staff report mayor and city council faryal saiidnia

STAFF REPORT

TO: Mayor and City Council

FROM: Faryal Saiidnia, Project Manager

VIA: Andrew Poster, Director of Public Works

SUBJECT: Second Reading and Adoption of the Ordinance Amending Sewer Service Charges

DATE: March 15, 2021

1 Issue: Second reading and adoption of the Ordinance to amend Chapter 17.04 of the Mill Valley 2 Municipal Code to allow sewer charges to be set by Resolution. 3 4 Recommendation: Adopt Ordinance No. 1324 "Amending Title 17, Chapter 17.04 of the Mill 5 Valley Municipal Code Regarding Sewer Service Charges". 6 7 Background: The City levies a sewer service charge under the authority of the California Health 8 and Safety Code Sections 54 70 Article 4 of Chapter 6 of Part 3 of Division 5, and such fees are 9 subject to the limitations prescribed in the California Constitution Articles XIIIC and XIIID

10 ("Proposition 218"). As required by Proposition 218, the City Council held a public hearing on 11 the proposed change of the City's sewer service charge on March 1, 2021 and introduced 12 Ordinance No. 1324 amending Chapter 17 .04 of the Municipal Code regarding sewer service 13 charges. 14 15 Discussion: At its regular meeting on March 1, 2021, City Council properly noticed and held a 16 public hearing on the proposed Sewer Service Charges after which it found a majority protest did 17 not exist and introduced the proposed Ordinance to amend the Municipal Code to authorize sewer 18 charges to be set by Resolution. Council also passed a Resolution to change the sewer charges. 19

of2

ITEM 4

City Council Staff Report Consideration of an Ordinance to Change Sewer Service Charges March 1, 2021

20 Fiscal Impact: Under the approved charges, the City will meet projected operating costs and 21 achieve sufficient reserves throughout the 5-year rate period. 22 23 Attachments: 24 1. Ordinance No.1324 Amending Title 17, Chapter 17.04 of the Mill Valley Municipal Code 25 Regarding Sewer Service Charges 26 2. Approved March 1, 2021 Resolution setting sewer charges 27 3. March 1, 2021 Staff Report

2

1 ORDINANCE NO. 1324 2 3 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY 4 OF MILL VALLEY AMENDING TITLE 17, CHAPTER 5 17.04 OF THE MILL VALLEY MUNICIPAL CODE 6 REGARDING SEWER SERVICE CHARGES 7 8 THE CITY COUNCIL OF THE CITY OF MILL VALLEY does ordain as follows: 9

10 Section 1. Section 17.04.090 of Chapter 17.04 of the Mill Valley Municipal Code is 11 amended in its entirety to read as follows: 12

13 "17.04.090. Sewer Service Charge Levied. An annual sewer service charge is 14 levied on each premises connected or required by this chapter to be connected to 15 the sewer system. The City Council shall establish by resolution the rates, fees 16 and charges for the services and facilities related to sewer services." 17

18 Section 2. This ordinance shall be effective 30 days following its adoption by the City 19 Council. A summary of this ordinance shall, within fifteen (15) days after passage, be published 20 in accordance with Section 36933 of the Government Code of the State of California with the 21 names of the City Councilmembers voting for and against it. 22

23 INTRODUCED at a regular meeting of the City Council of the City of Mill Valley on 24 the pt day of March, 2021, and 25 26 PASSED AND ADOPTED at a regular meeting of the City Council of the City of Mill 27 Valley on this 15th day of March, 2021, by the following vote: 28 29 AYES: 30 NOES: 31 ABSENT 32 ABSTAIN: 33 34 35 36 Sashi McEntee, Mayor 37 38 ATTEST: 39 40 41 Kelsey Rogers, City Clerk/ Administrative Analyst

122 19-000il2505365vl .doc ATTACHMENT 1

RESOLUTION NO. 21-05

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MILL VALLEY SETTING SEWER CHARGES

THE CITY COUNCIL OF THE CITY OF MILL VALLEY HEREBY FINDS AND RESOLVES AS FOLLOWS:

SECTION 1. The City Council hereby finds:

A. Pursuant to the provisions of Chapter 17.04 of the City of Mill Valley Municipal Code and Article 4 of Chapter 6 of Part 3 of Division 5 of the California Health and Safety Code, commencing with Section 5470, the City Council is authorized to levy an annual sewer service charge.

B. The City Council has caused to be prepared a rate study (the "Study") to analyze the cost of providing sewer service and to provide recommendations for the sewer service rate structure.

C. The City Council adopted Resolution No. 21-01 on January 7, 2021 to initiate the process for considering changes to the sewer service charges.

D. Following notice duly given in accordance with law, the City Council held a full and fair public hearing regarding the revised charge and heard and considered all objections and protests thereto. The City Council determined at the close of the public hearing that written protests had not been presented by a majority of the owners of the parcels upon which the City proposes to impose the charges.

SECTION 2. As authorized by Section, the following sewer charges are hereby adopted:

A. The annual sewer service charge is the product of a sewer service rate times the estimated annualized wastewater discharge per hundred cubic feet ("HCF" or "CCF"), based on the current land use of the premises, as provided in the table below. For residential premises, the annual sewer service charge includes a monthly fixed service charge as provided in the table below.

ATTACHMENT 2

Land Use of Premises

Residential Monthly Fixed Service Charge

SINGLE FAMILY RESIDENTIAL

MUL Tl-FAMILY RESIDENTIAL

Residential Volumetric Charge ($/HCF)


MULTI-FAMILY RESIDENTIAL

Commercial Volumetric Charge ($/HCF)

BAR WITHOUT RESTAURANT

CAR WASH

HOSPITAL/CONY ALESCENT HOME

HOTEL WITH DINING

HOTEL WITHOUT DINING

LAUNDROMAT

MARKET WITH GRINDER

MARKET WITHOUT GRINDER

PROFESSIONAL OFFICES

REPAIR SHOP/SERVICE STATION

RESTAURANT/BAKERY

SCHOOLS

STORE/RETAIL

Resolution No. 21-05 Page 2 of 3

Sewer Service Rate per HCF of Estimated Annualized Wastewater Discharge

Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2021/22 2022/23 2023/24 2024/25 2025/26

$27.28 $40.93 $54.57 $54.57 $54.57

$16.02 $24.02 $32.03 $32.03 $32.03

$16.10 $14.08 $12.07 $12.07 $12.07

$16.10 $14.08 $12.07 $12.07 $12.07

$20.65 $20.65 $20.65 $20.65 $20.65

$15.80 $15.80 $15.80 $15.80 $15.80

$19.68 $19.68 $19.68 $19.68 $19.68

$35.22 $35.22 $35.22 $35.22 $35.22

$21.36 $21.36 $21.36 $21.36 $21.36

$17.75 $17.75 $17.75 $17.75 $17.75

$39.21 $39.21 $39.2] $39.21 $39.21

$24.83 $24.83 $24.83 $24.83 $24.83

$16.71 $16.71 $16.71 $16.71 $16.71

$21.86 $21.86 $21.86 $21.86 $21.86

$34.12 $34.12 $34. 12 $34.12 $34.12

$17.12 $17.12 $17.12 $17.12 $17.12

$18.57 $18.57 $18.57 $18.57 $18.57

B. Beginning July 1, 2022 and on each July 1 through July 1, 2026, the City Council may adjust the above charges: (i) to pass through wholesale charges for water, sewage treatment, wastewater treatment or (ii) by increasing the amount to reflect the percentage increase in the Consumer Price Index, All Urban Consumers ("CPI-U") for San Francisco-Oakland-Hayward, during the twelve month period ending with the most recent month that has been published by the U.S. Department of Labor, Bureau of Labor Statistics, as of such July 1, or a successor to that index designated by the Bureau of Labor Statistics.

C. The land use of the premises shall be the use as of March 1st of each year.

D. For each fiscal year, the estimated annualized wastewater discharge for premises used as a bar, hotel or restaurant is the average water usage for such premises based on the average of two "summer" billing cycles and two "winter" billing

Resolution No. 21-05 Page 3 of3

cycles for the preceding fiscal year multiplied by the number of billing cycles per year as provided by a report of the Marin Municipal Water District.

E. For each fiscal year, the estimated annualized wastewater discharge for a premises used for purposes other than those described in subsection C of this section is the average of two "winter" billing cycles for the preceding fiscal year multiplied by the number of billing cycles per year as provided by a report of the Marin Municipal Water District.

F. In no event will the City apply an estimated annualized wastewater discharge that is less than 24 HCF.

G. The sewer service charge for a parcel occupied by a low-income customer may be reduced by 25%. For the purposes of this section, "low-income customer" means a residential customer of the sewer system that applies for low-income assistance and meets eligibility conditions determined by the City Manager, which shall be based on the types of low-income discount programs established by California public utility companies or public agencies.

SECTION 3. This Resolution shall be effective on the date that Ordinance No. 1324 becomes effective.

PASSED AND ADOPTED at a regular meeting of the City Council of the City of Mill Valley on the pt day of March, 2021, by the following vote:

AYES: NOES: ABSENT: ABSTAIN:

ATTEST:

Councilmembers: Ossa, Carmel, McCauley, McEntee None. Wickham None.

Kelsey Rogers, City Clerk/Administrative Analyst

STAFF REPORT



VIA: Andrew Poster, Director of Public Works Eric Erickson, Finance Director

SUBJECT: Consideration of Changes to Sewer Service Charges

DATE: March 1, 2021

1 Issue: Consideration of (i) an Ordinance to amend Chapter 17 .04 of the Mill Valley Municipal 2 Code to allow charges to be set by Resolution and (ii) a Resolution to change sewer rates for 3 Fiscal Years 2021/22 through 2025/26. 4

5 Recommendation: Receive staff update regarding sewer cost of service study and proposed 6 rates presented at the January 7, 2021 City Council meeting. 7 8 Open the public hearing on changing sewer rates based on cost-of-service study, receive updated 9 presentation from staff and NBS Consultants on the rate study, receive public comment, and

10 accept written protests before closing the public hearing. After closing the public hearing, the 11 City Clerk will tabulate the number of valid written protests in accordance with Proposition 218. 12 If there is not a majority protest, it is recommended that Council, after discussion, move to (i) 13 introduce, read by title only and waive further reading of the ordinance "Amending Title 17, 14 Chapter 17.04 of the Mill Valley Municipal Code Regarding Sewer Service Charges" and (i) 15 adopt a resolution to set sewer charges. The resolution requires a 2/3 vote for approval. At a later 16 date, staff will return to Council to consider collecting the approved levy charges on the tax roll. 17 If there is a majority protest, the ordinance and resolution cannot be adopted by the Council and 18 staff should be directed to return at a later date with alternatives.

Page 1 of 4

ATTACHMENT 3


19 Background: A presentation was made to City Council on January 7, 2021 to discuss the need 20 for a cost-of-service study required to update sewer service rates, per Proposition 218, for Fiscal 21 Years 2021/22 through 2025/26. 22 23 Council directed Staff to conduct a sewer rate cost-of-service study, as well as evaluate options 24 to change the 100% volumetric rate structure to a mixed volumetric/fixed rate structure to better 25 align with the City's mostly fixed costs of service and mitigate fluctuations in usage and revenue. 26 27 A cost-of-service study is a calculation of rates using the revenue requirements of the utility 28 compared to its operation and capital costs to determine the adequacy of the existing rates to 29 recover utility costs. Revenue requirements are allocated to the various customer classes based 30 on volumetric and strength factors for each class, and proposed rates are developed to align with 31 the total cost of service. 32 33 A full cost-of-service study is typically conducted every five years by many public agencies to 34 comply with Proposition 218, which requires charges for wastewater services to correspond to 35 the cost associated with providing the services, and that customers within each user classification 36 pay their corresponding share of the total cost. The City's last cost of service study was 37 performed in 2012. The rate increases in 2016 were adjusted across all customer classes without 38 a full cost-of-service study. 39 40 Many factors in the cost of service calculation have changed since 2012, including the number 41 and type of customers within each class and the City's revenue requirements. When a study of 42 this type is done, especially after nine years, there is inevitably a redistribution of rates among all 43 customer classes to account for changes in overall usage and strength factors compared to prior 44 calculations. As a result of this cost-of-service study, most customers will see changes, either 45 increases or decreases, in their rates. 46 47 On January 7, 2021, Council approved staff to move forward with the noticing requirements of 48 Proposition 218 and to prepare for a public hearing on the proposed rates. 49 50 Discussion: After the presentation and subsequent mailing of Proposition 218, staff has received 51 feedback, questions, and concerns from residents, commercial customers, and the Mill Valley 52 Chamber of Commerce, regarding the proposed rate increases. 53 54 Overall, the cost-of-service study demonstrated that current annual sewer revenues are sufficient 55 to cover the cost of service, so an across-the-board increase to all customer class rates is not 56 needed at this time. However, with updated data for each customer class, there will be changes to 57 rates within each user group to align with the cost of service based on usage and strength factors. 58 Some customer class rates will increase, such as restaurant/bakery, hotels, and low-usage 59 residential; and some customer class rates will decrease, such as schools, retail, high-usage 60 residential. This is due to the existing rates being based on a cost-of-service study from 2012. 61 62 Although the calculations and proposed rates in the original staff report were accurate and based 63 on industry-standard methodology from the American Water Works Association, the January 7,

2


64 2021 presentation to Council focused mainly on the fact that no across-the-board increases were 65 needed and did not focus on the redistribution of rates based on the cost-of-service study. The 66 bulk of the report and presentation was oriented toward the change for residential customers in 67 converting from 100% volumetric to a mixed rate structure of 40% fixed and 60% volumetric. 68 The large changes to some of the customer class rates, due to the updated cost-of-service study, 69 were not effectively highlighted during the presentation. 70 71 Total sewer program revenue requirements have increased from $2M per year in FY2011/12 to 72 $ lOM in FY202 l/22. There are several factors that contributed to the overall revenue needs since 73 the last cost-of-service study in 2012 which are outlined below. 74 • Operating costs, including equipment and maintenance, vehicles, and personnel, have 75 increased by $419,00, or 32%, over the last four years, and will increase another 14% 76 over the next five years. 77 • Sewerage Agency of Southern Marin (SASM) fees have increased by $858,000, or 25%, 78 over the last four years for modernization and upgrade costs and will increase by another 79 13% over the next five years. 80 • Capital Projects, including aging infrastructure, requires more maintenance and 81 replacement. 82 • The City had very low sewer fund reserves in 2011, and only $1.3M in 2016, which is 83 well below the current recommended $5M, which represents 10 months of operating 84 costs. Maintaining reserves is important to protect against large fluctuations in usage and 85 revenue, unforeseen emergency repairs, maintaining a quality credit rating, and to align 86 with the 2011 EPA order instructing the City to restore the sewer fund to a stronger 87 financial position with better reserves. 88 • Some of the methodology in the calculations have changed. 89 • The number of accounts within each customer class has changed, with approximately 90 1,000 more residential customers and 31 less commercial customers. 91 92 Staff acknowledges there will be some customer classes who see larger rate increases because of 93 the updated study, which is further exacerbated by the economic challenges some customers are 94 facing because of the current pandemic. But ultimately the City is obligated to follow CA 95 Proposition 218 requirements to ensure rates align with the cost of service and distributed 96 according to usage and strength factors. 97 98 Staff and the Ad-hoc Sewer Rate Subcommittee continue to recommend Alternative 3. 99

100 Alternative 3: Phased-In Fixed and Volumetric Rates for Residential Only: The rationale 101 for a 40% fixed and 60% volumetric approach this is that the City's costs are mostly fixed, and a 102 100-percent volumetric rate approach causes significant variance in annual revenues. This 103 alternative will increase costs for low-consumption residential customers and lower costs for 104 high-usage residential customers but will provide more stable revenues without raising overall 105 system costs. A phased conversion to the proposed blended rate approach will mitigate the 106 impact of rate changes for residential customers. The proposed alternative would shift the current 107 100 percent volumetric rates to 20 percent fixed in the first year, 30 percent fixed in the second 108 year, and 40 percent fixed in the third year.

3


109 110 The Subcommittee and Staff recommend Council approve and adopt Rate Design Alternative 3. 111 This is due to many factors. Residential customers account for more than 80% of the total 112 customers and effluent generated. Commercial customers tend to have vastly different effluent 113 strengths and volumes, therefore volumetric rates are more suited to commercial customers as 114 usage may vary based on season, business activity, and other factors, such as closures during the 115 current pandemic. 116 117 Staff also recommends Council approve a pass-through provision that allows Council to adjust 118 rates in future, as needed, without repeating the Proposition 218 noticing process. This would 119 only apply to items that would increase City's sewer costs: wholesale charges for water, sewage 120 treatment, wastewater treatment, and cost of living adjustment increases based on Consumer 121 Price Index, All Urban Consumers ("CPI-U") for San Francisco-Oakland-Hayward. Although 122 the City could pass through increases annually, Staff only plans to request this adjustment on a 123 biannual basis, dependent on the economy and amount of uncontrolled costs incurred by the 124 City. This would be delayed to until Fiscal Year 2022/23 taking into consideration the current 125 pandemic and economic climate. 126 127 Finally, staff recommends that Council amend the Municipal Code to authorize sewer charges to 128 be set by Resolution. Currently, the charges are set by ordinance and are codified in the 129 Municipal Code. 130 131 Fiscal Impact: Under the proposed rates, the City will meet projected operating costs and 132 achieve sufficient reserves throughout the 5-year rate period. 133 134 Attachments: 135 1. Ordinance No._ Amending Title 17, Chapter 17.04 of the Mill Valley Municipal Code 136 Regarding Sewer Service Charges 137 2. Resolution setting charges 138 3. January 7, 2021 Staff Report including: 139 a. Sewer Rate Study - Rate Design Analysis Report - (Technical Memorandum) -140 NBS 141 b. Sewer Rate Study Technical Appendices - NBS 142 4. Mailed Notice of Public Hearing 143 5. Written Communications/Protests received prior to March 1, 2021 packet publication. 144

4

1 ORDINANCE NO. 2

3 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY 4 OF MILL VALLEY AMENDING TITLE 17, CHAPTER

5 17.04 OF THE MILL VALLEY MUNICIPAL CODE 6 REGARDING SEWER SERVICE CHARGES

7 8 THE CITY COUNCIL OF THE CITY OF MILL VALLEY does ordain as follows: 9

10 Section 1. Section 17.04.090 of Chapter 17.04 of the Mill Valley Municipal Code is 11 amended in its entirety to read as follows: 12 13 "17.04.090. Sewer Service Charge Levied. An annual sewer service charge is 14 levied on each premises connected or required by this chapter to be connected to 15 the sewer system. The City Council shall establish by resolution the rates, fees 16 and charges for the services and facilities related to sewer services." 17 18 Section 2. This ordinance shall be effective 30 days following its adoption by the City 19 Council. A summary of this ordinance shall, within fifteen (15) days after passage, be published 20 in accordance with Section 36933 of the Government Code of the State of California with the 21 names of the City Councilmembers voting for and against it. 22

23 INTRODUCED at a regular meeting of the City Council of the City of Mill Valley on 24 the_ day of_, 2021, and 25 26 PASSED AND ADOPTED at a regular meeting of the City Council of the City of Mill

27 Valley on this_ day of_, 2021, by the following vote: 28

29 AYES:

30 NOES:

31 ABSENT 32 ABSTAIN:

33 34 35 36 Sashi McEntee, Mayor 37 38 ATTEST: 39 40 41 Kelsey Rogers, City Clerk/Administrative Analyst

12219-000l\2505365v I .doc

1 RESOLUTION NO. 21-_

2

3 A RESOLUTION OF THE CITY COUNCIL OF THE CITY

4 OF MILL VALLEY SETTING SEWER CHARGES

5 6 THE CITY COUNCIL OF THE CITY OF MILL VALLEY HEREBY FINDS AND

7 RESOLVES AS FOLLOWS:

8 9 SECTION 1. The City Council hereby finds:

10 11 A. Pursuant to the provisions of Chapter 17 .04 of the City of Mill Valley Municipal12 Code and Article 4 of Chapter 6 of Part 3 of Division 5 of the California Health and13 Safety Code, commencing with Section 5470, the City Council is authorized to levy an

14 annual sewer service charge.

15 16 B. The City Council has caused to be prepared a rate study (the "Study") to analyze17 the cost of providing sewer service and to provide recommendations for the sewer service18 rate structure.19

20 C. The City Council adopted Resolution No. 21-01 on January 7, 2021 to initiate the21 process for considering changes to the sewer service charges.

22

23 D. Following notice duly given in accordance with law, the City Council held a full24 and fair public hearing regarding the revised charge and heard and considered all25 objections and protests thereto. The City Council determined at the close of the public

26 hearing that written protests had not been presented by a majority of the owners of the27 parcels upon which the City proposes to impose the charges.

28

29 SECTION 2. As authorized by Section, the following sewer charges are hereby adopted: 30

31 A. The annual sewer service charge is the product of a sewer service rate times the

32 estimated annualized wastewater discharge per hundred cubic feet ("HCF" or "CCF"),

33 based on the current land use of the premises, as provided in the table below. For

34 residential premises, the annual sewer service charge includes a monthly fixed service35 charge as provided in the table below.

36

37 38 39 40 41 42 43 44

45

46

47 48 49 50 51 52 53 54 55 56 57 58 59 60 61

Land Use of Premises

Residential Monthly Fixed Service Charge



Residential Volumetric Charge ($/HCF)



Commercial Volumetric Charge ($/HCF)

BAR WITHOUT RESTAURANT

CAR WASH

HOSPITAi/CONVALESCENT HOME

HOTEL WITH DINING

HOTEL WITHOUT DINING

LAUNDROMAT

MARKET WITH GRINDER

MARKET WITHOUT GRINDER

PROFESSIONAL OFFICES

REPAIR SHOP/SERVICE STATION

RESTAURANT /BAKERY

SCHOOLS

STORE/RETAIL

Resolution No. 20-_ Page 2 of 3

Sewer Service Rate per HCF of Estimated Annualized Wastewater Discharge

Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2021/22 2022/23 2023/24 2024/25 2025/26

$27.28 $40.93 $S4.57 $S4.57 $54.57

$16.02 $24.02 $32.03 $32.03 $32.03

$16.10 $14.08 $12.07 $12.07 $12.07

$16.10 $14.08 $12.07 $12.07 $12.07

$20.65 $20.65 $20.65 $20.6S $20.65

$15.80 $15.80 $15.80 $15.80 $15.80

$19.68 $19.68 $19.68 $19.68 $19.68

$35.22 $35.22 $35.22 $35.22 $3S.22

$21.36 $21.36 $21.36 $21.36 $21.36

$17.75 $17 .75 $17.75 $17.75 $17.75

$39.21 $39.21 $39.21 $39.21 $39.21

$24.83 $24.83 $24.83 $24.83 $24.83

$16.71 $16.71 $16.71 $16.71 $16.71

$21 .86 $21.86 $21.86 $21.86 $21.86

$34.12 $34.12 $34.12 $34.12 $34.12

$17.12 $17 .12 $17.12 $17.12 $17.12

$18.57 $18.57 $18.57 $18.57 $18.57

B. Beginning July I, 2022 and on each July I through July I, 2026, the City Council may adjust the above charges: (i) to pass through wholesale charges for water, sewage treatment, wastewater treatment or (ii) by increasing the amount to reflect the percentage increase in the Consumer Price Index, All Urban Consumers ("CPI-U") for San Francisco-Oakland-Hayward, during the twelve month period ending with the most recent month that has been published by the U.S. Department of Labor, Bureau of Labor Statistics, as of such July 1, or a successor to that index designated by the Bureau of Labor Statistics.

