sewer System Management Plan (SSMP) • Stabilizing system condition over the five-year planning horizon (FY 2026 to FY 2030) • Aligning City collection rates with cost-of-service principles • Simplifying the rate structure to improve transparency and consistency with peer agencies SEWER FINANCIAL PLAN Maintain Scenario and Funding Needs At the February 17 Council meeting, the City Council selected the Maintain financial planning scenario, which is designed to stabilize the condition of the sewer system over a five-year period from FY 2026 through FY 2030. This scenario reflects a balanced approach that addresses critical near-term infrastructure needs while maintaining a manageable rate impact. To meet the objectives of the Maintain scenario, the sewer enterprise requires additional funding from both rate revenue and debt financing sources. These funding levels are necessary to support ongoing operations, implement planned capital improvements, and maintain key financial performance metrics, such as reserve balances and debt coverage requirements (for proposed debt issuances). The funding requirements for the Maintain scenario include: • $27.4 million in additional rate revenue • $28.0 million in debt financing Financial Plan Changes ATTACHMENT 1 Page 11 of 27