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

Page 4 of 15 Over the next four years, the Maintain Scenario will focus on establishing and implementing critical programs for the inspection, maintenance, and repair of the City’s sanitary sewer system. These efforts include system-wide sewer flushing; manhole, force main, and lift station inspection and maintenance; development of a comprehensive fats, oils, and grease (FOG) inspection, prevention, and maintenance program; establishment of emergency response plans; enhanced staff training; and replacement of vehicles and equipment necessary to effectively monitor, operate, and maintain the City’s sanitary sewer infrastructure. Under the Maintain Scenario, planned capital improvements will be implemented in accordance with the City Council-approved Sewer CIP, which was adopted in 2025 based on the SSMP. This program provides the framework for prioritizing and delivering system rehabilitation and replacement projects to maintain regulatory compliance and long-term infrastructure reliability. Over the course of the four-year sewer rate study period, it is typical that staff may need to make adjustments to the 10-year Sewer CIP to address unforeseen conditions, evolving system needs, or emerging regulatory requirements. In such cases, staff will bring forward updates for Council consideration through the annual budget process or the City’s overall CIP programming cycle. To implement the Maintain scenario, the sewer enterprise requires additional funding from both rate revenue and debt financing to support ongoing operations, deliver planned capital improvements, and maintain key financial performance metrics (including reserve balances and debt coverage requirements). The funding requirements for the Maintain scenario include: • $27.4 million in additional rate revenue • $28.0 million in debt financing Financial Plan Changes Following City Council direction, staff refined the timing of O&M costs, CIP implementation, and associated debt issuances to better align with financial advisor recommendations that would put the City in a better position for bond issuance. These updates improve financial feasibility while maintaining the planned investment level. While costs and debt issuance were rephased within the five-year planning period, the total funding needs (additional rate revenue and proposed debt financing) and the Maintain Scenario’s goal of stabilizing system conditions by the end of the planning period remain unchanged. A revised Maintain Scenario CIP was approved by the City Council on May 19, 2026, as part of the mid-term budget process. Based on the financial plan, Table 1 summarizes the revenue changes needed to implement the Maintain Scenario adopted by the City Council. For context, the current City portion of a typical residential service sewer bill is $31.70 per bimonthly billing cycle. The year 1 rate revenue adjustment would increase those sewer bills by approximately $12.65 per month. The estimated impact by customer classification as a percentage is shown in Table 2. Table 1. Projected Sewer Revenue Adjustments FY 2027- FY 2030 Page 341 of 617