C. The land use of the premises shall be the use as of March 1st of each year.

D. For each fiscal year, the estimated annualized wastewater discharge for premises used as a bar, hotel or restaurant is the average water usage for such premises based on

62 63 64 65 66 67 68 69 70 71 72 73

Resolution No. 20-_ Page 3 of 3

the average of two "summer" billing cycles and two "winter" billing cycles for the preceding fiscal year multiplied by the number of billing cycles per year as provided by a report of the Marin Municipal Water District.

E. For each fiscal year, the estimated annualized wastewater discharge for a premises used for purposes other than those described in subsection C of this section is the average of two "winter" billing cycles for the preceding fiscal year multiplied by the number of billing cycles per year as provided by a report of the Marin Municipal Water District.

F. In no event will the City apply an estimated annualized wastewater discharge that is less than 24 HCF.

74 G. The sewer service charge for a parcel occupied by a low-income customer may be 75 reduced by 25%. For the purposes of this section, "low-income customer" means a 76 residential customer of the sewer system that applies for low-income assistance and 77 meets eligibility conditions determined by the City Manager, which shall be based on the 78 types of low-income discount programs established by California public utility 79 companies or public agencies. 80 81 SECTION 3. This Resolution shall be effective on the date that Ordinance No. 82 becomes effective. 83 84 PASS ED AND ADOPTED at a regular meeting of the City Council of the City of Mill 85 Valley on the _ _ day of , 2021, by the following vote: 86 87 AYES: 88 NOES: 89 ABSENT: 90 ABSTAIN: 91 92 Sashi McEntee, Mayor 93 ATTEST: 94 95 96 97 Kelsey Rogers, City Clerk/Administrative Analyst

STAFF REPORT



VIA: Andrew Poster, Director of Public Works Eric Erickson, Finance Director

SUBJECT: Sewer Service Rate Study Presentation

DATE: January 7, 2021

l Issue: Sewer Service Rate Study presentation from NBS Government Finance Group.

3 Recommendation: Receive report, provide feedback and accept the Rate Study, including 4 staff and the subcommittee's recommendation to change the current sewer rate structure to a 5 mixed volumetric/fixed rate structure for residential customers only. Direct staff to proceed 6 with the Proposition 218 noticing requirements. 7 8 Background: In 2016, Council adopted increased sewer service rates through FY2020/21. 9 The rates were increased to help fund the City's proportionate share of the $30 million bond

IO the Sewer Agency of Southern Marin (SASM) issued in FY2016/17 and to cover the 11 reduced revenue experienced due to a significant water conservation effort. 12 13 At that time, Council expressed interest in studying the feasibility of a change from the 14 volumetric only rate structure to a mixed structure of volumetric/fixed. The intent was to 15 protect the City from revenue losses, reduction in reserves, and large swings that could I 6 occur from water conservation efforts or other unforeseen events. 17 18

Page 1 of 4

Approved for Forwarding:

~~&t::J;;ager 2

City Council Staff Report Sewer Service Rate Study Presentation January 7, 2021

19 Discussion: The City hired NBS in April 2020 to perform a full cost-of-service rate study 20 enabling the City to complete critical capital improvement projects and to evaluate rate 21 design alternatives to improve overall equity and revenue stability. NBS was provided the 22 estimated revenue necessary to fund the City's operational and capital needs. 23 24 Currently, all customers are on a volumetric only rate structure. Using a combination of 25 fixed and volumetric charges reduces fluctuations in annual revenue that occur when 26 revenue is only collected from volumetric rates. It also improves the overall equity of the 27 rates. That is, when fixed costs are collected entirely from volumetric charges, customers 28 with low water consumption are paying less than their intended share of fixed costs. 29 However, when revenue is collected in direct proportion to how the costs are incurred (i.e., 30 fixed or variable), it improves the equity. 3) 32 Analysis shows no system-wide rate increase is needed to either meet revenue needs or to 33 increase reserves to approximate industry standard of 10-months of operating costs. Under 34 current projections, the City should be able to maintain sufficient reserves to meet target 35 reserve levels throughout the 5-year rate period FY202 l/22 - FY2025/26 and provide the 36 available funds necessary for additional priority capital projects. 37 38 The attached consultant report presents the analysis of several rate alternatives and 39 recommends rates that (1) shift residential customers to a combined fixed/variable rate 40 design, (2) retain the current 100-percent volumetric rate design for commercial customers, 41 and (3) phase in the fixed portion of the rates by collecting 20% of rate revenue through 42 fixed charges in the first year, 30% in the second year, and 40% in the third year. 43 44 A Sewer Rate Study Subcommittee was formed in October 2020 to provide input and 45 feedback on the consultant analysis. The Subcommittee consists of Councilmembers John 46 McCauley and Urban Carmel, Public Works and Finance Department staff, and NBS staff. 47 48 The Subcommittee reviewed the report and rate design alternatives using a combination of 49 fixed and volumetric rates, which would collect fixed charges based on EDU's and collect 50 volumetric charges based on the annualized average water consumption: 51 52 1. Alternative 1 - Fixed and Volumetric Rates for All Customers: Both residential 53 and commercial customers would have fixed charges that collect 40 percent of 54 required revenue from fixed charges and 60 percent from volumetric rates. Although 55 this is still not close to a 100-percent fixed charge, (i.e., the City's costs essentially 56 all fixed), this is more proportional than a 100-percent volumetric rate design and 57 dampens the rate impacts on low-consumption customers whose bi1ls would go up. 58 59 2. Alternative 2 - Fixed and Volumetric Rates for Residential Only: Residential 60 customers account for more than SO-percent of all customers on an EDU basis and 61 are a relatively homogenous group. This rate design would improve overall equity 62 for residential customers and improve overall revenue stability for the wastewater 63 utility. 1n contrast, commercial customers tend to have vastly different effiuent 64 strengths, volumes, and EDUs. This makes their fixed charge rate calculations more 65 complicated.

2

66


67 For example, fixed/variable commercial bills would vary based on: (1) their 68 individual water use, and (2) their number of EDU's, and their number of EDU's 69 tends to change with consumption levels. That is, commercial customers with greater 70 water use tend to be those assigned more EDUs. Retaining the current 1 DO-percent 71 volumetric rate design excludes the EDU component of their sewer bill. 72 73 Also, considering the business risks related to the Covid-19 pandemic, a l 00-percent 74 volumetric rate provides some relief to businesses that have been temporarily shut 75 down, and commercial customers have indicated a preference to keep the current 76 100-percent volumetric rates. 77 78 3. Alternative 3 - Phased-In Fixed and Volumetric Rates for Residential Only: 79 The rationale for this alternative is that, while a I 00-percent fixed rate alternative 80 maybe best reflects actual cost of service, low-consumption residential customers 81 will be highly impacted by this type of rate design. To reduce the rate-shock to these 82 customers, a gradual phase-in makes sense. The proposed alternative would shift the 83 current 100 percent volumetric rates to 20 percent fixed in the first year, 30 percent 84 fixed in the second year, and 40 percent fixed in the third year. 85 86 The Subcommittee and staff recommend Council approve and adopt Rate Design 87 Alternative 3 - Phased-In Fixed and Volumetric Rates for Residential Customers Only. This 88 is due to many factors. Residential customers account for more than 80-percent of the total 89 customers and effluent generated. Commercial customers tend to have vastly different 90 effluent strengths and volumes. Therefore volumetric rates are more suited to commercial 91 customers whose usage may more greatly vary based on season, business volume, and 92 outside factors like business closures during the current Covid-19 pandemic. 93 94 The Subcommittee provided input to the consultant to phase in the rate structure change 95 from l DO-percent volumetric to fixed/volumetric mixed rate structure over a three-year 96 period, rather than implementing the changes all at one time. This would dampen the 97 change in rates, especially for the low consumption residential customers, who would see an 98 increase in rates due to the change in rate structure. High consumption residential customers 99 will see a decrease in rates, medium consumption residential customers will see rates stay

100 approximately the same, and low consumption customers will see small increases in their 101 monthly bills. 102 103 Staff also recommends Council approve a pass-through provision that allows Council to 104 adjust rates in the future as needed, without repeating the Proposition 218 noticing process, 105 for only the following items that would increase the City's sewer costs: utility rate increases 106 and cost of living adjustment increases based on U.S. Bureau of Labor Statistics Consumer 107 Price Index West Region. Although the City could pass through various increases annually, I 08 staff only plans to request this adjustment every two years dependent on the economy and 109 amount of uncontrolled costs incurred by the City. This would be delayed to start in 110 FY2022/23 taking into consideration the current Covid-19 pandemic and economic climate. 111

' '


112 Next Steps: If the recommendation is accepted by Council, staff will complete the Prop 218 113 notice requirements adopted by Council in 2016, which include: 114 • Preparing a written report of all parcels and the amount of proposed sewer service 115 charges to be made available on file in the office of the city clerk 116 • Mailing notice of a public hearing scheduled for March 1, 2021 at 6:30pm during the 117 regular city council meeting on the proposed sewer service rate structure change to 118 the record owner of each identified parcel 119 • Publishing notice of the filing of the written report and public hearing in the Marin 120 Independent Journal 121 122 Staff will return to Council on March l, 2021 for a Public Hearing to adopt the new rates. 123 124 Fiscal Impact: Revenue requirements from FY2021/22 through FY 2025/26 vary from 125 $8.3M to $9.3M per year. Under the recommended rate, the City should be able to maintain 126 sufficient reserves to meet target reserve levels throughout the 5-year rate period. 127 128 Attachments: 129 I. Sewer Rate Study-Rate Design Analysis Report - (Technical Memorandum)- NBS I 30 2. Sewer Rate Study Technical Appendices - NBS 131 3. Resolution

4

32•305 Temr:cula Parkway Suite 100 Temecula. CA 92592

Toll free : 800.6i6.7516 (P) 951 .296.1997 (F) 951 ,296.1998

nbsgov.com

FINAL TECHNICAL MEMORANDUM

TO: ANDREW POSTER, DIRECTOR OF PUBLIC WORKS

ERIC ERICKSON, FINANCE DIRECTOR

FROM:

RE:

DATE:

CITY OF MILL VALLEY

GREG CLUMPNER, DIRECTOR, NBS

ALICE BOU, CONSULTANT, NBS

UPDATE OF SEWER RATES AND RATE DESIGN ALTERNATIVES

DECEMBER 2020

BACKGROUND ANO PURPOSE

In 2016, NBS prepared a limited analysis of the sewer rates for the City of Mill Valley (City), primarily to adjust the sewer rates for its restaurant customers. At that time, the City adopted rates for a five-year period ending in FY 2020/21 but that analysis did not include the full cost-of-service analysis typically completed during a "rate study." The City is now conducting such a full cost-of-service rate study to evaluate rate design alternatives, document the cost-basis of the rates, improve their overall equity and revenue stability, and ensure that funds will be available for critical capital improvement and rehabilitation projects.

This memorandum presents the analysis of several rate design alternatives and recommends rates that (1) shift residential customers to a combined fixed/variable rate design, (2) retain the current 100-percent volumetric rate design for commercial customers, and (3) phases in the fixed portion of the residential rates by collecting 20% of rate revenue through fixed charges in the first year, 30% in the second year, and 40% in the third year.

SUMMARY ANO OVERVIEW

Prior to adopting the current 100-percent volumetric rate design in 2012 before the drought began in 2013-14, the City had a 100-percent fixed rate structure. Shifting to a 100-percent volumetric rate was intended to "achieve greater ratepayer equity" 1

• However, the City's wastewater system costs are essentially 100-percent fixed; the Sewerage Agency of Southern Marin {SASM) treatment costs, which

1 City Staff Report, June 18,20 l 2, p. I. Ai IACHMENT 1 ·~ es- Prepared by NBS for the City of Mill Valley Page 1

make up more than 50 percent of the City's annual sewer expenses, are the single largest of those fixed cost.

The current 100-percent volumetric rate has significant implications for the revenue the City collects each year from sewer customers. As shown in Figure 1, the City's water consumption declined since 2014-15 and has been particularly unpredictable the last several years. These year-to-year variations directly affect both customer bills and the amount of revenue the City collects from sewer rates.

Figure 1. Summary of Annual Historical Water Consumption

A basic tenant of rate design is that customer fairness and equity are improved when rate revenue is collected in proportion to the fixed and variable costs that each customer classes causes costs to be incurred. This is the basis for "cost-of-service" rate studies required under California's Proposition 218, which was originally referred to as the "Right to Vote on New Taxes Act" 2

• We note that all the other SASM member agencies rely on 100-percent fixed charges, although some also receive property tax revenues.

This study concludes and recommends that the City move toward a rate design that collects more revenue from fixed charges. This will improve overall equity and reduce the variability in annual revenue that comes with a 100-percent volumetric rate structure. Phasing-in a 40-percent fixed charge over a three-year period is recommended for residential customers, while commercial customers should continue using the current 100-percent volumetric rate design for now. The analysis and the basis for these recommendations are discussed in more detail below.

SCHEDULE AND ADOPTION OF NEW SEWER RATES

The City typically submits annual sewer service charges to the County Assessor's Office each July. These charges apply the current sewer rates "in arrears" to the most recent customer accounts and consumption data. For example, near the end of July, the City holds a Public Hearing and submits sewer service charges to

1 California Constitution article XIII D, Section 6 (commonly called Proposition 218, also referred to as Prop 2l8).

~ N es· Prepared by NBS for the City of Mill Valley Page 2

the County Assessor's Office based on current rates and customer consumption data for the fiscal year that just ended (FY 2019/20 in this case). Since new sewer rates cannot be adopted retroactively, any newly adopted sewer rates would be applied to customer consumption for FY 2020-21 and submitted to the Assessor's Office in July 2021.

METHODOLOGY

Rate studies typically include three primary components, as shown in Figure 2. These components reflect industry standards set forth by the American Water Works Association (AWWA)3 and meet the fairness and equity standards required under Proposition 218 (Prop 218}. Whereas the 2016 sewer rate update only addressed the financial plan and limited adjustments to the rate design, this study performed all three rate study components and developed two rate design alternatives for the City to consider.

Figure 2. Primary Components of a Rate Study

Compares current sources and U5es of funds and determines the revenue needed from rates and the projected rate adjustments.

Proportionately allocates the revenue requirements to the customer classes in compliance with industry standards and State Law.

Considers what rate structure will best meet the City's need to collect rate revenue from each customer class.

The following sections provide details of each rate study component along with the results.

RATE STUDY RESULTS

Description of the Financial Plan

The City's financial plan for the sewer utility should meet the minimum operating requirements and exercise sound financial management practices, including the development and adoption of sewer rates that meet all revenue requirements, maintain reserve levels in line with industry standards, adequately fund working capital, and promote a healthy credit rating.

The following is an overview of the current financial state of the City's sewer utility:

• Meeting Revenue Requirements: In addition to covering the increase in annual operating and maintenance costs, a primary objective of the financial plan is to ensure the adequate funding of future capital improvement and rehabilitation projects. Based on the current rates and the customer data for FY 2019/20, the rate revenue expected in FY 2021/22 is approximately $10.0 million,4 or roughly $500,000 more than initially estimated in the Utility's budget. This is primarily a result of two factors: (1) the higher-than-expected water use, and (2) the City's current 100-percent volumetric sewer rate structure that generates more revenue when water use goes up. This additional rate

3 Principles of Water Rates, Fees, and Chorges, Manual of Water Supply Practices, Ml Manual, American Water Works Association, Seventh Edition, 2017.

4 Preliminary estimates indicate revenue of $10.9 million, but after typical adjustments the City would normally ellpect $10.5 million. However, due to Covid-19 concerns the City is taking a more conservative approach and estimating revenue of only $10.0 million.

:)NBS Prepared by NBS for the City of Mill Valley Page 3

revenue improves the City's ability to fund capital improvements during high water use and has a corresponding negative impact on capital improvements during drought years.

• Maintaining Reserve Funds: The City's sewer utility maintains a single reserve fund for both operating expenses and capital expenditures. The current reserves are approximately $2.8 million, which is almost 40% below the recommended reserve target. NBS recommends the City increase this working capital reserve to approximately $5.0 million based on ten months of operating expenses which is slightly higher than industry standards for similar utilities but only provides minimal additional funds to address Covid-19 related issues. 5

In general, operating reserves can range anywhere from 2 to 12 months of operating expenses depending on the agency's reserve policies.6 In the City's case, the single reserve fund must not only cover a portion of its operating expenses, but it must also provide sufficient funding to cover any capital rehabilitation and replacement, equipment replacement, and emergency capital needs during the year.

Recently, the City finds itself facing the unexpected challenges of the Covid-19 pandemic and the financial impact on the sewer utility. According to a recent whitepaper published by Bluefield Research, utilities will feel the impacts of the pandemic long after it is over and will be forced to adapt to the changing landscape with "the acceleration of digitization and re-prioritization of capital needs, from reactive underinvestment to longer term planning for infrastructure sustainability."7 The full extent of the effects of Covid-19 are not yet known; however, sewer bill affordability will be an even greater issue as more and more households may have difficulty paying for services while, at the same time, utilities struggle to cover the increasing costs to provide their services. Going forward, the City will need to maintain flexibility in how it manages the sewer utility in terms of Covid-19 related impacts.

According to the American Water Works Association, many utilities are delaying construction and reducing capital maintenance and repairs, suspending shutoffs and late fees, and providing flexible payment plans to help reduce the financial impact on its customers. 8 All these options remain viable management tools for the City to consider going forward.

Revenue requirements from FY 2021/22 through FY 2025/26 are shown in Figure 3 and indicate that no projected annual rate increases are expected. The projected "Rate-Funded Capital Expenses" in this Figure total $11.0 million; this is a significant portion of the $13.8 million spent on capital improvements over this period, with the difference being funded from the Operating and Capital Replacement Reserve. These expenditures are based on the City's recent capital improvement study by Schaaf & Wheeler.

5 The SASM Treatment Fee accounts for approximately 70% of total operating costs. NBS normally considers 9-months of operating revenue to be a sufficient reserve target and we are only increasing the target level to 10-months based on Covid-19 concerns.

6 American Water Works Association, Cash Reserve Policy Guidelines, 2018, page 5. 7 Bluefield Research, Covid-19 Water Industry Impact: Navigating toward Resiliency, April 2020. 8 American Water Works Association, Covid-19 Utility and Water Sector Organization Impact Survey, June 2020.

/1Nes· Prepared by NBS for the City of Mill Valley Page4

Figure 3. Summary of the Five-Year Financial Plan

l'summar;, of Sources and Uses of Funds [~ _ Projected - - -:-

: and NetRevenueRequiremcnts I ___ F'!_2020/ 2l--r-~~

Sources of Sewer FutJds

Rate Revenue Under Current Rates' $ 10,000,000 $ 10,052,000 $ 10,104,270

Non-Rate Revenues 65,182 65,521 65,862

Total Sclurces of Funds $ lD,06S,182 $ 10,117,521 $ 10,170,132 Uses of Sewer Funds

Operating Expenses $ 1,728,155 s 1,791,212 $ 1,854,78{)

SAS\'! Treatment fee' 4,303, 166 4,432,261 4,565,229

1,815,000 2,488,294

t. Small In ere .. ., in "'"" n ue a ft•r FY 202/21 • ro du I to as tumod cu,tamer 1rawlll or 0.521'/'/ll a,. 2.SASM Tre1tmtnt Fee is bued on the SASM·.s e.stimated ~nnu-af mcr~;ues of 3.0%. 3. As.sun,es .an~ rate increases a re 1mpfemented July 1 each ym:;1r.

4. Tota I Use of Funds leu nonTrate reuenues. This is th~ annual amount needed from wa5tewater rites

$ 10,156,813 $ 10,209,628 $ 10,262,718

66,204 66,548 66,894

$ 10,Ul,01? $ 10,276,176 $ 10,329,613

s 1,917,424 $ 1,982,524 $ 2,048,995

4,702,186 4,843,251 4,988,549

2, 165,9'JS

Figure 4 summarizes the total capital expenditures, which consist of rate-funded capital improvements, which are included in the revenue requirements of Figure 3, plus the use of operating and capital replacement reserves, which are summarized in Figure 5.

Figure 4. Summary of Annual Capital Improvement Cost & Funding Sources

Projected reserve fund balances for the sewer utility are shown in Figure 5. The use of reserves in FY 2023/24 through FY 2025/56 is for capital improvements which, when combined with the rat e-funded capital expenditures shown in Figure 3 total $13.8 million. Under current projections, the City should be able to maintain sufficient reserves to meet target reserve levels throughout the 5-year rate period, providing the City with available funds for additional capital projects on the City's priority list.

Figure 5. Operating and Capital Replacement Reserve Fund Summary

Beginning Reserve Fund B,1lancP, and I_ Budg,•t __j_ _ ______ _ __ ProJc~ _ ---- ----. __ _

Recomm1•rtderi Reseive Tarert~ . FY 2070/?l FY 2021/22 FY 2022/23 FY 2023/ 2-l I FY 2024/25 i FV 2025/ 26

IL.:.._:.__·_· ___ ~~~--=---~-~..L..----..:.....-:..~ 1 Operating & capital Replacement Reseive

Beginning Reserve Fund Balances $ 2,829,825 $ 2,829,825 $ 5,048,686 $ 5,828,510 $ 6,nB,130 $ 7,125,512 Addition of Net Surplus 2,218,861 779,824 1,261,830 1,437,412 Use of Oper. & ca ital Re lac. Reserves (312,2101 (1,090,0301

: ... I; • •• .. $ 5,026,100 $ 5,186,200 $ 5,350,lm $ 5,51~300 $ 5,688,100 $

Prepared by NBS for the City of Mill Valley Page 5

Cost-of-Service Analysis

The intent of the cost-of-service analysis is to allocate sewer-related costs to each customer class in a fair and equitable manner that complies with Prop 218 requirements. This analysis first allocates costs into separate functional categories and then into customer classes based on factors such as effluent flow (estimated using water consumption), effluent strength (the two factors considered are BOD and TS59), and customer-related costs such as administrative, billing and customer service costs.

This process is used to estimate the revenue requirements that should be collected from each customer class. Generally, flow-related costs are considered variable and other costs are considered fixed. However, in the City's case, its costs are essentially all fixed, since SASM treatment costs accounts for over SO percent of the City's costs and ls essentially fixed. Other than electric costs for pump station operations, the collection system is also primarily a fixed cost. Therefore, most of the rate revenue should be collected from a fixed rather than volumetric charges, although most sewer agencies consider this a policy decision rather than one dictated by the cost of service methodology or any specific calculation.

