CITY COUNCIL REGULA MEETING AGENDA PACKET _Revised_ 6-2-26

Page 1 of 15 Item #11 CITY COUNCIL AGENDA REPORT June 2, 2026 Public Works - Utilities Division TITLE: APPROVE THE PROPOSED SEWER RATE STRUCTURE, SEWER RATE, AND UPDATED SEWER CONNECTION FEES TO SUPPORT IMPLEMENTATION OF THE SEWER RATE STUDY'S FINANCIAL PLAN SCENARIO 1 - MAINTAIN SUMMARY The City of Pleasanton owns and operates a sanitary sewer collection system serving approximately 21,000 service connections and conveying wastewater to the Dublin San Ramon Services District (DSRSD) and the City of Livermore (for the Ruby Hill service area) for treatment and disposal. In 2025, the City completed its Sewer System Management Plan (SSMP) and a long-term sewer Capital Improvement Program (CIP) to guide sewer program management, support infrastructure sustainability, and reduce the risk of sewer overflows. To maintain financial sustainability as the SSMP is implemented, the City is conducting the 2026 Sewer Rate Study (Rate Study) to evaluate the sewer enterprise’s financial condition and develop cost-based, equitable rates that recover the cost of service across customer classes. On February 17, 2026, the City Council adopted Scenario 1 – Maintain as the financial planning framework for the Rate Study. On April 21, 2026, staff conducted a workshop with the City Council to present the sewer rate structure and preliminary findings of the sewer rate study, including an overview of the proposed sewer rates necessary to implement the Rate Study financial plan’s Maintain Scenario. During the workshop, staff provided information for City Council consideration, including updating sewer rates for condominium and multifamily residential customers to establish a consistent rate structure aligned with DSRSD methodology, revising the sewer rate methodology for commercial and industrial customers to align with DSRSD by providing one collection rate regardless of business classification, continuing the distinction between non-metered and submetered Pleasanton Unified School District customers, and discussing the existing sewer rate discount applied to Ruby Hill customers. Based on the feedback from the City Council, staff is requesting approval of the proposed sewer rate structure and sewer rates necessary to implement the Rate Study’s Maintain Scenario. Staff is also recommending and seeking council approval to update connection fees to support the Maintain Scenario. Approval of these actions will allow staff to finalize the Rate Study, complete the required Proposition 218 noticing and hearing process, and return to City Council for final consideration of rate adoption, with updated rates proposed to take effect on January 1, 2027. Connection fees are not subject to the Proposition 218 process. However, obtaining City Council approval of the updated connection fees concurrently with the sewer rate adjustments, effective January 2027, is essential to support the long-term financial sustainability of the sewer enterprise program. Page 338 of 617