Based on the cost-of-service allocation factors, figure 6 summarizes the equivalent dwelling units (EDU's)

10 by customer class and the basis of the annualized water consumption. The EDUs for all

residential customers and certain commercial classes were calculated using the average winter water consumption when outdoor irrigation is typically at its lowest. The number of EDU's for the remaining commercial customers

11 was determined based on the annualized water consumption and the relative

strength factors (BOD and TSS) for each commercial customer class relative to single-family averages. As a result, higher-strength classes such as restaurants and cooking facilities.

Figure 6. Number of Sewer Customers (EDU) and Annual Consumption

I FY 2019/20 ~Annualized Consumption {CCF) Customer Class

I EDUt 1-(~ INGLE F L RESIDENTIAL 3,483.0 01,299 Winter Avg

MULTI-FAMILY RESIDENTIAL 1 2,633.0 133,698 Winter Avg

COMMERCIAL

s AMI Y 3

BAR W/0 RESTAURANr 3.9 291 Win/Sum Avg CARWASH2

20.4 2,031 Winter Avg HOSP I TAl/CO NVALESCENT2

86.1 6,735 Winter Avg HOTELW/ D1NING2

85.3 3,711 Win/Sum Avg HOTEL W/0 D1NING2 62.2 4,461 Win/Sum Avg lAUNOROMAT2 44.1 3,855 Winter Avg MARKET W / GRINDER2

0.0 0 Winter Avg MARKET W/0 GRlNDER2

147.7 9,159 Winter Avg PROFESSIONAL OFFICES2 208.6 19,404 Winter Avg REPAIR SHOP/SERVICESTATION2

13.0 924 Winter Avg RESTAURANT/BAKERY2

355.4 15,807 Win/Sum Avg SCHOOL52

90.3 8,202 Winter Avg STORE/RET Al L 2

lOS.O 8,781 Winter Avg Grand Total 7 337.9 518,358 1. Number of Sewer Dwelling Units is based on data provided by MMWD and the County

Assessor's Office. 2. Calculated EDU based on flow and BOD/TS5 strength factors.

Determining Revenue Requirements by Customer Class: Revenue requirements for each customer class are based on the costs allocated to each functional cost category. Figure 7 summarizes the revenue requirements by customer class resulting from the cost-of-service analysis.

9 BOD= biochemical oxygen demand, TSS = total suspended solids

10 The County Assessor's Office assigns residential properties an equivalent dwelling unit (EDU) based upon the actual dwelling

units [living units) permitted on the property, regardless of occupancy. 11

Includes 1 bar without restaurant, 4 hotels with dining, S hotels without dining, and 38 restaurants/bakeries.

~2'NBS Prepared by NBS for the City of Mill Valley Page 6

Figure 7. Summary of Revenue Requirements by Customer Class

Su~~ary of FY 2021/22 Customer Class Revenue Requirements by Functional Categories

Customer Class

SINGLE FAMILY MUL Tl-FAMJL Y COMMERCIAL

BAR W/0 RESTAURANT CAR WASH HOSPITAl/CONVALESCENT HOTELW/ DINING HOTEL W /0 OJ NI NG LAUNDROMAT MARKET W/ GRINDER MARKET W/0 GRINDER PROFESSIONAL OFFICES REPAIR SHOP/SERVICE STATlON RESTAURANT/BAKERY SCHOOLS

STORE/RETAIL

Volumetric/ Fixed {Treatment-Related) Cost Net Revenue

Variable Cost

Allocations

$3,487,539 $1,547,556

$3,368 $23,S09 $77,9S8 $42,9SS $Sl,636 $44,622

$0 $106,016 $224,602

$10,69S $182,966

$94,938 $101640

Allocations

BOD TSS

$1,056,467 $468,795

$1,166 $814

$33,736 $37,178 $27,709 $1l,SB6

$0 $SS,OS4 $S0,542

$3,332 $20S,86S

$21,364 $26 391

$1,157,923

$513,815

$1,118

$S,8S4 $12,942 $42,78S $10,286

$8,148 $0

$S2,798 $29,829

$4,971 $118,4S8

$1S,761 $25 310

Req'ts.

By Class

$5,701,930 $2,530,166

$5,653 $30,177

$124,636 $122,918

$89,631 $64,356

$0 $213,868

$304,972 $18,999

$S07,290 $132,063 $153 341

%of Net

Revenue Req'ts.

57.0%

25.3%

0.1%

0.3% 1.2%

1.2%

0.9% 0 .6% 0.0%

2.1% 3.0% 0.2%

S.1% 1.3%

15% _ I $ 6,000,000 I $ 2,000,000 I s 2,000,000 I $10,000,000 I 100%

1. Revenue requirements are from the COSA Functionalization/dassificatlon Analysis.

Rate Design

The City Council directed staff to consider collecting more rate revenue from a combination of volumetric and fixed charges. Before deciding on the recommended rate design alternative, City staff, the ad hoc rate advisory committee, and NBS evaluated a number of fixed/variable rate design alternatives that would reduce fluctuations in annual rate revenue. And by collecting more revenue from fixed charges, rates are better aligned with the true cost of service, which is closer to 100-percent fixed and improves rate equity among customers.

NBS developed several alternatives with different amounts of revenue coming from fixed charges; these alternatives ranged from zero to 80 percent with the remainder coming from volumetric charges. Three alternatives were considered to have the most merit:

1. Alternative 1- Fixed and Volumetric Rates for All Customers: Both residential and commercial customers would have fixed charges that collect 40 percent of required revenue from fixed charges and 60 percent from volumetric rates. Although this is still not close to a 100-percent fixed charge, (i.e., the City's costs essentially all fixed), this is more proportional than a 100-percent volumetric rate design and dampens the rate impacts on low-consumption customers whose bills would go up.

2. Alternative 2 - Fixed and Volumetric Rates for Residential Only: Residential customers account for more than BO-percent of all customers on an EDU basis and are a relatively homogenous group. This rate design would improve overall equity for residential customers and improve overall revenue stability for the wastewater utility. In contrast, commercial customers tend to have vastly different effluent strengths, volumes, and EDUs. This makes their fixed charge rate calculations more complicated. For example, fixed/variable commercial bills would vary based on: (1) their individual water use, and; (2) their number of EDU's, and their number of EDU's tends to change with consumption levels. That is, commercial customers with greater water use tend to be those assigned more EDUs. Retaining the current 100-percent volumetric rate design excludes the EDU component of their sewer bill.

<ONBS. Prepared by NBS for the City of Mill Valley Page 7

Also, considering the business risks related to the Covid-19 pandemic, a 100-percent volumetric rate provides some relief to businesses that have been temporarily shut down, and commercial customers have indicated a preference to keep the current 100-percent vo lumetric rates.

3. Alternative 3 - Phased-In Fixed and Volumetric Rates for Residential Only: The rat ionale for this alternative is that, while a 100-percent fixed rate alternative maybe best reflect actual cost of service, low-consumption residential customers will be highly impacted by this type of rate design. To reduce the rate-shock to these customers, a gradual phase-in makes sense. The proposed alternative would shift the current 100-percent vo lumetric rates to 20 pe rcent fixed in the first year, 30 percent fixed in the second year, and 40 percent fixed in t he third year.

Customer Bill Impacts of Fixed-Variable vs. 100-percent Volumetric Rates-To assess the potential impacts on customer bills of shifting away from a 100-percent rate design, Figure 8 compares the difference in annual residential sewer bills between a 100-percent volumetric rate versus a 100-percent fi xed rate. As this figure shows, all customers would have the same monthly bill under a 100-percent fixed rate design, while under the 100-percent volumetric rate design sewer bills for customers with high consumption leve ls would be significantly higher than those of low consumption customers.

With a 100-pecent fixed rate, all residential customers would pay $1,637.0712 pe r year regardless of the amount of water consumed. ln all three rate alternatives, 40 percent of t he rate revenue is col lected from fixed charges for residential customers. For commercial customers, only alternative 1 collects 40 percent from fixed charges and alternatives 2 and 3 continue the current 100-percent volumetric rate design.

Figure 8. Comparison of Current vs. Alternative Rate Designs

AYl!'ni1e consumption far a 1H d1n.1,.ai1

custarner i, 14 4 CCF/2 montfls

Results for Rate Alternatives

NBS' analysis resulted in the updated sewer rate schedules shown in Figure 9, 10 and 11. The single

family fixed charge of $54.57 /month in FY 2020/21 in Figures 9 and 10 is the $1,637.07 /year shown in Figure 8 divided by 12 months and multiplied by the 40 percent used in both of the rate design alternatives.

12 Annualiied Consumption divided by the Number of EOU's t imes the Volumetric Rate. (283,388 + 3,483) x $20.1206 = Sl .637.07.

O Nes· Prepared by NBS for the City of Mill Valley Page 8

Figure 9. Sewer Rates for Alternative 1: Fixed & Volumetric Rates for All Customers

$l2.D7 $12.07

$54.57

BAR W/0 RESTAURANT $16.31 $18.36 $11.36 $11.36 $11.36 $11.36 $11.36 $11.36 CAR WASH $13.18 $14.84 $8.82 $8.82 $8.82 $8.82 $8.82 $8.82 HOSPITAUCONVAUESCENT $15.11 $17.00 $10.77 $10 77 $10.77 $10_77 $10.77 $10.77 HOTH W/ DINING $25.44 $:ZS 64 $19.22 $19.22 $19.22 $19.22 $19.22 $19.22 HOTfl W /0 DI NI NG $16.16 $18.19 $11.66 $11,66 $11.66 $11.66 $11.66 $11.66 LAUNDROMAT $15.42 $17.36 $9.79 $9.79 $9.79 $9 79 $9.79 $9.79 MARK ET W / GRJ NDER3 $31.84 $35.84 $22.67 $22.67 $22 67 $22.67 $22.67 $22.67 MARKETW/0 GRINDER $10.38 $22.93 $13.60 $13.60 SU 60 $13.60 $13 60 $13 60 PROFESSIONAL OFFICES $14.77 $1663 $9.23 $9 23 $9.23 $923 $9.23 $9.23 REPAIR SHOP/SERVICE STAnON $18.12 $20.40 $12.05 $12.0S $12.05 $12.05 $12.0S $12.05 RESTAURANT /BAKERY $25.43 $28.62 $18.47 $18.47 $18.47 $18.47 $18.47 $18.47 SCHOOLS $16.22 $18.25 $9.45 $9.45 $9.45 $9 45 $9.45 $9.45 STORf/RETAI l $18.40 $20.71 $10.24 $10.24 $10.24 $10.24 $10.24

l. Mill Vill!y birls s,wer(ustomers 1nnu1Uv on the tax. rQJI b,ue:d Of'I ~ the:r average winteroraverace annual water consumptton frcm the previous year. 2. These rates were adopted and implemented in the City's hist rate updite- in 2016.

$10.24

3. Thf!re an~ curn!ntly oa Ma.rketw/Grinder customus; these r~tts ~re- proportion.ii to Market's w/o Grinder rates, adjusted for strengtr'I factors . source Email rrom Utv staff dated June 12, l019 •~d titled "MIi EDU's -adjusted for mulreu.•

Figure 10. Sewer Rates for Alternative 2: Fixed & Volumetric Rates - Residential Only

SINGlE FAMILY RESIDENTIAL $12.07 MUm-FAMllY RESIDENTIAL $12.07 ~ BAR W/0 RESTAURANT $16.31 $18.36 $20.65 $20.65 $20.65 $20.65 $20.65 $20.65 CAR WASH $13.18 $14.84 $15.80 $15.80 $15.80 $15.80 $15.80 $15.80 H05PITAUCONVALBCENT $15.11 $17.00 $19.6S $19.68 $19.68 $19.68 $19.68 $19.68 HOTEL W/ DINING $25.44 $28.54 $35.22 $35.22 $35.22 $35.22 $35.22 $35.22 HOTELW/0 DINING $16.16 $18.19 $21.36 $2136 $21.36 $21.36 $2136 $21.36 LAUNDROMAT $1542 $17.36 $17.75 $17.75 $17.75 $17 75 $17.75 $17.75 MAR IC ET W / GRINDER' $31.84 $35.84 $39.21 $39.21 $39.21 $39.21 $39.21 $39.21 MARKET W/0 GRINDER $20 38 $22.93 $24.83 $24.83 $24 83 $24.83 $24.83 $24.83 PROFESSIONAL OFFICES $14.77 $16.63 $16.71 $16.71 $16.71 $16.71 $16.71 $16.71 REPAIR SHOP/SERVICE STATION $18.12 $20.40 $21.86 $21.86 $21.86 $2186 $21.86 $21.86 RES7AURANT/8AKERV $25.43 $28.61 $34.12 $34.12 $34.12 $34.12 $34.12 $34.12 SCHOOLS $16.22 $18.25 $17 .12 $17.12 $17.12 $17.12 $17.12 $17.11 smRE/RETAI l $18.40 $20.71 $18.57 $18.57 $18,57 $18.57 $18.57 $18.57

1. Mill Valley bills sewer customers annuatly on the t a,i roll based on either averase wint~ror iil ver.ilge ~nnual wa te- r consumptfon fr-om the: previou.s year.

2. Tllese rates were ado~ted and implemented in the City's last rate upda te In 2016

~. There are currently no Mi rlc.@t ~/Grir,der cus.tomers; t'1ese rates are proportional to Market's w/o Grinder rates, adtusted fors(rength factors. Source: Emall from City stair da ted June 12, 2019 and titled ' MV EDU'< -ad1usted for ma ri<ets. •


Figure 11. Sewer Rates for Alternative 3: Phased-In Fixed & Volumetric Rates for Residential Only

$32.03

$12.07 $12.07 $12.07 $12.07

BAR W/0 RESTAURANT $15.31 $18.36 $20.65 $20.65 $20.65 $20.6$ $20.65 $20.65 CAR WASH Sll.18 SH.84 $15.BO $15.80 SlS.BO sis.so $15.80 $15.80 HOSPITAl)CONVAl.ESCENT $15.11 S11.oo $19.68 $19.68 S19 68 $19.6B $19.68 $19 68 HOTEL W/ OINfr+G $25.44 $28.64 $35.22 $3S.22 $3S.22 $35.22 $35.22 $35 22 HOTEL W/0 DINING S1o.16 $18.19 $2136 $21.36 $21.36 $21.36 $2136 $21.36 LAUNDROMAT $15.42 $17.36 $17.75 $17.75 $17.7S Sl 7 .75 $17 .7S $17.75 MARKET W/ GRINDER' $31.84 $35.84 $39 21 $39.Zl $39 2l $39 21 $39 21 $39 21 MARKET W/0 GRINDER $10.38 522.93 $24.83 $24.83 $24.83 $24.83 $24.83 S24.83 PRO FESSIONAI. OFFICES $14.77 Sl6.63 S16.71 $16.71 $16.71 $16.71 S16.71 $16 71 REPAIR SHOP/SERVICE STATION $18.12 $20.40 $21.86 $21.86 $21.86 $21.86 $21.86 $21 86 RESTAURANT/BAKERY $15.43 $28.62 $34.12 $34.12 $34.12 $34.12 $34.12 $34 12 SCHOOLS $1612 $18.15 $ 17.12 $ 17.12 $17.12 $17.12 $17.12 $17.12 STORE/RETAJL $18.40 $20.71 S1s.s7 S1a.s1 $18.57 Sl8.S7 $18.57 $18.57

1. MUI Valll!!'JblUs 5ewer customers ilflnuallyon IIH!: ta 11: roU b1sed on eitheraver.a1e w1nt!ror average annual wate:rconsumptfon from the previous year. 2. The~e r.ite.5 wen!! aGopted and implemented in the Utys last r.1tc upd3te In 2016 .

.3 Thare a.re currently no Market w/ Grlnder c.ustom~n:; thue ra te:s are proportional to Market's w/o Grinder rates, adjusted for 5 trength facto fl.

The actual calculations of the sewer rates performed as part of the cost-of-service and rate-design analyses are further detailed in the Technical Appendix. All rate alternatives are designed to collect the same amount of rate revenue needed to meet the projected costs shown in the financial plan.

Impact on Residential Sewer Bills by Rate Alternative

Customer sewer bills will vary depending on their individual water use and the selected rate design. Figure 12 shows the actual number of single-family residential customers by consumption level and notes the amounts selected for single-family bill comparisons.


Figure 12. Single-Family Monthly Consumption Data

/ •Averog• of 8,6 CCF/

:Z°" of Customen f•An Avoragt of W CCF was uJ•d bt"J1.1st cfte

!imo/J tKJ mbtr of outliers s~ewed the avera9~)

l 387 cus tamefS" I

L _ m•ed IZ~ _j

Figure 12 also shows that 20% of single-family residential customers use between 0-3.25 CCF/month, 20% use between 3.25-5.0 CCF/month, 20% use between 5.0-7.0 CCF/month, 20% use between 7.0 and 10.0 CCF/month, and 20% use more than 10.0 (CF/month. figure 13 provides the projected single-family sewer bill at various consumption levels and Figure 14 shows similar results for multi-family residential customers.

Other Provisions

In adopting new rates, the City should also consider {1) adding a provision to the sewer rate resolut ion for cost-of-living-adjustments (COLAs) to ensure that inflation does not outpace the adopted rate increases, and (2} a pass-through whereby the City can adjust rates major costs to account for changes in major costs that are outside the City's control, such as SASM charges, without re-doing t he Prop 218 protest balloting process. These provisions should be carefully reviewed by the City Attorney.

Impact on Commercial Sewer Bills

It is recommended that commercial customers keep the current 100-percent volumetric rate structure. Although the volumetric rates did change due to updated cost-of-service analysis that reflects different consumption levels and number of accounts by customer class, commercial bill impacts are otherwise similar to the current rates.

Prepared by NBS fo r the City of Mill Valley Page 11

Figure 13. Projected Annual Single·Family Sewer Bills by Consumption Level

Averag~ caruumptian for a ~nsle---f.amily reS1dential customer ts 7.2 CCF/monllt

a MFR Rate (40% F /60% VJ

Auera1e consumption for~ multi-family residential customer is 4.2 CCF/01onth

$1,983.60

1,741.34

$2,644.80

2,103.51


Phasing-In Fixed Charges

After reviewing these alternatives, the City Council's sub-committee suggested t hat a phased-in approach might be worth reviewing, since it would dampen the rate impacts on low-consumption sewer customers that would occur if rates jumped from 0% to 40% fixed the first year. NBS recommends a phased-in approach that increases fixed charges from 00,.{, (current rates) to 20% fixed in FY 2020/21, then to 30% in FY 2021/22, and then to 40% fixed in FY 2022/23. The customer bill impacts on residential cust omers with various consumption levels under this phased-in approach are shown in Figure 15. The rate schedule for the next five years for this phased-in approach were shown above in Figure 11.

Figure 15. Phased-In Fixed Charges for Residential Sewer Customers

D Current (100% VJ

D 80% V/20% f (Year 1)

(] 70% V/30% f (Year 2)

D 60% V/40% F (Year 3)

For the lowest quintile, which has an average consumption of 2.63 CCF/ month, customers have been paying $57.97/month (i.e., 2.63 CCF/mo. x $22.04/CCF), while under the proposed rates they would pay $86.32/month (i.e., $54.57 fixed + 2.63 CCF/mo. x $12.07 /CCF). This is a difference of $28.35/month. However, under a 100% fixed charge their monthly bill would be over $136/month (i.e., $1,637/year divided by 12 months), or a difference of $78/month. These customers have been enjoying substantially lower rates since the change from 100-percent fixed rates to the 100-percent volumetric rates implemented in 2012.

Review of Sewer Rate Design in California - According to the State Water Resources Control Board, many sewer agencies across CaHfornia are opting for rate design structures t hat collect rates from a combination of fixed and variable charges as shown in Figure 16. Th is Figure indicates that more sewer agencies in California are adopting rate designs that collect rate revenue from a combination of fixed rates and variable charges.

Pre pared by NBS for the City of Mill Valley Page 13

Figure 16. Survey of Rate Designs for Sewer Agencies in California

500 Rate Design Survey

450 o Flat Rate {100% Fixed} a variable Based in Water use (100% Variable)

! 400 • Fixed/ Variable

I 350 394

a, 300 334 = 323 ..,

CD 250 l

CD 200 ~ .. 150 CD

J 100 0 so - 0

FY'lDl.2/U FY2014/1S FY'l016/17

We believe a fixed and variable rate alternative more closely meets Prop 218 cost-of-service criteria and its broader fairness and equity requirements. Also, we are confident that this alternative, including a three-year phase-in, is administratively implementable. However, continuing with a 100-percent volumetric rate structure for commercial customers would still more broadly meet Prop 218 requirements, collect the cost-of-service based levels of revenue from commercial customers, and may be more acceptable to commercial customers.


RECOMMENDATIONS AND NEXT STEPS

Consultant Recommendations

NBS' recommendations are as follows:

• Review and Evaluate Rate Design Alternatives - This study updates sewer rates to ensure they comply with Prop 218 requirements and, rather than continuing with the current 100-percent volumetric rate structure, evaluated combinations of fixed and volumetric charges as requested by the City Council. NBS developed several fixed/variable alternatives, all of which improve overall customer equity and fairness and increase revenue stability. NBS recommends the City adopt and phase in over a three-year period a rate alternative collecting 40 percent of rate revenue from fixed charges. However, continuing with a 100-percent volumetric rate structure for commercial customers is a reasonable course of action, particularly since those customers have expressed an interest in this option.

• Consider Community Priorities - In selecting an appropriate rate structure, NBS recommends the City consider customer and community priorities, concerns, and the impacts on individual customer bills.

• Consider Phasing-In New Rate Design - The recommended phased-in approach increases the fixed component of sewer rates from 0% to 20% in the first year, from 20% to 30% in the second year, and from 30% to 40% in the third year. This would reduce the customer bill impacts on !ow-level consumption customers and provide a more gradual shifting of the rate design to over a three-year period.

• Approve and Accept this Technical Memorandum - NBS recommends the City Council formally accept and approve this Technical Memorandum along with the documentation incorporated in the Technical Appendix, which together demonstrate compliance of this rate study with Prop 218 requirements.

Next Steps

• Follow Proposition 218 Adoption Procedures - The City Council will need to direct City staff to mail out Prop 218 notices to the City's sewer customers. Then, after the required 45-day noticing period, conduct a public hearing to receive public comments and any additional protest ballots. Assuming there is no successful protest (i.e., SO percent plus one protest ballots are submitted), the City Council should adopt the proposed sewer rates (including a three-year phase-in and 100-percent volumetric commercial rates), which will then be used in calculating sewer customer bills submitted to the County Assessor's Office in July 2021.

• Annually Review Rates and Revenue - Any time an agency adopts new utility rates, those new rates should be closely monitored over the next several years to ensure they generate sufficient revenue to meet the annual revenue requirements. Changing economic and water consumption patterns, as well as other potential unseen changing revenue requirements, can significantly affect revenue requirements.

• Covid-19 Related Concerns - According to Bluefield Research, "traditional models of raising rates on financially burdened customers and waiting for federal government handouts will not suffice ... the current infrastructure investment model needs to change, starting from the bottom-up ... The forced shift to remote work, optimization of resources, and need for redundancy in response to the coronavirus are likely to instigate demonstrable movement toward resiliency." 13 Once the City has

13 Bluefield Research, Covid-19 Woter Industry Impact; Navigating toward Resiliency, April 2020.

1Nes· Prepared by NBS for the City of Mill Valley Page 15

more information regarding Covid-19 related impacts, it may want to consider additional changes in rate design, capital improvement expenditures, or other changes.

NBS' PRINCIPAL ASSUMPTIONS AND CONSIDERATIONS

In preparing this technical memorandum and the opinions and recommendations included herein, NBS has relied on a number of principal assumptions and considerations with regard to financial matters, conditions, and events that may occur in the future. This information and these assumptions, including the City's budgets, capital improvement costs, customer account and consumption records, and other information from the City staff were provided by sources we believe to be reliable, although NBS has not independently verified this data.

While we believe NBS' use of such information and assumptions is reasonable for the purpose of this study and its recommendations, some assumptions will invariably not materialize as stated herein and may vary significantly due to unanticipated events and circumstances. Therefore, the actua I results can vary from those projected to the extent that actual future conditions differ from those assumed by us or provided to us by others.


CITY OF MIU VAUEY SEWER RATE ANALYSIS Financial Plan and Reserve Projections Pre/Im/nary Draft S<Jb/ect to Ma~rlal Re~ision, Do Nol C/tr, or Distribute

TABLE 1 : FINANCAL PLAN AND SUMMAR'I OF REVENUE REQUIREMENTS

SOURCES OF FUNDS (SEWER REVENUES)

Financial Plan & Rese,w Summ ary

Sewer Service Charge' I$ 8,300,0001 $10,000,0001510,052,000 Is 10,104,270 Is 10,156,8131 s 10,209,628 I $ 10,262,7181 s 10.316.084 1 s 10,369,7281 s 10.423.650 I $ 10,477,853 1 $10,532,338 Other Revenues 66,500 65,182 65,521 65,862 66,204 66,548 66,894 67,242 67,592 67,943 68,297 68,652

TOTAL SOURCES OF FUNDS $ 8,366,500 $10,065,182 $10,117,521 $10,170,U2 $10,223,017 $10,276,176 $10,329.613 $ 10,383,327 $ 10,437,320 $ 10,491,594 $10,546,150 $ 10,600,990 USES OF FUNDS

Operating Expenses

Sewer System Operations' $ 1,445,632 S 1,728,155 5 1,791,212 $ 1,854,780 $ 1,917,424 5 1.982,524 S 2,048,995 s 2,115,758 s 2.183,408 s 2,255,716 S 2.325,293 $ 2,397,016 Lateral Replacement Program - -SASM Treatment Fee4 4,059,591 4,303,166 4,432,261 4,565,229 4,702,186 4,843,251 4,988,549 5,138,205 5,292,351 5,451,122 5,614,656 5,783,095

Subtotal: Operatl"S Expense , S 5,505,223 $ 6,031,321 S 6,22M73 $ 6,420,009 S 6,619,610 $ 6,825,776 S 7,037,544 Other Expendltur~•

s 7,253,963 $ 7,475,760 s 7,706,838 $ 7,939,948 $ 8,180,111

histing Debt Service s $ s - s - s - s - s s s s s s future Debt Service - - - - -Rate-Funded Capjt;il Expenses' 3,214,174 1,815,000 3,114,224 2,488,294 2,165,995 1,510,726 1,717,677 1,106,967 1,552,033 1,189,193 1,883,061 J 1,784,513

Subtot;it: Other Expenditures $ 4,018,280 $ 1,815,000 S 3,114,224 $ 2,488,294 $ 2,165,995 $ 1,510,726 $ 1,717,677 s 1,106,967 s 1,552,033 s 1,189,193 S 1,883,061 $ 1,784,SB Tgtal Uses of Water Funds $ 9,523,503 S 7,846,321 $ 9,337,697 $ 8,908,303 $ 8,785,605 $ 8,336,501 $ 8,755,221 $ 8,360,930 $ 9,027,793 $ 8,896,031 $ 9,823,009 $ 9,964,624

Plus: Revenue from Rate Increases' s s - $ s - s s $ $ - $ s Contribution to Renrws [Surplus/Deficit) . $ (1,li7,D03 $ 2,218861 $ 779.824 S 1261830 $ 1,437 412 $ 1939,675 $ 1,574,391 $ 2,022,396 $ 1409,527 $ 1,595,563 I s 7?31411 $ 636,366

I . . •:•: : ...... i•;•.1: ... $ 8,300 000 $10 000,000 $10,052,000 $10104 270 $10,156 813 $10,209,628 $10,262 718 $ 10,316,084 $ 10,369 728 $ 10,423,650 $10,477.853 $ 10,532,338

o.°" o."" o."" o.°" o."" .O.°" o.°" o."" o.°" o."" o.°" o."" Cumulathlr, /ncrea~e from Annual Rl!llenue Increases 1 0.00% 0.00% O.amtl CJ.00% 0.00% 0.00% 0.00'1(, 0.00" 0.00'1(, 0.00% 0-00" CJ.00" !TOTAL CIP EXPENOITURES 1 $ 3214114 S l 8J5 000 $ 3,lJ4,ZZ4 $ Z,4118,294 $ Z,47B.l05 $ 2,600,755 $ 3,124995 $ Z,866,242 $ Z 941 624 $ 3,CJJB,9119 $ 3 CJ9B3B9 $ 3,179,876 l Ro,....nue and expen .. , for FY 2017/lB through FY 2020/21 wero proYkled by City Staff. Saurco fl!<,: 51 Sewrr Lines B.pdf. FY l016/17 IS based on the Information provided in tho last •tudy. 2. Per th• City's e•llmated population growth, we are assuming annual inflation of O.S2" for FY 2020/21 •nd beyolld 3 General cost jnflatlon Is the S-vear i1ver.1e chan1e In CP, for all Urban Con$Umen ln the Sar.a frant1SCa·O.:aktand H.iyward areas per the 8L5. 4 . SASM Treatment f'tt ts based on the SASM's estimated annual Increases of 3.0%. S. Protl!cted lJ!!i~ cf rat!!! revenue based on p~anned capital rmprovement costs and pay•;n•you·go funding.

6 Assumes new rates .are lmpiementerl July t, 2021.

7 Projected .annu~t rate Increases are cakulatl!d based on the Clry·~ capltal lmpr~tnent e;11pendrt-ures.

8 Annual CIP eicp•ndlture, for FY 2020/U were provldl!CI by Schaaf & Wheolor lfll•· M/I/Valley_S•w•rCIP_202J_1015_DRAFT.pdf) and •II Mun, year, ha"" been Inflated u,lng tli• cumula!lve comtructlon cost mu1tJpller (see hhibit 2)

Selection of Flnpncltil Plan Altornrmv• I I I

1 Alternative 1 • Increase Needod to Meet Totill CIP $ CJ.oo,6 o.~ 3.~ 4 DO" 5.()()5 Ii.~ 6 CID" .iOO:\i 100,i; 300% 3.00'!;; 3.001; Alternative 2 - Full CIP .+- 6 Months of O&M 0.00% o.~ 300% 200% 2 ,00')6 2.00% 2.0D~ 2.00'; 2 0D'o 2.Q0f'J 2 00% 2.00;~ Alternative 3 - Pro sed 5-Vear CIP Plan $3 mll./yr.) 0.009' CJ.lJC1% 0001' 0 oa,,; D.00'11; o.~, 0001\, 0.00.'f uoo,. 0.00:. 000', 0.00'~

choice In bo• ta !!Jl!i.t, bfJsed on options llsted above I 3 I

Pt•l).lrtd by NB5

www.nbsa:ov com I Toll frtt: aoo.676.7Sl& Fl nanr:lal P"lian. 1 of ll

CITY OF MILL VALLEY SEWER. RATE ANALYSIS Flnandal Plan and Resarve Projections Pmlmlllary Oro~ Subjttt to Material Re11/slon, Do Not Cite or Distribute

TABlE 2 : RESERVE FUND SUMMARY - UN-RESTRICTED RESERVES

l. Unencumb<!red fund Balan<e from 6/30/20 Fund b•lance 1 .. , CIP carryoverencumbran<0. from Erle Erikson, 9-22·20 email. 2 Hlstorkal inlerest earn in I rai. Is the s-v••r avera1• •nnual yield for funds Invested In LAIF (2016-2020). The sour<e ls the California State Treasure~, w..bslte:https://www.trea,11ror.co.gov/pmla-Jaif/hlstorlcal/annual.asp

Prepared by NBS

www nDqov.com I TolMrH: 800 676 7516

Finan<ial Plan & Reserw Summary

Ftn;inci.111 ~lain1 2 ar 31

CITY Of Mill VALLEY SEWER RATE ANALYSIS Flnanctal Plan and Reserve ProjectioN PN?llmlnory Ola/t Sub}ttt to Material Revision, Do Not ate or o;strlbute

TABLE 3: RESERVE FUND SUMMARY· RESTRICTED RESERVES

Less: U.se of Re:serves for caeital .ProJec.ts = ",& Fund llalona

- - 1$ --- ~T$

Debt Obllsallons

Ii -11 ,rating Reserve

• , $ - .:-1;1·· -; · ~,, • I$

1 l 1 1

Financial Plan & Reserve Summary

• , $ ·Is r -1 l I' 91 s

s

1 :Ii - $ - s . s - s

$ - I S

2.35!,; 1 35"' 1 35!,; I 35'~ I.JS% 1.35,. l .35:t6 1 Hlotorical lnte,.,t earning rat .. are per the 10-vear averoge annual yields for funds lnveoted In lAlF (2010-2019}. The source lo the California state Treasurer'! web!lte: https;//www.trl!Osurtr.ca,gov/pmfa-/aif/historlcol/onnual.osp

Prepared bv NBS www.nb"511av con, I Tolf.rree· 800 676 7516 Fl-n..inci~I Pl;an. 3 al 31

CITY OF MILL VALLEY SEWER RATE ANALYSIS Flnantlaf Plan Charts Preliminary Draft Subject to Mater/al Revision, Do Not Cite or Distribute

CHARTl

Sewer Revenue Requirements vs. Revenue Under Existing and Increased Rates

$12.0Mil.

$10.0 Mil.

CII C 0

$8.0 Mil.

1 :s 0$6.0 Mil. iG :::, C C <t

$4.0 Mil.

$2.0 Mil.

$.OMil.

Prepared by NBS

DReserve-Funded Capital Expenses

liDRate Funded Capital Expenses

lnformE11ion Only {Rese/V8· Funded Capital Expenses am , /IOI a Revenue Requirement)

$1,260,912

$1,090,030

- $3,114,224 $2,488,294 $2,165,995 $1,510,726 $1,717,677

$1,815,000 IMilii" .. i 1 4Lqk 1

$6,619,610 $6,825,776 $7,037,544

I

FY 2017 /18 FY 2018/19 FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 Fiscal Year Ending June 30

··--· •• __ ___J

www nb,gov.com I Toll-free: 800.676.7516 Ch.arts ind Table-s, 4 of 31

CITY OF Mill VALLEY SEWER RATE ANALYSIS Flnandal Plan Charts Preliminary Draft Subject to M'1terlal Revision, Do Not Cite or Distribute

CHART2

$9.0Mil.

Ending Cash Balan~es vs. Recommended Reserve Targets

Wastewater Fund - Un-Restricted Reserves

$8.0 Mil. • Ending Cash Balance

$7.0Mil.

$6.0Mil.

$5.0Mil.

$4.0 Mil.

$3.0 Mil.

$2.0 MIi.

$1.0 Mil.

$.0 Mil. FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25

Fiscal Vear Ending June 30

P,.,µiK•d by NBS

www.nbssov.com I Toll-frtt : 800 676.7516

FY 2025/26

Chart, and Table,, S of 31

CITY OF Mill VALLEV SEWER RATE ANALYSIS Operating Ravt!nue and Expenses Preliminary Draft Sub/eel to Matf!rtol Re11lsfon, Do Not Cite or Distribute

TABLE 4: REVENUE FORECAST'

DEPT. CODE DESCRIPTION Basi:I 2020 SEWER REVENUE

S7 350140 Sewer Service Charge 1 S 8,300,00C 57 350150 Sewer Conriectior: Fc,e l 16,500 57 350151 Sewer Lateral fee l 35,000 57 330100 •ntcrest Income 1 15000 TOTAL; REVENUE $ 8 366,500

TABLES: REVENUE SUMMARY

50URCES OF REVENUE Buts 2020 SEWER REVENUE

Sewer Service Charge $8,300,000 OTHER REVENUE

Sewer Connection !!o Lateul Fee 51,500 Interest Income 15000 TOTAL: REVENUE $8,366,SOO

TABLE 6, OPERATING EXPENSE FORECAST'

DEPT. CODE DESCRIPTION Basis 2020 SALARY & BENEFITS

57 50100 Salaries 3 $ 278,012 57 50102 Overtime ~ 2,500 57 50103 Holiday Pay 3

57 50104 Partllme 3 57 soqoo Employee Benefits 6 167,727

ALL OTHER EXPENSES 57 51100 Office StJpplics 2 1,300 57 51200 Postage 2

57 51300 Special Departmental Expe:me 2 5,000

l 57 51500 Clothing & Personal Supplles ) 3,850 57 51700 Communications 2 2,500 57 Sl8Sl Water 2 500 57 S1852 EletlrkllY 2 11,000 57 S1853 Gas 2 250 57 52000 Buildine & Grounds Maintenance 2 12,000 57 52100 Eq ulpment Maintenanc~ 2 21,025 57 521020 Fuel 2 4,500 57 52300 Specialized se,vkes 2 121,345 57 524000 Insurance 2 57 52600 Memberships & Training 2 4,500 57 52900 Other Expenses 2

57 550080 Bond Principal Payments 2 135.000 57 551080 Bond Interest Payments 2 167,225 57 58005 Bond Issuance Costs 2 57 58300 fqulpment 2 57 58900 Contllliency 2 S7 59700 Vehicle Maintenance Chg 2 27,433 57 59800 Equipmrnt Replacement Expense 2

57 59900 lnter-Deoartmental Expense 2 479,966 SUBTOTAL; OPERATING EXPENSES $1,445,532

Prepared by NBS

www.nbs,ov corn I T~IHr~II!· 800.Ci76.751Ci

S 10,939,980 From 'Mill Valley Sewer 2020-21.xlsk' -$400,000 Adjustments

$10,539,980 Estimate $10,000,000 Conservative estimate

2021 2022 2023 2024

srn,000,000 S 10,052,000 $10,104,270 $10,156,813 5,000 5,026 5,052 5,078

35,182 35,365 35,549 35,734 25,000 25,130 25,261 25,392

$ 10 065,llll $10117,521 $1D,170,13Z $10223,017

ZO • .fll" 2021 2022 2023 2024

$ 10,000,000 $ 10,052,000 $10,104,270 $10,156,813

40,182 40,391 40,601 40,812 25,000 25,130 25,261 25 392

$ 10,065,182 $10,117 521 $10,170,132 $10,223,017

20U 2022 2023 2024

s 297,061 $ 305,973 $ 315,152 $ 324,607 2,500 2,575 2,652 2,732

--

186,977 202,309 216,673 228,590

soo 824 850 877 .

3.7~i) 3,866 3,987 4,112 4,000 4,125 4,253 4,386 2,000 2,062 2,127 2,193

400 412 425 439 9,500 9,796 10,102 10,417

400 412 425 439 14,500 14,952 15,419 15,900 22,500 23,202 23,926 24,672 5,500 5,672 S,849 6,031

212,200 218,821 225,648 232,688 -

6.700 6,909 7,125 7,347 .

140,000 144,368 148,872 153,517 164,438 169,568 174.859 180,315

- - --

-26,931 27,771 28,638 29,531

-627,999 647,593 667797 688,633

$ 1,728,155 $ 1,791,212 $ 1,854 780 $ 1917,424

fillli!.!!!I.!

2025 2026 2027 ZOZB 2029 2030 2031

$10,209,628 $10,262,718 $10,316,084 $10,369,728 $10,423,650 $10,477,853 $10,532,338 S,10S 5,131 5,158 5,185 5,212 S,239 5,266

35,920 36,106 36,294 36,483 36,672 36,863 37,055 25,524 25 657 25,790 25,924 26,059 26195 26,331

$10,276,176 $10 329 613 $10,383,327 $10,437,320 $10,491,594 $10,546,150 $10,600990

202S 2026 2027 2028 2029 2030 2031

$10,209,628 $10,262,718 $10,316,084 $l0,369, 728 S 10.423,650 $10,477,853 $10,532,338

41,024 41,238 41,452 41,668 41,884 42,102 42,321 25,524 25 657 25,790 25,924 26059 26,195 26 331

$10,276,176 $10,329,613 $10,383,327 $10,437,320 $10,491,594 $10 546,150 $10,600,990

2025 2026 2DZ7 2028 2029 2D30 2031

$ 334,345 s 344,375 $ 354,706 s 365,348 $ 376,308 s 387,597 $ 399,nS 2,814 2,898 2,985 3,075 3,167 3,262 3,360

- - --

241,391 253,943 265,117 275,457 288,678 297,339 306,259

904 932 961 991 1,022 1,054 1,087 " - -

4,240 4,372 4,508 4,649 4,794 4,944 5,098 4,523 4,664 4,810 4,960 S,11S 5,274 S,439 2,262 2,332 2,405 2,480 2,557 2,637 2,719

452 466 481 496 511 527 544 10,742 11,077 11,423 11,779 12,147 li,526 12,917

452 466 481 496 511 527 544 16,396 16,908 17,435 17,979 18,540 19,119 19,715 25,442 26,236 27,055 27,899 28,769 29,667 30,592

6,219 6,413 6,613 6,820 7,032 7,252 7,478 239,948 247,434 255,154 263,115 271,324 279,790 288.519

- - . 7,576 7,812 8,056 8,308 8,567 8,834 9,110 . - .

158,307 163,246 168,339 173,591 179,008 184,593 190,352 185,940 191,742 197,724 203,893 210,255 216,alS 223,579

- - -. . - .

30,453 31,403 32,382 33,393 34,435 35,509 36,617 - - .

710,118 732,274 755,121 778,680 802,975 828,028 853,863 $ 1,982,524 $ 2 048,99S $ 2,115,758 $ 2183 408 $ 2,255,716 $ 2 325 293 $ 2,397,016

£xh.iblt l (O&MJ. 6 uf ll

CITY OF Mill VAU.EY SEWER RATE ANAlY515 Operating Relll!nue and bpenses ~iminory Draft Subject to Motrrlal Revision, Do Not Cltr or Distribute

TABLE 4 : REVENUE fORECAST1

TABLE 7 : OPERATING EXPENSE FORECAST, 1 con!.

DEPT. CODE DESCRIPTION Basis 2020 OTHER EXPENSES

57 lateral Replacement Program 2. $ 57 52930 SASM en Fee Treatment 4 4 059,591

$ 10,939,980 From "Mill Valley Sewer 2020-21.xls•" ~ Adjustments

$10,S39,!IIIO Estlmale $10,000,000 Conservative estimate

2021 2022 2023 2024

$ $ s s 4,303,166 4,432,261 4 565,229 4,702 186

EXHIBITl

2025 2026 2027 202B 2029 2030 2031

$ $ s . s s $ $ 4,1.143,251 4 988 549 5,138,205 5,292,351 5.451,122 5 614,656 S 783,095

SUBTOTAL: OTHER EKPENSES $4 059 591 4 303 lli& $ 4 432 261 $ 4 65,22!1 $ 4 702186 4,843,251 $ 4,988 549 $ 5138,205 $ S 29 351 $ 5,451122 5,614.656 $ 5 783 095 r - -·-- -

'' ..

..... L- .~:Wffiiif.l#H41 @¥4H t&ijo1f1,N#1fi.M lti&iuJ .. .. . -~ ... ~ l • \.,. ... _ 1 .......

1. ~evenuos and e•penses for FY 2019/20 and FY 2021/22 were provided by City Staff. soun:1 Ille: 57 S1Mr tJMs B.pdf

NON-CASH m~ EJCaUDED FROM ABOIIE:

DEPT. COO! D£5CRIPTION Basis 2020 2021 2022 2023 DEPRECJA110N

Z024 2025 2026 2027 2028 2029 ZD30 4l 2031

. ~ ..

Denreclation ••-se 2 s s . ~ . ~ • $ . $ • $ . s • $ - s • . ~ -SUBTOTAL: DEPRECATION $ • $ • $ . ~ • $ • $ • $ - $ • $ • $ • $ ~ . ~ . TABLE 8: FORECASTING ASSUMPTIONS'

COST INFI.ATION FACTORS Basis 2020 2021 2022 2023 2024 2025 2026 2027 202B 2029 2030 2031 Customer Growth" l .. 0.52% 0.52% 0.52% 0.52% 0.52% 0.52% 0.52% 0,52~ 0.52% 0.52% General Cosl lnflatlon (prior S·vur aweragelJ 2 .. 3.12% 3.12% 3.12% 3.12% 3.12% 3.1?% 312% 3.12% 3.12% 3.12% Labar Cast lnf1;otlon' 3 .. 3.00% 3,00% 3.00% 3.00% 3,00% 3 00% 3.00% 3.00% 3.00% 3.00% SASM Agency Fee5 4 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3 .00% 3.00% ~.00% No Cast lnflatlan 5 .. 0.00% 0.00% o.om1, 0,00% 0.00% 0.00% 0.00% G.00% 0 ,00% 0.00% Labor Benefits Inflation" 6 .. 3.00% 8.20% 7.10% 5.50% 5.60% 52~ 4AO% 3.90% 480% 3.0()'i; 1 Exp1mses .1re Jr1fliittd Piiit:h ','eiilr by the foHowln1 innu1I jnfliltion factor categories These factors ar• from theo BLS website~ https://data.bls.gav.

2. In the 2016 study, custamer 1rowth was sot to iero. Howl!\H!r, based on the City's e,11mated populatlan JTOWth, we are anumlng an annu•l !l'lerease of 0.5~%. City's websile: hctp<://datousa.lo/profth,/9•0/mlfr-volloy·co/. 3. Gene,al cost inflation is the 5-vear •vera,e thanae In CPI for all Urb•n Consumers In the San Francloco.oakland-Hayward aroa, por the BLS.

4. Labor cost inflatlon is the 5-year average chanse In the Sacramento and San Francisco County Employment and Wage Inflation lnde• (all Industries) per the BLS. 5. SASM Agency F"" is based on the City's information on anticipated SASM annual cost Increases jErlc Erickson, 8/13/20). John McCauley (vice-mayor) confirmed in B/27/20 conference call. 6. Per Erle Erklcson, email of 8·18-20.

Prtipitf!d by NBS

www.nb5&a'ol.com I TD1t·hff:: 800.676.7516 E,hiblt 1 (O&MJ, 7 of 31

CITY Of MILL VALLEY 5~WER RATE ANAlV51S Capital Improvement Plan Expenditures Prt!lfm/norr Draft Subjttt ro Matf!rlal Revision, Do Not Citf! or Dlstributf!

TABLE 9 : CAPITAL FUNDING SUMMARY

lnt~rAae1 Future Rev"- Bond Procet!ds

Scllaar-WhHler Flnal 5-YHr CIP (In $2020) Schaaf-WhHler Final 5-Year CIP (Future$)

·I CAPITAL IMPROVEMENT PROGRAM

TABLE 10 : CAPITAL IMPROVEMENT PROGRAM COSTS fin Currt!nt- Y"ar Oallafl) 1

Prolect o .. crlptlon 2020 61903S Repair of Hotspots and Pipe Rehablhtatlon $ 148,685 619036 Bllthedale 43,400 619037 Shelter Bay Sewer Pump Station - Complete Replacement 337,902 620006 frontitge Road Sewer Pump Station - Upgrade 1,985,861 620032 Misc. Generators/Devices Cityv.,ide 544,449 620034 Annual S•wer Rehabilitation 153,877

CCTV Inspection,

Repairs from CCTV Manhole Replacement Cleanout Replacements Annual Flow Monitoring GIS Oata Management Sewer Master Plan

Placeholder for Futurl! Yeor Coaitol Prolrcts 1

Total: CIP Pro•111m Costs /Current-Year Oo//o,sJ S 3 214174

Prepilred by NBS www nb51cv.com I TotMree-: 800 &76 7Sl6

2021 $ 450,000 $

200,000 750,000

15,000 400,000

$ 1,815,000 $

$3,020,000 $2,340,000 $3,114,224 $2,488,294

.' 53

2022 2023 1,500,000 $ 820,000

--

-264,000 264,000 725,000 725,000 250,000 250,000

50.000 50,000 50,000 50,000 50,000 50,000

2,889,000 $ 2,209,000

$

$2,260,000 $2,478,205

2024 740,000

264,000 725,000 250,000 50,000 50,000 50000

$ 2,129,000

$

$2,300,000 $2,600,755

2025 785,000

264,000 725,000 250.000

50,000 50,000 ~a.ooo

S 2,174,000

s

$2,680,000

1,215,327 1, 883,061

$ 3,098.389

$ 1.

~

1,395,363 1,784,513

.79,876

$ 3,179,876

$ $

$3.1'24,995 Sour(e · hUr,s //www t•nr rnm t."~·onom cs. /lutorjrn m,11ce1 rn,1s!rncr n , c

,ndrx h,c;.ro1:,:10Jy enc , 1-JBGU 10069-?.1) 1F

2026 2027 202B 2029 2030 2031 860,000 $ s $ s s

2b4,000 125,000 250,000

50,000 50,000 50,000

300,000

2.390,000 2,390,000 2,390,000 2,390,000 2,390,000 $ 2,549,000 ~ 2,390,000 $ 2,390,000 $ 2,390,000 $ 2,390 000 S 2,390,000

hhlblt 2 (Clr'I, ll ur 31

CITY OF Mill VALLEY SEWER RAT£ ANALYSIS Capital Improvement Plan E>cpendihm,s Preliminary Draft Subject lo Ma~rial Re~/slon, 00 Not Clt1t or IJlstrlbut~

TABLE 11: CAPITAL IMPROVEMENT PROGRAM COSTS {in Future· YeCJr Dol/CJrs)

Proiect Oescrh1tlon 2020 619035 Repair of Hotspots and Pipe Rehabilitation $ 148,685 619036 Bilthedale 43,400 619037 Shelter Bay Sewer Pump Station • Complete Replacement 337,902 620006 Fronta1e Road Sewer Pump Station· Upgrade 1,985,861 620032 Misc. Generators/Devices Citywide 544,449 620034 Annual Sewer Rehabilitation 153,877

CCTV Inspections Repairs from CCTV Manhole Replacement Cle,mout Replacements Annual Flow Monitoring GIS Data Management Sewer Master Plan

PlaCt!holdt!r /CJr Futut? YeCJr Caoitol Proiects' Total: CIP PNH!ram Cast• /Future-Year Dollars) $ 3,214,174

TABLE 12: FORECASTING ASSUMPTIONS

Economic V•riables 2020

Annual construction Cost tnllatlon, Per En&ineeri ng News Retord' 0.009-~

Cumulative Construction Cost Multiplier l.00

2021 2021 2023 $ 461,829 $ 1,579,918 $ 886,404

205,257 . 769,716

. 15,394

410,515 .

278,066 285,379 763,627 783,711 263,320 270,245

52,664 54,049 52,664 54,049

. 52,664 54,049 . .

$ 1,862,712 $ 3,042,923 $2,387,885

2021 2022 2023

2.63~"t· 2.G3% 263 .. 1.03 1.05 1.08

l , CIP •xpenses for FV Wl9no and FY 2020/21 woro provided by the City. Source file : CIP 5 YR BUDGET MltL VAUEY 6·1-lO_ab.•lsx. 2. Future year capital projects are the S·year average, not including carryover funding . 3. Source: https://www.enr.com/economlcs/hlstorlca1_lndices/construction_cost_inde~_hlstory?oly_enc_idz1861Fl006934MF

Prepuc,d P,Y N8S

www nbs,Dv e::cnn I Toll,fn!e· 800 676 7516

EXHIBIT2

2024 2025 2026 2027 2028 2029 2030 2031 s 820,963 $ 893,791 $1,004,938 $ $ $ s s

292,884 300,587 308,492 804,322 825.476 M7,186 277,352 284,647 292,133

55,470 56,929 58,427 55,470 56,929 58,427 55,470 56,929 58,427

. 350,560

. . 2,866,242 2,941,624 3,018,989 3,098 3gg 3,179,876 $ 2,361,934 $ 2,475,289 $ Z,978,Sllll $ 2,866,242 $ 2,941,624 $ 3,018,989 $ 3 098,389 $ 3,179,876

2024 2025 2026 2027 Z02ll 2029 2030 I 2031 .Z.6.l!'o 2 63' 2 63', 2 G~1::. : 1 c3·,c 2 63 1..53%

1.11 1.14 l.1 7 l.ZO 1.Zi1 1.26 1.30 I 1.33

Ed1ib11 2 (CIP). 9 or 31

CITY Of Milt VALLEY SEWER RATE ANALYSIS Debt Service Prt!llminaf"/ Draft Subject to Mot,:rla:I Rrllislon, Do Not Cit,: or 1

Debt sl!r11icl! scht!dult:s are not included separately as part of this onQ/ysls (any rkbt sen1ice is included in Exhibit l · O&M, Sewer S)ll'tems Operations/.

~ Principal Payment

I: : Is : Is : Is : Is : 15 :l:-~~1: Interest Payment Subtotal: Annual Debt Service • $ • $ • $ • $ • $

s . s . s s $ $ s $

Subtotal: Annual Debt Suvlce $ . $ . $ . $ . $ . $ . $ . $ Coverage Requirement 1$-Amnt above annual payment) $ $ . $ $ . $ s . $ $ Reserve Reoulrement (total fund balance) s . s $ $ . s . s s $

Certificates or Participation • $0 Prin,;ipal Payment s s . s s . $ $ . $ $

Interest Payment . . . -

Subtotal: Annual Debi Service $ $ . $ $ . $ $ . $ . $ $ s $ $ $ s s $ s . $ $ s s s s s $ . $ . $ . $ • $ . $ . $ . $ $ . $ • $ . $ • $ . $ . $ . $

Grand Total: Exlstln1> Debt Reserve Tarut ls . $ • $ . s $ . $ . $ . $

E11fsting Annual Debt Obligations to be Satisfied by Watf!'r Rates:

Existing Annual Debt Service $ $ $ . is · 1 s ·r -, $ - , $ EJtlstlng Atmuol COtlf!'ragl! Rrquirement $ $ . $ • $ • $ • $ • $ . $ Existing Debt R,,s,,n,e TQl{lll:I ~ J $ . $ . l_ - $ . $ . $

P,epMed by NBS

www nbscov com I Tol/,lree: 800 676 7516

EXHIBIT 3

: Is • $

:1~--~:1s . $

$ $ $

-. $ . $ . $ $ $ $ $ s $

· 15 . I s - I$

. $ . $ $ < $ s ~

. $ s . $

. $ $ . $

. $ $ . $

. $ . $ . $

T$ · 1 $ · 1 $ $ • $ - $ $ - _$ - ~

Ek~lbit ! (Debt), 1U of 31

CITY OF MILL VALLEY SEWER RATE ANALYSIS Projected Wa,tewater Rates Under Eidsting Rate Schedule Pre/Im/nary Droft Subject to Material Revision, Do Not Cfte or Distribute

TABLE 13 : CURRENT WASTEWATER RATE SCHEDULE

BAR W/0 RESTAURANT $9.61 CAR WASH 7.77 HOSPITAL/CONVALESCENT 8.90 HOTEL W/ DINING 15.00 HOTEL W/0 DINING 9.53 LAUNDROMAT 9.09 LAUNDROMAT · COMMERCIAL 12.02 MARKET W/ GRINDER 18.77 PROFESSIONAL OFFICES 8.71 REPAIR SHOP/SERVICE STATION 10.68 RESTAURANT /BAKERY 18.64 SCHOOLS 9.56 STORE/RETAIL 10.85

Prepared by NBS

www.nhSl[o•.com I Toll-free: BOO 676.7516

$11.10 $12.61 $14.34 $16.31 $18.36 8.97 10.19 11.60 13.18 14.84

10.28 11.68 13.29 15.11 17.00 17.31 19.67 22.38 25.44 28.64 11.00 12.50 14.21 16.16 18.19 10.49 11.92 13.56 15.42 17.36 13.86 15.75 17 .92 20.38 22.93 21.67 24.62 28.00 31.84 35.84 10.05 11.42 12.99 14.77 16.63 12.33 14.01 15.94 18.12 20.40 17.30 19.66 22.36 25.43 28.62 11.03 12.54 14.26 16.22 18.25 12.52 14.23 16.18 18.40 20.71

E<hlblt 4 {Current Rare,), l l o f 31

CITY OF Mill VALLEY WASTEWATER RATE STUDY Cost of Service Ar,alysls Preliminary Draft Sub/11ct to Material Revision, Do Not Cite or Distribute

TABLE 14: CLASSIFICATION OF EXPENSES FOR COST OF SERVICE ANALYSIS

005-0100

005-0102 Overtime 2,500 1,500 005·0103 Holiday Pay 005-0104 PartTlme 005-0400 fmnlnvee Benefits 186,977 112,186 ALL OTHERll:Xffl:NSES . 005-1100 Office Supplies s 800 s 480 005-1200 Postage . -005-1300 Special Departmental hpense 3,750 2,250 005-1500 Clothing & Personal supplies 4,000 2,400 005-1700 Communications 2,000 1,200 005-1851 Water 400 240 005-1852 E lectric1ty 9,500 5,700 OOs.1853 Gas 400 240 005-2000 Building & Grounds Maintenance 14,500 8,700 005-2100 Equipment Maintenance 22,SOO 13,500 052-1020 Fuel 5,500 3,300 005-2300 Specialized Services 212,200 127,320 052-4000 Insurance . 005-2600 Memberships & Training 6,700 4,020 005-2900 Other Expenses 055-0080 Bond Principal Payments 140,000 84,000 055-1080 Bond Interest Payments 164,438 98,663 005-8005 Bond Issuance Costs 005-8300 Equipment . -005-8900 Contingency . -005-9700 Vehicle Maintenance Chg 26,931 16,159 005-9800 Equipment Replacement Expense .

005-9900 lnter-Oeoertmental Exoense 627,999 376 799 OTHER 000-0000 lateral Reolacement ProQram J $ $

4,303,166 4 303,166

$ - $ -$ 6,031,321 $ 5,340059

$

$

$ $

438 438 125 60.0% 17.51'; 175% 60.0% 17.5% 17 5~. 60.0~: 17 5% 17 .sr

32 721 32,721 9,349 60.0% 17.5% 17.s~·.

140 $ 140 $ 40 60.0% 17.5% 17 5% - - . 60.0% 17.5~~ 17 5%

656 656 187 60.0% 17 5"~ 17.51~.,

700 700 200 60.0% .i.7.5% 17.S~ , 350 350 100 60.0!, 17.5~") 17.5},

70 70 20 600% l 7.511~ 17 5 ;

1,663 1,663 475 60.0'Y., 17.S~, 17 S'' 70 70 20 mm~ 17.5' .. 17 5%

2,538 2,538 725 60 0% 17 5ci• 175' :, 3,938 3,938 1,125 60.m: 175, 17.5%

963 963 275 60.0', 17 5 17 5~: 37,135 37,135 10,610 60.0% 17.5', 17.5'!.'

. 60.0% .:7.5 (l 17.5', 1,173 1,173 335 60 oi: 17 5' 17 5°~

60.0'lo 17 5 17.5% 24,500 24,500 7,000 60.0·•; 17 5' 17.5'.I; 28,777 28,777 8,222 600% :7 5 17 5 '}.i

. - . 60.0% 17 5' 17.5% - . . 60,0 % 17 5' 17.5,, - - . 600% 17 5' 17 ~~~

4,713 4,713 1,347 60.0% 17 S ' 17.5 % - 60.0% 17.5~.i 17.S~·J

109 900 109,900 31,400 60.0% 17.5% 17.5%

$ :P :i 60.0% l 17 5'~ l 17.5°, l 100 .0% o.o,. 0.0%

- s . $ . 45.0% 20.0% 20.0% 302,427 $ 302A27 $ 86408 88.5% 5.1)% 5.0% I

o. flased on the Draft l!tvistd Ord/oonce XX-1- Pr~•criblnr; Sewer Service Char<Ju, page 10, the City'$ O:,pitol and ~bt Allocation is $347,520 (a/HJvr 4°"/ ond O&M Allocation;, $561,861 (about 6016/.

Propared by NB,

www.nb,gov.com I ToH-froe: 800 676.7516

5 .0 ''l 5.0., 5.0' s.o-,

5.0~., s.o• , 5 0' . 5.0' s.o•i 5.0 "

5.0', 5 ori 5.0 5.U' so· 5 .0 ,, 5.0~ 5.0 , s.0°· S 0' ' 5 o a1,;

s.o . 5 ff

so so 5 0' 5.0

5.0', 0.0'-,

15.0~: 1.4%

COSA Fuoct & Class1fic.it1on, 12 of 31

CITY OF MILL VALLEY WASTEWATER RATE STUDY Cost of Service Analysls Preliminary Draft Subject to Material Revision, Do Not Cite or Distribute

TABLE 15: CLASSIFICATION OF EXPENSES FOR COST OF SERVICE ANALYSIS, c.ont.

Less: Non..Ratf! Revenues -·

NET REVENllE llEQUll(EMENTS

Allocation oj Revcmw Rt1 qwrC'ments

I -

TABLE 16: ADJUSTMENTS TO CLASSIFICATION OF EXPENSES

rrep.ari!d by NBS

www.nb,;ov.com I Toll,froo· HOO 676 7516

I -

50,0%

0.0%

60.0%

81."' I. -1. I I

81.9% 81.9% &l.9%

I 25.0% I 25.0% 0.0~\l J 0.0% I 0.0% 0.0%

I 17.5% I 17.5% 5.0% I 7.9% I ?--9" 2.3"

I 7.9%

I 7.9%

I 2.3%

7 .9% 7.9 '}.' 2.3%

7.9% 7.9% 2.3%

COS.Ai Funct. & ClassiUc:~t1tm. n af :u

CITY OF MILL VAtlEV WASTEWATER RATE STUDY Wastewater Cost of Service Analysis Prellminory Draft Subject to Moterlo/ Revision, Do Not Cite or Distribute

SINGLE FAMILY RESIDENTIAt MULTI-FAMILY RESIDENTIAL 1

COMMERCIAL 2,633.0

BAR W/0 RESTAURANT' 3.9 291 Win/Sum Avg $18.36 CAR WASH' 20.4 2,031 Winter Avg $14.84 HOSPITAL/CONVALESCENT' 86.1 6,735 Winter Avg $17.00 HOTEL W/ DINING' 85.3 3,711 Win/Sum Avg $28.64 HOTEL W/0 DINING' 62.2 4,461 Win/Sum Avg $18.19 LAUNDROMAT' 44.1 3,8S5 Winter Avg $17.36 MARKET W/ GRINDER' 0.0 0 Winter Avg $35.84

5,342 .76 30,140.04

114,495.00 106,283.04

81,145.59 66,922.80

MARKET W/0 GRINDER' 147.7 9,159 Winter Avg $22.69 207,817.71 PROFESSIONAL OFFICES' 208.6 19,404 Winter Avg $16.63 322,688.52 REPAIR SHOP/SERVICE STATION 13.0 924 Winter Avg $20.40 18,849.60 RESTAURANT/BAKERY' 355.4 15,807 Win/Sum Avg $28.62 452,396.34 SCHOOLS' 90.3 8,202 Winter Avg $ 18.25 149,686.50 STORE/RETAIL' 105.0 8,781 WinterAv~ $20.71 181,854.51

Grand Tot,11 7,337.9 518,358 $10.921.188.33 1. Number of Sewer Dwelllng U!llts ls based on data provided by MMWD and the County Assessor's Office. 2. Calculated EDU based on flow and BOD/TSS strength factors.

Proposed New Ordinance for SASM charges: c. • Average Monthly Wintertime Water Usage by Single Family Units" refers ta the average monthly water usase by single family accounts served by Marin Municipal Water District during the months of December, January, February, and Man:h.

Pr~pilfed by NBS

www."b,gov.com I loll-free: 800 ~76. 7516 COSA AUoca t on Filcton, 14 of 31

CITY OF Mill VALLEY WASTEWATER RATE STUDY Wastewater Cost of Senilce Analy$ls P~llminary Draft Subject to Mater/al Revision, Do Not Cite or Distribute

TABLE 18: DEVELOPMENT OF THE VOLUMETRIC/VARIABLE COST ALLOCATION FACTORS

Devclopnu::mt of the V,1nabfc Cost Al:orntlon F' ,1cto~-----~I P1•rccntagcof CuJtomcr (l,1s~ ' Voltnrn 1 Tot.ti Adjush•d

I {Cerf ' Volume SINGLE FAMILY RESIDENTIAL 301,299 S8.1" MULTI-FAMILY RES1DENT1Al1 133,698 25.8" COMMERCIAL

BAR W/0 RESTAURANT 291 0.1% CAR WASH 2,031 0.4" HOSPITAL/CONVALESCENT 6,735 1.3" HOTEL W/ DINING 3,711 0.7% HOTEL W/0 DINING 4,461 0.9% LAUNDROMAT 3,855 0.7" MARKET W/ GRINDER 0 0.0% MARKET W/0 GRINDER 9,159 1.8" PROFESSIONAL OF FICES 19,404 3.7% REPAIR SHOP/SERVICE STATIC 924 0.2% RESTAURANT /BAKERY 15,807 3.0% SCHOOLS 8,202 1.6" STORE/RETAIL 8 781 1.7"

Gralld Tobl: S1R.3S8 100.0% l . Consumption data ls based on the City or MIii Valley's FY 2020/21 seasonal customer data. 2. Number of dwelling units [DU's) is per source file: EDU Backup 114.xlsx.

TABLE 19 : DEVELOPMENT Of THE FIXED COST ALLOCATION FAOOR5

D"vcloprr.cnt of the r,-r,d Cost (BOD/TSS Tre~tmPnt) /\llocat,on Factor ______ M __ _

Anr}u,il1t t•cl

Conc;urnntion

iCCfl'

1\r.nuail1z•::d

Consumntion

{g,1l!on~! b. llioc.hcmiol O>ygen Dem .ind (OO D)

Typir, 11 ; Total Suspended Solids (TSS)

(u)tC'tmPr (l,i•; •, CJlrnlatcd ,

I Str~nr,t h f',lltor , I Pflccn t of Tota l I Strength , 1l'l0D (lbs 1vr) .

1 i (mr./1) ! 1 Fa ctor l mr, / 1) I

Tvpit,1 1 .... SINGLE FAMILY RE51DENT1AL1 301,299 225,386,717 175 328,952 52,8"

J

200 I 375,945 I 57.9% MULTI-FAMILY RESIDENTIAU 133,698 100,012,789 175 145,969 23.4% 200 166,821 25.7% COMMERCIAL

BAR W/0 RESTAURANT 291 217,683 200 363 0.1" 200 363 0.1% CAR WASH 2,031 1,519,290 20 253 0.0% 150 1,901 0.3" HOSPITAL/CONVALESCENT 6,735 5,038,117 250 10,504 1.7" 100 4,202 0.6% HOTEL W/ DINING 3,711 2,776,014 500 11,576 1.9% 600 13,891 2.1% HOTEL W/0 DINING 4,461 3,337,051 310 8,628 1.4% 120 3,340 0.5" LAUNDROMAT 3,855 2,883,733 150 3,608 0.6% 110 2,646 0.4" MARKET W/ GRINDER 0 800 0 0.0% 800 0 0.0% MARKET W/0 GRINDER 9,159 6,851,390 300 17,142 2-8" 300 17,142 2.6% PROFESSIONAL OFFICES 19,404 14,515,162 130 15,737 2.5" 80 9,685 1 .5'6 REPAIR SHOP/SERVICE STATIC 924 691,198 180 1,038 0.2" 280 1.614 0.2% RESTAURANT/BAKERY1 15,807 11,824,426 650 64,100 10.3% 390 38,460 5.9" SCHOOLS 8,202 6,135,506 130 6,652 1.1" 100 5,117 0.8% STORE/RETAIL 8,781 6,568,627 150 8,217 1.3" 150 8,217 1.3'6

Grand Total: S18358 387 757 702 622 740 100,0% 649 344 100.°" 1. Averase strength factors for BOD and TSS are derived from the State Water Resources Control Board Revenue Pros ram Guidelines, Append ix G. 2. The BOO and TSS Average Strensth Factor (mg/l) for Restaurant/Bakery were adjusted bv a factor of 0 .65 in 2017 to account for other factors. 3. The Restaurant Rate Adjustment Factor is: 65% [this adjustment was made in 2017 rest au rants I.

Prepared by NBS www.nbogov com I Tolf·fr .. -800.676.7516

COSA Allocation F~cra1&, 15 or 31

CITY OF MILL \/ALLEY SEWER RATE ANALYSIS Sewer Cost of Service Analysls Pl'fllimlnary Draft- Do Not Cltt! or Dirtrlbute

TABLE 20: SUMMARY OF REVENUE REQUIREMENTS & ALLOCATION FACTORS

SINGlf FAMILY MULTI-FAMILY $1,547,556 25."8% $468,795 COMMERCIAL

BAR W/0 RESTAURANT $3,368 0.1% $1,166 CAR WASH $23,509 0.4% $814 HOSPITAL/CONVALESCENT $77,958 1.3% $33,736 HOTEL W/ DINING $42,955 0.7% $37,178 HOTEL W/0 DINING $51,636 0.9% $27,709 LAUNDROMAT $44,622 0.7% $ll,S86 MARKET W / GRINDER $0 0.0% so MARKETW/0 GRINDER $106,016 1.8% $5S,054 PROFESSIONAL OFFICES $224,602 3 .7% $50,542 REPAIR SHOP/SERVICE STATIC $10,695 0.2% $3,332 RESTAURANT /BAKERY $182,966 3.0% $205,865 SCHOOlS $94,938 1.6% $21,364 STORE/RETAIL $101640 17% $26 391

00.000 I 100 O"'a I s i.000.000 I 1. Revenue requirements are from the COSA Functionalizallon/Classlflcatlon Analysis.

23.4% $513,sts I

0.1% $1,118 0.0% $5,854 1.7% $12,942 1.9% $42,785 1.4% $10,286 0.6% $8,148 0.0% $0 2.8% $52,798 2.5% $29,829 0.2% $4,971 10.3% $118,458 1.1% $15,761 13% $25 310

100.0% i s 2,000,000 I

2 Customer class allocatlon percentages are from Table 27 - Development of the Volumetric/Variable Cost Allocation Factors.

3. Customer class allocation percentages are from Table 28 • Development of the Fixed Cost Allocation Factors.

P,.i»••d by N85 www.nbseou.com I Toh•fr-!!' 800 516 1516

25.7% I $2,530,166 I 2S.3%

0.1% $S,653 0.1% $5,343 0.3% $30,177 0.3% $30,140 0 .6% $124,636 1.2% $114,495 2.1% $122,918 1.2% $106,283 0.5% $89,631 0.9% $81,146 0.4% $64,356 0.6% $66,923 0.0% $0 0.0% So 2.6% $213,868 2.1% $207,818 1.5% $304,972 3.0% $322,689 0.2% $18,999 0.2% $18,850 5 .9% $507,290 5.1% $452,396 0.8% $132,063 1.3% $149,687 13% $153 341 15% $J81,855

100 0% I s10.ooo,ooo , 100%

COSA • S.Wll!r R;;ates, l6 of 3I

CITY OF Mill VALLEY SEWER RATE ANALYSIS Sewer Cost of Servke Analysis Pttllminary Draft· Do Not Cite or Distribute

TABLE 21: SUMMARY OF REVENUE REQUIREMENTS & ALLOCATION FACTORS

Summary of FY 2021/n Customer Cl~ss Revc,nuc, Requirements by Functional Cater:orics --- - ·~----

Cu;,tomer CJ;i~·j

SINGLE FAMILY MULTI-FAMILY COMMERCIAL

BAR W/0 RESTAURANT CAR WASH HOSPITAL/CONVALESCENT HOTEL W/ DINING HOTEL W/0 DINING LAUNDROMAT MARKET W /GRINDER MARKET W/0 GRINDER PROFESSIONAL OFFICES REPAIR SHOP/SERVICE STATIO RESTAURANT /BAKE RV SCHOOLS STORE/RETAIL

Volumetric/ Fi,tPfl (Tre;1tn1Pnt-Helated) i Net Rcvcm;e

J v.1r1nblc Co •,t Co•,t Alloct1t1ons

i r,ilu, ,H•os, r--1300 -- - j TSS

$3,487,539 $1,056,467 $1,157,923 $1,547,556 $468,795 $513,815

$3,368 $1,166 $1,118 $23,509 $814 $5,854 $77,958 $33,736 $12,942 $42,955 $37,178 $42,785 $51,636 $27,709 $10,286 $44,622 $11,586 $8,148

$0 $0 $0 $106,016 $55,054 $52,798 $224,602 $50,542 $29,829

$10,695 $3,332 $4,971 $182,966 $205,865 $118,458

$94,938 $21,364 $15,761 $101640 $26 391 $2S 310

I s 6,000.000 l s

Rcq'ts.

lly Cl~ss

$5. 701,930 r $2,530,166

$5,653 $30,177

$124,636 $122,918

$89,631 $64,356

So $213,868 $304,972

$18,999 $507,290 $132,063 $153 341

2,000,000 I S 2,000,000 I S!0,000,000 I 1. Revenue requirements are from the COSA FuncUonallziltlon/Classlllcatlon Analysis.

Ptlfp1ned by N8~

www.nbs1ov com I Toll,f""'· 600 676 75Ifi

% of Net

RcvPnll c

Req't~; .

57.0% 25.3%

0.1% 0.3%

1.2% 1.2% 0.9% 0.6%

0.0% 2.1% 3.0% 0.2% 5.1%

1.3% 15% 100%

COSA- Sll!wer Aates, 17 of 31

CITY OF MILL VALLEY SEWER RATE ANALYSIS Sewer Cost of Service Analysis Prellmlnary Draft - Do Not Cite or Distribute

TAIILE 22 : PROPOSED SEWER RATE5 FOR FY 2021/22 Rate Altematlve #1 -~ Fl•ad / 60% Volumetric Rates for Resld. & Comm.

Single Famlly Residential (EDU) Multi-Famili:: Resld. jDwellln1 Units

Rate Desliln'fot lfnl*ntlol: 4#4#

$ $ $54.57 Bar w/o Restaurant (EDU) 3.9 274 Win/Sum Avg s 5,653 2,543 3,110 $11.36 520.65 Car Wash (EDU) 20.4 1,910 Winter Avg 30,177 13,335 16,841 $54.57 $8.82 $15.80 Hospital/Convalescent (EDU) 86.l 6,335 Winter Avg 124,636 56,401 68,234 $54.57 $10.77 $19 68 Hotel w/ Dining (EDU) 85.3 3,490 Win/Sum Avg 122,918 55,849 67,069 $54.57 $19.22 $35.22 Hotel w/o Dining (EDU) 62.2 4,196 Win/Sum Avg 89,631 40,715 48,916 $54.57 $11.66 $21 36 laundromat (EDU) 44.1 3,626 Winter Avg 64,356 28,868 35,488 $54.57 $9.79 S17. 75 Market w/ Grinder• (EDU) 0.0 0 Winter Avg . $54.57 $0.00 SO.OD Market w/o Grinder (EDUf 147.7 8,615 Winter Avg 213,868 96,709 117,159 $54.57 $13.60 $24.83 Professional Offices (EDU) 208.6 18,250 Winter Avg 304,972 136,591 168,382 $54.57 $9.23 $16.71 Repair Shep/Service Station (E 13.0 869 Winter Avg 18,999 8,523 10,476 $54.57 $12.05 $21 86 Restaurant/Bakery (EOU) 355.4 14,867 Win/Sum Ave 507,290 232,708 274,582 $54.57 $18.47 $34.12 Scltools (EDU) 90.3 7,714 Winter Ave 132,063 59,130 72,933 $54.57 $9.45 $17.12

105.0 8,259 Winter Avg 153,341 68,739 84,602 $54.57 $10.24 518.57 1,221.9 78,405.4 - , $ 1,767,904 $ 800,111 $

45" 3 2 I •7l33719Jli 487tsU•I I

1. Residential EDUs are based on Marin lllluniclpal Water District and SOSM. Commerclal EDUs are NBS calculations based on annual consumption and effluent strenrth factors~-2. The most recent total Annualized Consumption Is 518,358 ccr. This total w .. adjusted to be the average of the three most recent years lo better represent a 5-year projection. 3. Eithertl,e winter average or a winter/summer average consumption Is used to calculate volumetric rates as noted below. 4. There are no accounu in this customer class; rate reflects current differential between "Market w/ Grinder" rate vs. "Market w/o Grinder" rate.

Prepared by NBS www.nbs1o11.ccm I Toti fr.tilt 800 676 ?S16

COSA - Sewer' Rilt~,, 113 or 31

CITY OF Mill VALLEY SEWER RATE ANALYSIS Sewer Cost of Servke Analysls Preliminory Draft- Do Not Cite or Distribute

TABLE 23: PROPOSED SEWER RATES FOR FY 2021/22 Rate Alternative #2 • Fl~ed/Volumetrlc Rates for Resid. Only

Slngle Family Residential (EDU)

Multi-Famil~ Resid. !Dwellln11 Units Rott Design. ~ndol: • Bar w/o Restaurant (EDU I 3.9 274 Winter Avg - $5,653 n.a. $5,653 $20.65 n.a.

Car Wa5h (EDU) 20.4 1,910 W in/Sum Avg $30,177 n.a. $30,177 $15.80 n.a. Hospital/Convalescent (EDUI 86.1 6,335 Winter Avg $124,636 n.a. $124,636 $19.68 n.a. Hotel w/ Dining (EDU) 8 5.3 3,490 Win/Sum Avg $122,918 n.a. $122,918

llJ01' $ 35.22 n.o. Hotel w/o Dining (EDUJ 6 2.2 4 ,196 Win/Sum Avg $89,631 n.a. $89,631

Volumetric $21.36 n.a. Laundromat (EDU) 44.l 3,626 Win/Sum Avg $64,356 n.a. $64,356

Ratl!S(No S17.75 n.a. Market w/ Grind er' (EDU I 0.0 0 Winter Avg so n.o. so

Change/ram $39.21 n.a .

Market w/o Grinder l EDU) 147.7 8,615 Win/Sum Avg $213,868 n.a. $213,868 $24.83 n.a. Professional Offices (EDU) 208.6 18,250 Winter Avg $304,972 $304,972 Cu=ntRate

$16.71 n.a. lkslgnJ n.a.

Repair Shop/Service Station ( EC 13.0 869 Winter Avg $18,999 n.a. $18,99 9 $21.86 n.a. Restaurant/Bakery (EDU) 355.4 14,867 Win/Sum Avg $507,290 n.a. $507, 290 $34.12 n.a. Schools (EDU) 90.3 7,714 Winter Avg $132,063 n.a. $132,063 $17.12 n.a. Store/Retail CEOU I 105,0 8 259 Winter Avg $153,341 n.a. $153,341 $18.57 n.a.

Total u M37.9 48~ $10,000,000 I $3!292"39 r, ~101~161 - -

1. Residential EDU$ are based on Marin Municipal Water District and SDSM. Commercial fDUs are NBS calculation, based on annual consumption and effluent strength factors. 2. Either the winter average or a winter/summer average consumption ls used to calculate volumetric rates as noted below. 3. There are no accounts In this customer cla5s; rate reflects current differential between "Market w/ Grinder" rate vs. "Market w/ o Grinder'' rate.

Pro}l,lrod by NBS

www.ni»£OY,tOm I Toll-r, ••. 800.616.7516 tOSA ... Se:wtt R~tcs, 19 or 31

CITY OF MILL VALLEY SEWER RATE ANALYSIS Sewer Cost of Service Analysls Preliminary Draft· Do Nat Cltt! or Dlstrlbutt!

Single Family Residential (EDU) Multi-Famil~ Resld. !Owellins Units

Ratt_Deslan__ · · - _R •• nlff. ~~ .-n_ tla0

I:

Bar w/o Restaurant (EDU) 3.9 Car Wash (EDU) 20.4 Hospital/Convalescent (EDU) 86.1 Hotel w/ Dining (EOU) 85.3 Hotel w/o Dining (EDU) 62.2 laundromat (EDU) 44.1 Market w/ Grinder

1 {EDU) o.o

Market w/o Grinder (EDU) 147.7 Professional Offices [EDU) 208.6 Repair Shop/Service Station (EC 13.0 Restaurant/Bakery IEOUJ 355.4 schools (EDUI 90.3 store/RetaU(EDU) .... _ .. 105.0

1,221.9

frota11;«.; "if I fn.1,.,1

274 Win/Sum Avg

1,910 Winter Avg 6,335 Wintl!rAvg

3,490 Win/Sum Avg

4,196 Win/Sum Avg

3,626 Winter Avg

0 Winter Avg

8,615 Winter Avg

18,250 Winter Avg

869 Winter Av&

14,867 Win/Sum Avg

7,714 Winter Avg

8,259 Winter Avg

78,405.4

'87!§43 . ..

$ 5,653 $ 1,907 $ 3 ,746 - --$40.93 $13.69 30,177 20,002 20, 175 $40.93 $10.56

124,636 42,301 82,335 $40.93 $13.00 122,918 41,887 81,031 $40.93 $23 .22

89,631 30,536 59,095 $40.93 $14.08 64,356 21,651 42,705 $40.93 $11.78

$40.93 $0.00 213,868 72,532 141,336 $40.93 $16.41 304,972 102,443 202,529 $40.93 $11.10

18,999 6,392 12,607 $40.93 $14.51 507,290 174,531 332,759 $40.93 $22 .38 132,063 44,348 87,715 $40.93 Sll.37 153,341 51,555 101,786 $40.93 $12.32

$ 1,767,904 $ 600,084 $ 1,167,820

34" 66" ,...-;no!OOQ ... r'it!bib&9•7U ~ $6!930;2171

1. Residential EDU• are based on Marin Municipal Water District and SDSM. Commercial EDU, are NBS calculatlons based on annual consumption and effluent strength factors 2. Either the winter average or a winter/summer average consumption Is used to calculate volumetric rates as noted below.

3. There are no accounts in this customer class; rate reflects current differential between "Market w/ Grinder" rate vs. "Market w/o Grinder" rate .

Prep.arrd by NBS

www.nb.5gov.rom I ToM•rrer: 800 £i76 7516

$20.65 $15.80 $19.68

$35.22 $21.36 $17.75 So.oo

$24.83

$16.71 ~2186 $3-1.ll

$17.12 $18.57

COSA. Sewer R;rte~. 20 or 3l

CITY OF Mill VALLEY SEWER RATE ANALYSIS Sewer Cost of Service Analysis Preliminary Draft· Do Nat Cite ar Distribute

TABLE 25: PROPOSED SEWER RATES FOR FY 2021/22 Rate Alternative 113 • 20% FiKed / 80% Volumetric Rates for Resid. & Comm.

Sar w/o Restaurant {EDU) 3.9 274 Win/Sum Avg $5,653 ~.zn $4,381 --$27.28 $16.01 $20.65 Car Wash (EDU) 20.4 1,910 Winter Avg $30,177 $6,668 SB,509 $27.28 $12.31 $15.80 Hospital/Convalescent [EDU) 86.1 6,335 Winter Avg $124,636 $28,101 $96,435 $27.28 $15.22 519.68 Hotel w/ Dining (EDU) 85.3 3.490 Win/Sum Avg $122,918 $27,924 $94,993 $27.28 $27.22 $35}} Hotel w/o Dining (EDU) 62.2 4,196 Win/Sum Avg $89,631 $20,357 $69,274 $27.28 $16.51 $21.35 Laundromat (EDU) 44.1 3,626 Winter Avg $64,356 $14,434 $49,922 $27.28 $13.77 517.75 Market w/ Grinder' {EDU) 0.0 0 Winter Avg so so so $27.28 $0.00 $000 Market w/o Grinder (EDU) 147.7 8,615 Winter Avg $213,868 $48,355 $165,513 $27.28 $19.21 $14.83 Professional Offices (EDU) 208.6 18,250 Winter Avg $304,972 $68,295 $236,677 $27.28 $12.97 516.71 RepaJr Shop/Service Station (E 13.0 869 Winter Avg $18,999 $4,2fi1 $14,738 $27.28 $16.96 $21 86 Rest au rant/Bakery ( EDU) 355.4 14,867 Win/Sum Avg $507,290 $116,354 $390,936 $27.28 $26.29 $34.12 Schools (EDU f 90.3 7,714 Winter Avg $132,063 $29,565 $102,498 $27.28 $13.29 $17.1? Store/Retall jfOU) 105.0 8,259 Winter Avg $153,341 534,370 $118,971 $27.28 $14.41 $18.57

1,221.9 78,405.4 $1,767,904

1,n,.il 487,543 ( I $10.000,0001 ~""°~,:.,a:,-, :,1.11:..:1!:;Z!llr 1-

1. Residential EDU$ •r• b.sed an Marin Municipal Water Dl•trlct and SDSM. Commercial EDU, are NBS calculatlon, ba~d on annual consumption and effluent strength factor>. 2. either the winter average or a winter/summer average consumption is used to calculate volumetric rates as noted below.

3. There are no accounts in this customer class; rate reflects current differential between "Market w/ Grinder" rate vs. "Market w/ o Grinder" rate.

Prepaced by NBS

WWW nb.5,:ov com I TolHrH 800.676 751fi COSA ~ Sf.W~t Ril lP.!o, 2.l or 3 1

CITY OF Mill VALLEY SEWER RATE ANALYSIS Sewer Cost of Service Analysis Preliminary Orojt • 00 /Yot Cite or Distribute

TABLE 26: PROPOSED SEWER RATES FOR FY 2021/22 Rate l\l!ernative N3 • 20% Fixed/ BO% Volumetric Rates for Resid. & Comm.

Rate • Win/Sum Avg - st, .is--$1s.01 Bar w/o Restaurant (EDU) 3.9 274 $5,653 $1, 271 $4,381 $10.65 Car Wash (EDU) 20.4 1,910 Winter Avg $30,177 $6,668 $23,509 $27.28 $12.31 $15.80 Hospital/Convalescent (EDU J 86.l 6,335 Winter Avg $124,636 $28,201 $96,435 $27.28 $15.22 $19.68 Hotel w/ Dining (EDU) 85.3 3,490 Win/Sum Avg $122,918 $27,924 $94,993 $27.28 $27.22 535.22 Hotel w/o Dining (EDU] 62.2 4,196 Win/Sum Avg $89,631 $20,357 $69,274 $27.28 $16.51 $21.36 Laundromat (EDU) 44.1 3,626 Winter Avg $64,356 $14,434 $49,922 $27.28 $13.77 517.75 Market w/ Grinder (EDU) 0,0 0 Winter Avg $0 SD $0 $27.28 $0.00 $0.0D Market w/o Grinder (EDU) 147.7 8,615 Winter Ave $213,868 $48,355 $165,513 $27.28 $19.21 $7.J,83 Professional Offices (EDU J 208.6 18,250 Winter Avg $304,972 $68,295 $236,677 $27.28 $12.97 $16.71 Repair Shop/Service Station (E 13.0 869 Winter Avg $18,999 $4,261 $14,738 $27.28 $16.96 $21.86 Restaurant/Bakery (EDU) 3SS.4 14,867 Win/Sum Avg $507,290 $116,354 $390,936 $27.28 $26 .29 $34.12 Schools (EDU) 90.3 7,714 Winter Avg $132,063 $29,565 $102,498 $27.28 $13.29 $17.1:J Store/Retail (EDU) 10S.O 8,259 Winter Avg $153,341 $34.370 $118,971 $27.28 ?_14.41 $18.57

1,221.9 78,405.4 $1,767,904

14871!'31 1. Residen!lal fCUs are baM!fl an Marin Municlpal Water Clstrlct and SCSM. Commercial fDUs are NBS calculations based on annual consumption and effluent strength factors 2. Either the winter average or a winter/summer average consumption is used to calculate volumetric rates as noted below.

3. There are no accounts in this customer class; rate reflects current differential between "Market w/ Grinder" rate vs. "M,.rket w/o Grinder• rate .

Prepar"d by N8~

www.nbsgov.com I Toll,froo: B00.676. 7516 COSA ~ Sl!"'ler Rates, 22 or 31

TABLE 1 : PROPOSED SEWER RATES FOR FY 2021/ZZ

Rate Alternative #2 • Fh<ed/Volumetrlc Rates for Resld. Only

- --$5,653 ss,ss3 $20.65 Bar w/o R!!stau rant (EDU) 3.9 274 Winter Avg n.a. n.a. Car Wash (EDU) 20.4 1,910 Win/Sum Avg $30, 177 n.a. $30,177 $15.80 n.o. Hospltal/Conval!!Scent (EDU) 86.1 6,335 Winter Avg $124,636 n.a. $124,636 $19.68 n.a. Hotel w/ Dining (EDU) 85.3 3,490 Win/Sum Avg $122,918 n.o. $122,918 1001' $35.22 n.a. Hotel w/o Dining (EDU) 62.2 4,196 Win/Sum Avg $89,631 n.o. $89,631 Volumetric $21.36 n.a. Laundromat (EDUI 44.l 3,626 Win/Sum Avg $64,356 n. a. $64,356

Rates(Na $17.75 n.a. Market w/ Grinder3 {EDU) 0.0 0 Winter Avg $0 n.a. $0

Change from $39.21 n.a.

Mark!!t w/o Grinder (EDU) 147.7 8,615 Win/Sum Avg $213,868 n.a. $213,868 Current Rate

$24.83 n.a. Professional Offices {EDU] 208.6 18,250 Winter Avg $304,972 n.a. $304,972 $16.71 n.a. Repair Shop/Service Station (EDU] 13.0 869 Winter Avg $18,999 n.a. $18,999 Design) $21.86 n.o. Restaurant/Bakery (EDU) 355.4 14,867 Win/Sum Avg $507,290 n.a. $507,290 $34.12 n.a. Schools (EDU) 90.3 7,714 Winter Avg $132,063 n.a. $132,063 $17.12 n.a. Store/Retail (EDUI 105.0 8 259 WinterAv11. $153 341 n.CJ. $153,341 $18.57 n.a.

ITOIIII 1. Resid~ntlal EDUs are based 011 Marin Municipal Water District and SOSM. Commercial EDUs are NBS calculations based on annual consumption and effluent strength factors. 2. Either the winter average or a winter/summer average consumption is used to calculate volumetric rates as noted below. 3. There are no accounls in this customer class; rate reflects current differential between "Market w/ Grinder" rate vs. " Market w / o Grinder'' rate.

TABLE 1: PROPOSED SEWER RATES FOR FY 2021/ZZ

Bar w/o Restaurant (EDU) 3.9 274 Winter Avg $5,653 n.o. ·--$5,653 $20.65 n.o. Car Wash (EDUI 20.4 1,910 Win/Sum Avg $30,177 n.o. $30,177 $15.80 n.a. Hospltal/Convalescent {EDU) 86.1 6,335 Winter Avg $124,636 n.a. $124,636 $19.68 n.a. Hotel w/ Dining (EDU) 85.3 3,490 Win/Sum Avg $122,918 n.a. $122,918 100% $35.22 n.a. Hotel w/o Dining [EDU) 62 .2 4,196 Win/Sum Avg $89,631 n.a. $89,631 Vo/umetrlc $21.36 n.Q. Laundromat (EDU) 44.1 3,626 Win/Sum Avg $64,356 n.a. $64,356

Rates(No $17.75 n.a.

Market w/ Grinder3 {EDU] 0.0 0 Winter Avg so n.a. $0 Change from

$39.21 n.a. Market w/o Grinder (EDU) 147.7 8,615 Win/Sum Avg $213,868 n.a. $213,868

Current Rate $24.83 n.a.

Professional Offices {EDU] 208.6 18,250 Winter Avg $304,972 n.a. $304,972 $16.71 n.o. Repa[r Shop/Serv[ce Station (EDU I 13.0 869 Winter Avg $18,999 n.o. $18,999 Design} $21 .86 n.o. Restaurant/Bakery (EDU) 355.4 14,867 Win/Sum Avg $507, 290 n.o. $507,290 $34.12 n.a. Schools (EDU) 90.3 7,714 Winter Avg $132,063 n.o. $132,063 $17.12 n.a. Store/Retall lEDU! 105.0 8 259 Winter Av~ $153,341 n.a. $153,341 $18.57 n.a.

Totat ···-·

1. Residential EDUs are ba,ed on Ma rln Municipal Water District and SOSM. Commercial ED Us are NBS calculations based on annual consumption and ~ffluent strength factors. 2. Either the winter average or a winter/summer average consumption Is used to calculate volumetrfc rates as noted below. 3. There are no accounts in this customer class; rate reflects current differential between "Market w/ Grinder'' rate vs. "Market w/ o Grinder" rate.

TABLE 1 : PROPOSED SEWER RATES FOR FY 2021/22

YEAR3

Bar wlo Restaurant (EDU I 3.9 274 Winter Avg $5,653 n.a. --$5,653 $20.65 n.o. Car Wash (EDU) 20.4 1,910 Win/Sum Avg $30,177 n.a. $30,177 $15.80 n.a. Hospltal/Conva lescent (EDU} 86.1 6,335 Winter Avg $124,636 n.o. $124,636 $19.68 n.o. Hotel w/ Dining (EDU) 85.3 3,490 Win/Sum Avg $122,918 n.o. $122,918 100% $35.22 n.a. Hotel w/o Dining (EDU) 62.2 4,196 Win/Sum Avg $89,631 n.o. $89,631 Valuml!!trlc $21.36 n.o. Laundromat (EDU) 44.1 3,626 Win/Sum Avg $64,356 n.o. $64,356

Rates(No $17.75 n.a. Market w/ Grinde? (EDU t 0.0 0 Winter Avg $0 n.o. so

Changl!!/ram $39.21 n.a.

Market w/o Grinder (EDU) 147.7 8,615 Win/Sum Avg $213,868 n.a. $213,868 $24.83 n.a. Profession al Offices (EDU) 208.6 18,250 Winter Avg $304,972 n.a. $304,972 CUlll!!ntRote

$16.71 n.a. Repair Shop/Service Station (EDU] 13.0 869 Winter Avg $18,999 n.o. $18,999 Design} $21.86 n.a. RestauranVBakery (EDU) 355.4 14,867 Win/Sum Avg $507,290 n.o. $507,290 $34.12 n.a. Schools (EDU) 90.3 7,714 Winter Avg $132,063 n.a. $132,063 $17.12 n.o. Store/Retail (EDU) 105.0 8 259 Winter Avg $153,341 n.a. $153,341 $18.57 n.a.

Total -ill... 7.337;9 487.543 ,_'/$10!000;000 I Ill S3.292!M9 q_6}707f161 1. Residential EDUs are based on Marin Municipal Water District and SDSM. Commercial EDUs are NBS calculations based on annual consumption and effluent strength factors. 2. Either the winter average or a winter/summer average consumption is used to calculate volumetric rates as noted below. 3. There are no accounts in this customer class; rate reflects current differential between "Market w/ Grinder" rate vs. "Market w/o Grinder" rat e.

CURRENT VS. PROPOSED SEWER RATES (MONTHLY) Rate Alternative #2 - Fixed/Volumetric Rates for Resid. Only I

SINGLE FAMILY RESIDENTIAL I 519.58 I $22.04 l $16.10 I $14.08 l $12.07 1 $12.07 l $12.07 $12.07 MULTI-FAMILY RESIDENTIAL $16.90 $19.02 $16.10 $14.08 $12.07 $12.07 $12.07 $12.07

·'";· ~ :r.. ,. --~ • ;• * '~, •_; • ~·-.:: I ..

I.'~,.:

BAR W/0 RESTAURANT $16.31 $18.36 $20.65 $20.65 $20.65 $20.65 $20.65 $20.65 CAR WASH $13.18 $14.84 $15.80 $15.80 $15.80 $15.80 $15.80 $15.80 HOSPITAL/CONVALESCENT $15.11 $17.00 S19.68 $19.68 $19.68 $19.68 $19.68 $19.6B HOTEL W/ DINING $25.44 $28.64 $35.22 $35.22 $35.22 $35.22 $35.22 $35.22 HOTEL W/0 DINING $16.16 $18.19 $21.36 $21.36 $21.36 $21.36 $21.36 $21.36 LAUNDROMAT $15.42 $17.36 $17.75 $17.75 $17.75 $17.75 $17.75 $17.75 MARKET W / GRINDE R1 $31.84 $35.84 $39.21 $39.21 $39.21 $39.21 $39.21 $39.21 MARKETW/0 GRINDER $20.38 $22.93 $24.83 $24.83 $24.83 $24.83 $24.83 $24.83 PROFESSIONAL OFFICES $14.77 $16.63 $16.71 $16.71 $16.71 $16.71 $16.71 $16.71 REPAIR SHOP/SERVICE STATION $18.12 $20.40 $21.86 $21.86 $21.86 $21.86 $21.86 $21.86 RESTAURANT/BAKERY $25.43 $28.62 $34.12 $34.12 $34.12 $34.12 $34.12 $34.12 SCHOOLS $16.22 $18.25 $17.12 $17.12 $17.12 $17.12 $17.12 $17.12 STORE/RETAIL $18.40 $20.71 $18.57 $18.57 $1B.57 $18.57 $18.57

~ $18.57 1. Mill Valley bllls sewer customers annually on the ta~ roll based on either average winter or average annual water consumption from the previous ye~r. 2. These rates were adopted and Implemented In the City's last rate update In 2016. 3. There are currently no Market w/ Grinder customers; these rates are proportional to Market's w/o Grinder rates, adjusted for strength factors.

Source: Email from C1tystaff dated June 12, 2019 and titled "MV EDU's • adjusted for markets."

.. I

crrv OF MILL VALL.£Y SEWER RATE ANALYSIS Sewer Cost of Servi<e Anolyslt/R•t• De,lan Ptollminary Draft • Do Not Cite ar Distribute

SINGU FAMILY RESIDENTIAL MULTI-FAMILY RESIDENTIAL

-r- ~- r:r.~:_"_i ·.:~~,.-:~

ALL COMMERICAL CUSTOMERS . . - _ ___,_i/• ~ ..

BAR W/0 RESTAURANT CAR WASH HOSPITAL/CONVALESCENT HOTEL W/ DINING HOTEL W/0 DINING LAUNDROMAT MARKET W/ GRINDER' MARKET W/0 GRINDER PROFESSIONAL OFFICES REPAIR SHOP/SERVICE STATION RESTAURANT/MKERY SCHOOLS STORE/RH AIL

$19.58 $16.90

NA -.,

16.31 $13.18 $15.11 $25.44 $16.16 $15.42 $31.84 $10.38 $14.77 $18.12 $25.43 $16.22 $18.40

$12.04 $12.07 $12.07 $19.01 $12.07 S12.07

NA $54.57 $54.57

18.36 Sll.36 11.36 11.36 $14.84 $8.82 $8.82 $8.82 $17.00 $1D.77 SlD.77 $10.77 $18.64 $19.22 $19.22 $19.22 $18.19 $11.66 $11.66 $11.66 $17.36 $9.79 $9.79 $9.79 $35.84 $0.00 $0.00 $0.00 $12.93 $13.60 $13.60 $13.60 $16.63 $9.23 $9.23 $9.23 $10.40 $12.05 $12.05 $12.05 $28.62 $18.47 $18.47 S18.47 $18,2S $9.45 $9.45 $9.45 $20.71 $10.24 $10.24 $10,24

1 Mitt Vilile'f bltls sewercustomeu annuiljlyon the tn r.oli b~,et.l on i:olth~r avl!N"a&II! winter ar il'tleras;~.;11nn~..il 1,.H1ler consumption rrom the pJet.lDLls 'l*.ilr

2, The5e ,.ates werr: adopted and lmplentl!ntl!lld lf1 thl! C1ty'1 la1t r.ite upd•te In 201G.

11.36 $8.82

$10.77 $19.22 $11.66 $9.79 $0.0D SU.60 $9.23 $12.0S $18.47 S9.45

$10.24

3. Therl!! ilre ,unently no M.arket w/ Grinder customeu; thtse: nites arl!! f!tO~rtlOn~I to M~rk1t'5 w/o Grinder f.iiltl!!~ ad Justed for 5ttanith f:anors. Source {m;aiJ from C1cy Stilff diltrd Junl! 12, 2019 and utled "'MV EDU'.s • ad)usred rar i'bar.kitu "

Prepared bv NBS

WWW nb~ov com I Tall,frH: BOO 616 7516

Sl2.o7 $12.07 12.07 $12.07

$54.57 $54.57

Sll.36 $11.36 $8.82 SS.82 $10.77 $10,77 $19.22 $19.22 $11.66 $11.66 $9.79 $9.79 $0.00 so.oo

$13.60 $13.60 $9.23 $9.23

$12.05 $12.05 $18.47 $18.47 $9.45 $9.4S $10.24 $10.24

COS:A Cuttent & Propo,ed Rltt!.S, 21 of 31

CITY OF MILL VAl.lfY SEWER RATE ANALYSIS sewer Cost al Service An.lly$!,/Ralt. De•iln Preliminary Droft • Do Nor Clttl or Dlsrrlbllt~

SINGLE FAMILY RESIDENTIAL MUlTI-FAMILV RESIDENTIAL

.. ... ~ ·:'7J~~~ BAR W/0 RESTAURANT CAR WASH HOSPITAL/CONVALESCENT HOTH W/ DINING HOTEL W/0 DINING LAUNDROMAT

MARXET W/ GRINDER' MARKET W/0 GRINDER PROFESSIONAL OFFICES REPAIR SHOP/SERVICE STATION RESTAURANT/BAKERY SCHOOLS STORE/RETAIL

$19.58 16.90

$16.31 $13.18 $15.11 $25.44 $16.16 $15.42

$31.84 $20.38 $14.77 $18.12 $25.43 $16.22 $18.40

$22.04 512.01 S12.07 $12.Q7 $19.02 $12.o7 Sl2.07 $12.07

. ;' r•

$18.36 $20.65 520.65 $20.65 $14.84 $15.80 $15.80 $15.80 $17.DO $19.68 $19.68 $19.68 $28.64 $35.22 $35.22 $35.22 $18.19 $21.36 $21.36 $21.36 $17.36 $17.75 $17.75 $17.75

$35.84 $39.21 $39.21 $39.21 $22.93 $24.83 $24.83 $24.83 $16.63 $16.71 $16.71 $16.71 $20.40 $21.86 $21.86 $21.86 $28.62 $34.12 $34.12 $34.12 $18.25 $17.12 $17.12 $17.12 $20.71 $18.57 $18.57 $18.57

1. Mrll Va.Hey b1M1 sewer custamer, annu.1lly on the taw roll buN tin eithtr ave11111e: wlnt,r or .swni1• annu1I water consumption rrom the p1evk)us y,eu.

2. ThttH ratu v.,ereadopt11td and 1m~cmen1ed m thl' C1ty'i Int rilf• updatl! In 2(]16 •

$12.07 $12.07

$20.65 $15.80 S19.68 $35.22 $21.36 $17.75

$39.21 $24.83 S16.71 $21.86 $34.12 $17.12 $18.S7

.3. There are curritnllV no Markt I w/ Grindet c:ustometJ;; th~se r.atn ai1, prcmartlonilll to Muk~t's w/o Grinder r;atcs. adjusttd for Jt,an1th rilcton. Source; EmaH from Cttv naff dated June l2, 2019 and titt.d "MV £DU's - •dJti,tl!!d for m1111kds"

Prl!'pilred bv NBS

www.nbsaav.com I TolM,••: aoo.676.1516

$12.07 $12.07 $12.07 $12.07

$20.65 S20.65 $15.80 $15.80 $19.68 $19.68 $35.22 $35.22 $21.36 $21.36 $17.75 $17.75

$39.21 $39.21 $24.83 $24.83 $16.71 $16.71 $21.86 $21.116 $34.12 $34.12 $17.12 $17.12 $18.57 $18.57

COSA Curnmt &. Propo,ed Rir.trs, 28 of 31

CITY Of MIU VALLEY SEWER RAT£ ANALYSIS Sewer Cost of Service Analy>l1/R1te Desl(fl Prrllmlnary Draft - Do Not Cit• or Plslrlbute

SINGLE FAMILY RESIOENTIAL MULTI-FAMILY RESIDENTIAL -~,~-.-

~

519.58 T 522.04 T $14.D8 1 $16.90 $19.02 $14.08

"'I._ .. _ .. _,... nt't _, '·t' .~ • "\. ~!' r 'f.

$14.08 1 $14.08 1 $14.08 1 $14,08 1 $14.08 $14.08 $14.08 $14.08 . .,,...,.:i. 1• =- .. ALL COMMERCIAL CUSTOMERS NA NA I $40.93 $40.93 $40.93 $40.93 $40.93 l

~-~,... .,., - .- . -...... •"". BAR W/0 RESTAURANT $16.31 $18.36 $13.69 $13.69 $13.69 $13.69 $13.69 CAR WASH $13.18 $14.84 $10.56 $10.56 $10.56 $10.56 $10.56 HOSPITAL/CONVALESCENT $15.11 Sll.00 $13.00 $13.00 $13.00 $13.00 $13.00 HOTEL W/ DINING $25.44 $28.64 $23.22 $23.22 $23.22 $23.22 S23.22 HOTH W/0 DINING $16.16 $18.19 $14.08 $14.08 $14.08 $14.08 $14.08 LAUNDROMAT $15.42 $17.36 $11.78 $11.78 $11.78 S11.7B $11.78 MARKET W/ GRINDER' $31.84 $35.84 $0.00 $0.00 $0.00 $0.00 $0.00 MARKET W/0 GRINDER $2CJ.38 $22.93 $16.41 $16.41 $16.41 $16.41 $16.41 PROFESSIONAL OFFICES $14.77 $16.63 $11.10 $l110 $11.10 $11.10 Stuo REPAIR SHOP/SERVICE STATION $J8.JZ $20.40 $14.51 $14.51 $14.51 $14.51 $14.51 RESTAURANT/BAKERY $25.43 $28.62 $22.38 $22.38 $22.38 $22.38 $22.38 SCHOOLS $16.22 $18.2S $11.37 $11.37 $11.37 $11.37 $11.37 STORE/RETAIL $18.4() S20.7l $12.32 $12.32 $12.32 S1D2 $12.32

1. Mill Valley b1ll1o HW~r custom en anmJ~lly on the t;u: roll bul!:'d on f!lth•r awr•s• w1nltn or averiCI! 1nnu.1I w.1ter corrsumptlon fzam th, pr<l!Yious \'Hr.

1. J'rojected i1nnu1I lncrHSH In tol1f rite fft\lenue from the adap•i,d fir,,u1,lt1 I pl1n; pe,rcan1111- 1ncre•se1 in imJivkh,al r•t•, will v.1rv. 3. Thes:c nites: were adopted and 1mp'9m•nt.d in thl! City's ~,st~,, update In 2016.

4. The,e ,are cumtntly na M.arkat w/ Grlndu cu~tam•r~; these riltu are proportional to M1tk•t'1 w/o Gnndu ratll!'S. ,o,u~ted fot' scre-n11h factCtJ, Soun:,: Email from C1ly slil lf dlted June 12. 2019 •nd m~ed "MV EOU'1 · adJlnttid for rr,,;irkets"

Prtpo11red by NBS

www nb~i::,v,cc-rn I Toll-r, .. 800.676 7516

$14.08 $14.08

-$40.93

$13.69 $10.56 $13.00 $23.22 $14,08 $11.78

$0.00 $16.41 $11.10 $14.Sl $22.38 Sl1.37 $12.32

(0SACurrent& Praposed Rare,, 29 of 31

CITY OF MILL VAlLEV SEWER RATE ANALV5l5 Sewu Co•t c,I Sef1lke Analv>ll/Rate Deolp Preliminary Dnrft • Oo Nor Cite or Distribute


l.. •• - -' • -- • 7'

' '" ·' 51 NGLE FAMILY RESIDENTIAL MULTI-FAMILY RESIDENTIAL

$19.58 S22.D4 $16.lO $16.10 $16.10 $16.10 $16.90 19.02 $16.10 $16.10 $16.10 $16.10

: r ::._E:::r. . -···,r:··.,. ,..,.. All COMMERCIAL CUSTOMERS NA NA $27.28 $27.28 I $27.28

~- ~ -;.· vf' • . ~ .. ,:~"'""" SAR W/0 RESTAURANT $16.31 $18.36 $16.01 $16.01 S16.0l CAR WASH $13.18 $14.84 $12.31 $12 .31 $12.31 HOSPITAL/CONVALESCENT $15.11 $17.00 $15.22 $15.22 $15.22 HOTEL W/ DINING $25.44 $28.64 $27.22 $27.22 $27.22 HOTEL W/0 DINING $16.16 $18.19 $16.51 $16.51 $16.51 LAUNDROMAT $15.42 $17.36 $13.77 $13.77 $13.77 MARKET W/ GRINDER' $31.84 $35.84 $0.00 $0.00 $0.00 MARKET W/0 GRINDER $20.38 $22.93 $19.21 $19.21 $19.21 PROFESSIONAL OFFICES $14.77 $16.63 $12.97 $12.97 $12.97 REPAIR SHOP/SERVICE STATION $18.12 $20.40 $16.96 $16.96 $16.96 RESTAURANT/BAKERY $25.43 $28.62 $26.29 $26.29 $26.29 SCHOOLS $16.22 $18.25 $13.29 $13.29 $13.29 STORE/RETAIL $18.40 $20.71 $14.41 $14.41 SU.41

l. M,11 Valley b1&1s :Sewwr customers 1nnua~v on the t11t roll bu~ on either ~-..e,aee Wfnt•r or •111tt.i•it annu1I wat,rcons.umptlon from the p,elllous yt.ar.

l Projected annual ir,crH~ts 1n tor.al ra1c 1r.,1111nu• ftan1 the adaptf!d rim1nrn1I plan. ;:u:n;:enlil' intr9sas lr1 individual riltu w .t vary.

3. Thit~e lilllll!!!i Wltl • dapttd :and 1rnplem11:11ced ln the C1tv'-' 1.nt ratl! updat@ 10 2lll6

$27.28 ... •'-,. .

$16.01 $12.31 $15.22 $27.22 $16.51 $13.77

$0.00 $19.21 $ 12.97 $16.96 $26.29 $13.29 -~-14.41

$16.10 $16.10

.. $27.28

$16.01 $12.31 $1S.22 $27.22 $16.51 $13.77

$0.00 $19.21 $12.97 $16.96 $26.29 $13.29 S14.41

4. Triete ate i:urr•ntlv 110 Market w/Cirlnif•rcu'lilorrt•U. th~, rate~ ;ue prciportlonal to Marktt't w/o Grlnder nte-s. ad.tun~ for man,th facton Sour«i· Emall rrom C11v naff d,Ufd

June Jl, J019 ilfld t11l•d •Mv EOU'~ · ad1u~tPd fo, ma,kiet:s"

P,~at•d bv Nas www.nb'5COII com I Tofl.frett· 800 676,1S16

$16.10 $16.10

$27.28

$16.01 $12.31 $15.22 $27.22 $16.51 $13.77 $0.00

$19.21 $12.97 $16.96 $26.29 $13. 29 114.41

COSA Cummt & .Proposed Ro1 t~1 . .30 o~ '.ll

Examall!! of EDU Calculations for Markets w/o Grinder: Dato from MIii Varley Sewer 1020-11.rlsK (NBS Asseuor's Offlce worksheet (Nick Dayhoff/NBS): EDU Calculal/0t1s for Filtftl Charin purposes:

Annualized Sewer Service Unweighted Unweighted Unweighted Weighte APN ServN CCF Catel'orv Rate/CCF Charge ED!.!: (CCFI EDUIBODI EDU(TSSl dEDU Total EDU

028-014-18 10150 183.0 MKT W/0 GRINDER 22.69 4,152 27 2.37 4,07 3 .56 2.95 147.6!1 028-0l4-l9 10143 297.0 MKT W/0 GRINDER 22.69 6,H8.93 3.85 6 .61 5.78 4.79 030-073-01 16877 2,163.0 MKT W/0 GRINDER U.69 49,078.47 28.06 48.11 42.09 34.88 030·091-33 29223 2,586.0 MKTW/0 GRINDER 22.69 58,676.34 33.55 57.52 50.33 41 70 030-126-07 53866 3,930.0 MKT W/0 GRINDER 22.69 89,171.70 50.99 87.41 76.48 63.37

Markets w/o Grinder: SFR Equivalent Flow/BOO(TSSl Typlcal BOD Typical TSS Annualized

Strength Strength CCFperEDU Factor (me/I) Factor (ml'II) (SFR) lbs. BOD/EDU lbs. ~

300 300 nos 84.15 96.17 300 300 EDU W!lllbtfn& 300 300 60.00% 20.00% 20.00% 300 300 300 300

Prep~red by NB5

www nhseov.com J Toll ft1tt: BOO 676 7516 COSAAlloc.-fh:,n Facton (2), 31 of 31

1 RESOLUTION NO. 20-2

3 A RESOLUTION OF THE CITY COUNCIL OF THE CITY 4 OF MILL VALLEY STATING ITS INTENTION TO 5 CONSIDER CHANGES TO SEWER RATES 6

7 THE CITY COUNCIL OF THE CITY OF MILL VALLEY HEREBY FINDS AND 8 RESOLVES AS FOLLOWS: 9

10 SECTION 1. Approve consideration of City sewer Rate Design Alternative 3 - phased-I I in fixed and volumetric Rates for residential customers only per consultant NBS 12 December 2020 Technical Memorandum presented to Council on January 7, 2021. 13 14 SECTION 2. Approve consideration of a pass-through provision that allows Council to I 5 adjust rates in future as needed, for only the following items that would increase City's 16 sewer costs: utility rate increases, cost of living adjustment increases based on U.S. I 7 Bureau of Labor Statistics Consumer Price Index West Region. 18

19 SECTION 3. Direct Staff to begin Proposition 218 noticing procedures for the City 20 Council to hold a public hearing to consider adopting the proposed changes to sewer 21 rates. 22

23 PASSED AND ADOPTED at a regular meeting of the City Council of the City of Mill 24 Valley on the 7th day of January, 2021, by the following vote: 25 26 AYES: 27 NOES: 28 ABSENT: 29 ABSTAIN: 30 31 32 Sashi McEntee, Mayor 33 ATTEST: 34 35 36 37 Kelsey Rogers, City Clerk/Administrative Analyst

.:ATTACHMENT 3

&City of Mill Valley 26 Corte Madera Ave Mill Valley, CA 94941

PROPOSED CHANGES TO SEWER SERVICE CHARGES

NOTICE OF PUBLIC HEARING

On Monday, March 1, 2021 at 6:30 p.m. or as soon thereafter as the matter may be heard, the Mill Valley City Council will hold a public hearing during its regularly scheduled meeting to consider proposed changes to sewer service charges described in this notice (the "proposed charges"). Due to the COVID-19 pandemic public health orders, which limit in-person public meetings, the public hearing will be held either in the City Council Chambers at 26 Corte Madera Avenue, Mill Valley, California, or in another manner specified in the meeting agenda. Please check the March 1, 2021 City Council agenda once it is posted on the City's website to determine how to participate in the City Council meeting.

What is this mailer about? You are receiving this mailer because you own property that receives wastewater services subject to the sewer service charges.

What wastewater services are provided by the City? Safe and reliable wastewater collection, treatment, and disposal services are provided by the City of Mill Valley. Wastewater is carried through the City's underground sanitary sewer collection system and is treated after someone flushes the toilet, takes a shower, does laundry or washes dishes.

The City owns and maintains a network of nearly 60 miles of sanitary sewer pipelines and two pump stations that collect and convey wastewater to the Sewerage Agency of Southern Marin (SASM).

What is the purpose of sewer service charges? The purpose of the charge is to collect revenue for the cost of maintenance, operation, replacement and improvement of the city sewerage facilities used for the collection, treatment and disposal of sewage.

What are the proposed charges and when would they go into effect? The proposed charges are presented on the back of this notice. Sewer service charges for residential and commercial customers are currently based on a 100% volumetric water flow rate, as measured by Marin Municipal Water meters and are billed annually on property tax bills.

The proposed charges are the result of a shift from solely volumetric water rates to a mixed volumetric/fixed rate for residential customers starting Fiscal Year 2021 /22; and would be effective on July 1, 2021. This aligns with the large (over 50%) fixed costs of operating and maintaining the wastewater treatment plant. The rates are proposed to be phased in over three years. Commercial customers would continue using 100-percent volumetric rate design, although their volumetric rates have been adjusted based on the cost of service analysis. High water consumption residential customers will see a decrease in rates, medium water consumption residential customers will see rates stay approximately the same, and low water consumption customers will see small increases in their annual bills.

The proposed charges will also include a provision that allows for Council adjustment of rates in the future as needed, without repeating the Proposition 218 noticing process, for only the following items that would increase the City's sewer costs: wholesale charges for water, sewage treatment, or wastewater treatment established by SASM and cost of living adjustment increases based on the local U.S. Bureau of Labor Statistics Consumer Price Index, dependent on the economy and the amount of uncontrolled costs incurred by the City. This would commence in FY2022/23.

Written Report: The City has commissioned a Cost of Service Study regarding the proposed sewer service charges, which is available on the City Website: https://www.cityofmillvalley.org/gov/departments/publicworks/wastewater/sewer

rate information.htm.

What is the basis for the proposed charges? Proposition 218 requires charges for utilities to correspond to the cost associated with providing the services, and that customers within each user classification pay their fair share of the total cost. The City retained NBS Government Finance Group to prepare a cost of service study that provided a rate structure that recovers sufficient revenue to cover infrastructure repair and replacement needs as well as day-to-day services, in compliance with Proposition 218.

When was the last time the sewer service rate structure was changed? The City adopted the current 1 DO-percent volumetric rate in 2012.

Why does the rate structure need to change? The City's water consumption, and therefore the associated revenue, has been unpredictable the last several years. The year-to-year variations directly affect both customer bills and the revenue the City collects from sewer rates. The proposed rate structure moves to a rate structure that collects a portion of revenue via fixed charges and a portion via volumetric, (or use) charges. This will improve overall equity and reduce the variability in customer costs and City revenue associated with a 1 DO-percent volumetric rate structure.

What is the process for sewer service charges to be changed? Mill Valley City Council will hold a Public Hearing at 6:30 p.m. on March 1, 2021. This hearing will consider adoption of the proposed charges. The City Council welcomes and will consider input from the community on the proposed charges at the Public Hearing. In accordance with Proposition 218, only valid written protests will be counted as formal protests. If you are the owner of record of a parcel subject to sewer service charges, you may submit a written protest against the proposed charges. If written protests to the sewer service charges are presented by a majority of the owners of the affected parcels before the close of the public hearing, the City Council cannot approve the proposed sewer service charges.

How do I protest the proposed charges? If you oppose the proposed charges, you may submit a formal written protest via postal mail or personal delivery to the City Clerk's office at 26 Corte Madera Avenue, Mill Valley, California, 94941 or by email (with signed PDF attachment preferred) to the City Clerk at [email protected], with a note that the email is for public comment at the meeting specifically regarding the Sewer Rate Change item. Written protests that are delivered to the City Clerk before the meeting must be received by the City Clerk by 4:30 PM on March 1, 2021. To be counted, a formal written protest must be submitted in writing, clearly state opposition to the proposed charges, contain a description of the property, identify the property owner, and include the signature of the property owner. No more than one written protest per parcel will be counted in calculating a majority protest. To avoid physical contact, the City strongly encourages you to submit any written protests by mail with sufficient time to arrive at City Hall prior to the public hearing. If you would like to personally deliver a written protest, please contact the City Clerk at (415) 388-4033 to make arrangements for the personal delivery of the written protest.

Low-Income Household Information: The City will continue to provide sewer rate credits to lower-income households. The program is modeled after PG&E's California Alternative Rates for Energy (CARE) Program. Please visit the PG&E CARE guidelines to find out if you qualify at: http://www.pqe.com/myhome/customerservice/financialassistance/care/eligibility/.

Proposed Sewer Rates for Alternative 3: Phased-In Fixed & Volumetric Rates for Residential Only

Current Recommended Monthly Sewer Rates Sewer Rate Schedule1 Rates

IFY'2Ql211 1 FY1.<J21/ll FY'1Jlll/'13 FY2023/24 FY 202A/25 FY1JJ'15/26 FY2026/27

Recommended Rote Design: 20%Fixed/ 30% Fixed/ 40% Fixed/ 40%Fixed/ 40% Fixed/ I 40% Fixed/ 80% Vot. 70% Vol. 50% Vo/, 60% Vol. 60% Vol. I 50% Vol.

Rasldentlrrl Monthlv fi1(ed Se111ke Charne

SINGLE FAMILY RESIDENTIAL NA $27.28 $40.93 $54.57 $54.57 $54.57 $54.57 MULTI-FAMILY RESIDENTIAL NA $16.02 $24.02 $32.03 $32.03 $32.03 $32.03 Residential Volumetri< Charge ($/CCF)

SINGLE FAMILY RESIDENTIAL $22.04 $16.10 $14.08 $12.07 $12.07 $12.07 $12.07 MULTI-FAMILY RESIDENTIAL $19.02 $16.10 $14.08 $12.07 $12.07 $12.07 $12.07 Commen:/a/ Vo/umttric Charge ($/CCF)

BAR W/0 RES TA URA NT $18.36 $20.65 $20.65 $20.65 $20.65 $20.65 $20.65 CAR WASH $14.84 $15.80 $15.80 $15.80 $15.80 $15.80 $15.80 HOSPITAL/CONVALESCENT $17.00 $19.68 $19.68 $19.68 $19.68 $19.68 $19.68 HOTEL W/ DINING $28.64 $35.22 $35.22 $35.22 $35.22 $35.22 $35.22 HOTEL W/0 DINING $18.19 $21.36 $21.36 $21.36 $21.36 $21.36 $21.36 LAUNDROMAT $17.36 $17.75 $17.75 $17.75 $17.75 $17.75 $17.75 MARKETW/GRINDER $35.84 $39.21 $39.21 $39.21 $39.21 $39.21 $39.21 MARKETW/0 GRINDER $22.93 $24.83 $24.83 $24.83 $24.83 $24.83 $24.83 PROFESSIONAL OFFICES $16.63 $16.71 $16.71 $16.71 $16.71 $16.71 $16.71 REPAIR SHOP/SERVICE STATION $20.40 $21.86 $21.86 $21.86 $21.86 $21.86 $21.86 RESTAURANT/BAKERY $28.62 $34.12 $34.12 $34.12 $34.12 $34.12 $34.12 SCHOOLS $18.25 $17.12 $17.12 $17.12 $17.12 $17.12 $17.12 STORE/RETAIL $20.71 $18.57 $18.57 $18.57 $18.57 $18.57 $18.57

L.5ewercustomers are billed annually on the tax roll b,1sed on .aver.1ge w1nteror aive rage annuill watercon5umpt1on from the pn!v,ous yea r. 2. The 5e rat Pi wer~ .a doptf!d i 11 the Ci'tys I iii st rate up date in 2016.

February 3, 2021

City Clerk City of Mill Valley 26 Corte Madera A venue Mill Valley, CA 94941

REO!:fV�O

F 1-� ri r, 2n,1

City of Mill Valley

This is for public comment at the meeting specifically regarding the Sewer Rate Change item.

Parcel 027-103-02, residential single family Property Owner Klussman Nancy B Trust 2003 & Klussman Nancy B Trustee

I am opposed to the proposed changes to the sewer service charges. Low water consumption customers should not see an increase in annual bills. Low water users should not be penalized for conservation efforts and trying to preserve our precious resources.

High water consumption residential customers should see increases.

0%°'6 \<'.\v.�vn(QAr) Nancy Klussman 700 Lovell A venue Mill Valley, CA 94941

Email: [email protected]

TO: City of Mill Valley

February 3, 2021

RE: Proposed Changes to Sewer Service Charges

This is a formal written protest regarding my opposition to proposed

changes. We have a 2 unit residential property at 286 Miller Avenue in Mill Valley.

Regards,

Kalania Place LLC

Helen Abe, Manager / Owner

) ~\

From: Sandy Ross [email protected] Subject: Disability rate for new sewer service charges

Date: January 21, 2021 at 2:31 PM To: citycounci l@c ityofmillval ley. org

Bee: Stephanie Moulton-Peters [email protected], Richard Skaff [email protected], Pat Williams pean utpat@1cl oud. com

To: Mill Valley City Council From: Dr. Sandy Ross

Protest Proposed Sewer Charge as Does Not Have Disability Rates

I see that you have lower-income sewer service rates, but am wondering why you do not have same - and request that you so do - for those people who have disability rates with MMWD on the water they use. It would take little extra work as MMWD has already vetted those who are eligible, and I presume can provide the information to your system (probably with permission from those on the list). Also consider that people with disabilities often have extra people attending and living with them - which means extra water gets used because of said disability. And they often have limited income, but perhaps not as much as PG&E requirements - though they may have PG&E disability rates, another guideline you might use.

Please enter my Protest that you Do Not Have Disability Rates on Sewer Charges @ the public hearing March 1, 2021 - and favor me with a reply.

City Clerk Office

City of Mill Valley

26 Corte Madera Avene

Mill Valley CA 94941

Re Parcel 030-056-02 Against Sewer Rate Hikes

Good Morning,

RECEIVED

City of Mill Valley

I am writing to strongly oppose the Sewer Service Rate Hike increase. I live in a single family home in Mill Valley @225 Sycamore.

I understand the concept of fixed vs volumetric charges but the proposed changes really astonish me.

High volume users will see a DECREASE, medium no change, and LOW water consumers will bear the

entire burden of this current and future increases???? So you are REWARDING people who use a lot of

water needing to be processed by the sewage agency and PENALIZING homes with 1 or 2 people

,probably older and conscientious about water conservation as I am. With global warming, droughts are

expected to become normal occurrences and this rate increase encourages high water use?. Why

should residents in larger houses with 5 bathrooms care about shorter showers and conserving water

when you are telling them not to worry about it and then increasing charges for people who really try to

conserve? This is a very affluent community but not all of us are wealthy. To me this is grossly unfair and

environmentally irresponsible. I expected better from this City concerned about the environment and

older residents. I really urge you to please deny this increase and reconfigure any needed increase in a more fair way.

Thank you,

Melinda Miller

225 Sycamore Avenue

Mill Valley CA 94941

415-388-5502

PROTEST REGARDING SEWER RATE CHANGE

City Clerk 26 Corte Madera Ave. Mill Valley, CA

My husband and I are strongly opposed to the proposed large Sewer Rate increases especially in light of the hugh sewer tax increases that we have been levied in the past few years that appear on our property tax bill.

And, now we have to replace sewer laterals if we sell our house or improve it. All because of deferred maintenance over the years on the part of SASM.

Can we see a copy of SASMS current and proposed budget? Where is this information available to the public?

R~e~ ly

T{m~ue

Sharon Leveque /) __

<l-~ -~UL

4 Somerset Lane Mill Valley, CA 94941

Hannah Politzer

From: Sent: To: Subject: Attachments:

I CAUTION: External Sender

Stephen Blose <[email protected]> Tuesday, February 16, 2021 8:13 AM city clerk Letter in opposition to proposed sewer service charges 2021.02.16 Opposition to proposed sewer service charges.pdf

To the City Clerk of Mill Valley,

Attached please find a letter from us in opposition to proposed sewer service charges to be presented to the City Council.

Please confirm by email you are in receipt of the attached letter.

Thank you.

Stephen H. Blose and Gladys A. Blose SINGLE FAMILY RESIDENTIAL- PROPERTY ID 027-082-28 333 Corte Madera Avenue Mill Valley, California 94941-4505

1

Date: February 16, 2021

TO: City Clerk

City of Mill Valley

26 Corte Madera Avenue

MUI Valley, California 94941

FROM:

RE: Opposition to proposed sewer service char&es SINGLE FAMILY RESIDENTIAL- PROPERTY ID 027-082-28

Dear City Clerk:

Stephen H. Blose Gladys A Blose


PROPERTY ID 027-082-28

333 Corte Madera Avenue Mill Valley, California 94941-4505

We wish to oppose the proposed sewer service charges for single family residential

dwellings by asking the City Council to vote NO.

Thanking you in advance to communicate our thoughts to the City Council.

Very truly yours, we are,

Stephen H. Blose Gladys A. Blose

TO: City of Mill Valley

February 3, 2021

RE: Proposed Changes to Sewer Service Charges

This is a formal written protest regarding my opposition to proposed

changes. We have a 2 unit residential property at 286 Miller Avenue in Mill Valley.

Regards,

Kalania Place LLC

Helen Abe, Manager/ Owner

Hannah Politzer


! CAUTION: External Sender

for public comment: Beverly Rodgers

52 Locust Ave, Mill Valley

Beverly Rodgers <[email protected]> Saturday, February 06, 2021 12:49 PM city clerk

Sewer protest - public comment MV sewer protest.pdf

1

TO: City Clerk and City Council of Mill Valley Date: February 6, 2021

I Beverly Rodgers, and Bob Reynolds owners of, and living at, 52 Locust Avenue, Mill Valley, hereby protest and object to the proposed changes to Sewer service charges.

Sincerely,

Beverly R9dger~s . J) rKoA~ r _ · .~~ u ~ ( \

Bob Reynolds · p J\ l-~ ) tJ:> ~Jf'l 6\._QJ~ r~o ')J\_~

Hannah Politzer

From:

Sent To: Subject:

j CAUTION: External Sender

seela lewis <[email protected]> Thursday, February 04, 2021 6:08 PM city clerk PROTEST TO PROPOSED SEWER RATE CHANGE

I am the owner of 351 Hazel Ave in Mill Valley and I am writing to protest the proposed sewer rate changes to be considered at the City Council Meeting on March 1, 2021.

With the proposed rate calculations, homes that conserve and use the least water are being penalized and will be the only group to carry the burden of a substantial rate increase. It is indeed not a "small" rate increase as your flyer claims.

You mention paying "fair share" ... what is fair about increasing costs on those using the feast and decreasing rates for those using the most water? It is an entirely unfair scheme and it comes on top of the burden of an already huge increase in our water bills.

I am formally protesting the proposed sewer rate change.

Sincerely, Seela Lewis 351 Hazel Avenue Mill Valley, CA 94941

1

Kelsey Rogers

From: Sashi McEntee Sent: To:

Wednesday, February 24, 2021 8:29 AM Daniel M

Cc: city clerk Subject: RE: Opposition to proposed sewer rate ordinance

Daniel,

Thanks so much for your letter. It will be included in the public record for this item.

Sincerely,

Sashi McEntee Mayor City of Mill Valley 26 Corte Madera A venue Mill Valley, California 94941 tel. (415) 843-1450 [email protected]

Sign up for emergency alerts on your mobile phone!

From: Daniel M [[email protected]] sent: Tuesday, February 23, 2021 7:25 PM To: Sashi McEntee Subject: Opposition to proposed sewer rate ordinance

! CAUTION: External Sender

Honorable Mayor McEntee,

I am writing to express my strong opposition to the proposed new sewer rate scheme scheduled for hearing on March 1st, 2021. It is urgent that you vote against its adoption.

I am in favor of retaining the 2012 Sewer rate ordinance and administering it according to the directives of the Mill Valley City Council at that time. Please refer to the minutes of 2012 Mill Valley City Council meetings for full details.

Be reminded that the 2012 Sewer Rate ordinance was the product of an open and public process, proactively gathered public input through public workshops, mailings and outreach, and overall represents a thorough living up to the core values as expressed in the Mill Valley City Council mission statement. The current effort to cast aside the results of that 2012 process provides a stark contrast, and would amount to an abject failure to live up to our core values, if adopted into law.

If the City Council were to approve a major change to the 2012 Sewer Rate ordinance, a process equivalent in character and quality to that undertaken in 2012 must first be undertaken, as a matter of simple simple common sense, and more importantly, as a matter of the equal protection of the laws as guaranteed under the 14th amendment to the United States Constitution. If the current noticing, required supporting survey, and public meeting process is legally compliant with California law, it is so only in the most minimal and narrow sense, and does not even begin to approach the thoroughness of the 2012 process. I would argue that progressing from a vote to explore options, taken at the end of a contentious meeting in July 2020, (a meeting primarily devoted to Social Justice issues as were so many meetings in 2020,) should not have directly led to any vote to throw out the existing ordinance, without any intervening public input. If the decision was actually made in 2016, and the directives of the 2012 ordinance left to founder under malignant neglect for

1

another five years, the rights of those who participated in the 2012 process-such as myself-have been even more gravely injured. In any case, public outreach and education in these series matters that affect the entire community, with the opportunity to participate in discussions, consider alternatives, and discover or discredit purported facts advanced by interested parties, are required by precedent, the mission statement of the City Council, and common sense.

We must take a step back and honor our core values of equal protection and due process. We are all still under a public health order prohibiting most gatherings, and therefore the public has little to no ability to organize in opposition or support of the current effort, even if the City of Mill Valley had engaged in adequate noticing and public outreach, which it manifestly has not. Other than by writing letters and making short "zoom" statements at meetings, if the technology and bandwidth happens to be working and available at the time, the public has been completely shut out of this effort to overturn one of the most reasoned and proud achievements of our efforts at self-government. The proposed far-reaching changes to the law that as are being contemplated require that the Mill Valley City Council adhere to the principles enshrined in its mission statement and vote to reject the current proposal.

In addition to the process-related defects of the proposed new Sewer ordinance, the defects of the proposal itself are so numerous that I find it difficult to enumerate them all. Consider that proposition 218 notice does not disclose the existing minimum charge, which is already regressive against low water users, single-person households, apartment dwellers and part-time residents. The effect of the proposed changes will be to double or more than double the effective minimum charge. Moreover, the minimum charge exists expressly to address the argument made in the proposal that people who conserve water do not pay their fair share. The proposition 218 notice makes no mention of this fact, it only says there will be small increases in costs for low water consumption users. This is demonstrably false and misleading, in the case of any household currently subject to the minimum charge. Moreover, the notice also states that high water use customers will see a decrease in their rates, and that the decrease cannot be characterized as small, (or it would have been so claimed,) meaning that the decrease may be large. In other words, the proposal calls for effectively doubling (or more) the minimum charge, while providing large reductions in costs to those who consume the most water and therefore also evacuate the most volume to SASM through the sewer lines.

Furthermore, the provided NBS Government Finance Group cost of service survey merely makes a very tentative claim that fixed rates are equitable because they are more common, and fails ever to clearly distinguish between fixed and variable costs, to say nothing of showing how system users most equitably would bear those costs. It was exactly this issue which led the 2012 Mill Valley City Council to unanimously pass into law the 100% volumetric rate system we now have. With the full support of the City Manager and the Director of Public Works at that time, who agreed that "100% flow-based rate structure is the most simple, fair and equitable sewer rate system for our particular needs."

The NBS service survey is wildly inconsistent in how it describes "fixed" rates and percentages of fixed vs. variable costs, often failing to differentiate altogether, other times throwing out vague round numbers such as 50%, 70%, and even 100%. How are we to make decisions based on this? We have the tool of the minimum charge to deal with any "fair share" argument against the 2012 sewer ordinance. The NBS service survey even admits that "most sewer agencies consider this [i.e., fixed vs. volumetric rates} a policy decision rather than one dictated by the cost of service methodology or any specific calculation." NBS dismisses the 2012 ordinance as having been adopted "before the drought of 2013-2014" and while this might technically be correct, all of the participants in the debate in 2012 were well aware of the potential for droughts, and indeed we had all lived through numerous drought periods prior to 2012. The issue was thoroughly discussed, contra1y to the false representation currently being disseminated by the City of Mill Valley.

More precisely as to the issue of the methodology for dealing with reduced water usage during drought periods (or for other reasons) envisioned by the 2012 ordinance, the directive of the City Council was to set the flow-based rate as often as annually to maintain adequate system monetary reserves. If water use went down, the rate would go up as necessary, by plan and clear directive. Obviously this policy has not been implemented as intended. The critique that water usage "has been unpredictable the last several years" fails on its face due to the fact that the City of Mill Valley has not even attempted to predict water usage AT ALL since 2016, and has allowed the reserves to dwindle either through maladministration, or malignant neglect, or worse. To reiterate, the failure to reset the rates as intended does not demonstrate any defect in the 2012 ordinance, but rather is prima fi1cia evidence for maladministration or malignant neglect on the part of The City of Mill Valley. The defect can be corrected by appropriate due diligence and administration of existing law, and does not require overturning our "simple, fair and equitable" system and replacing it with the proposed inequitable, convoluted and ill-considered scheme to reward water wasters and defame people who wish to live sustainably.

At a time when MMWD is considering new rationing measures, it would be the height of folly to incentivize water wasting while punishing those who conserve. This would be highly inequitable and an affront to the values contau,ed in the mission statement of the Mill Valley City Council. I recommend voting to approve an appropriate flow-based rate to restore the reserve fund over a period of two or more years, and to base this rate on the assumption that we will achieve a 20% reduction in water usage over the 2020 level in the 2021-22 period. Revisit the question for the 2022-23 year and as necessa1y in later years. It is simple and equitable, and if 100% flowbased rates are appropriate for the widely varying water usage patterns of commercial customers, they are also appropriate for the widely varying usage patterns of individual households, which vary in our community from tiny apartments and cabins to massive multi-building compounds functioning as corporate command facilities where workers conw and go all day long.

Another fatal defect to the current proposed ordinance is that it includes provisions for raisil1g new fixed charges based on various factors not specifically relclted to tlw sewer system at all. New, uncertain, u_ndefowd or ill-defined, likely highly inequitable, these

2

potentially unchecked fees the City of Mill Valley intends to exempt from the proposition 218 process entirely. Surely this is compounding problem upon problem and will come back to haunt us, probably sooner than later. We should not be voting to open a

proposition 218 exempt" back door" on proprrty tax bills.

Please vote to reject any attempt to nullify, revoke, override or deprecate the 2012 Srwer Rate ordinance. Please do vote to administer it as intended, and to hold accountable those who have sought to undermine it.

For several other objections to the proposed new ordinance, please see my formal letter of protest sent to the City Clerk. Thank you for taking the time to consider my views.

Sincerely,

Daniel Meltzer 77 Lovell Avenue, Mm Valley

3

Hannah Politzer


Follow Up Flag: Flag Status:


Janet Knowlton <[email protected]> Wednesday, January 20, 2021 10:51 AM city clerk Proposed Changes to Sewer Services Charges signatures.pdf

Follow up Completed

We received the Proposed Changes to Sewer Service Charges and we are totally OPPOSED to this increase. We pay $1351/yr. which equates to $112.58/month. Raising the charges to more than $43 more a month in addition to what we pay yearly is unacceptable.c This flyer is very confusing as it is unclear how the current rate of $22.04 fits in with what we pay now on an annual basis. This is an outrageous increase especially during a major pandemic.

On another note you want to DECREASE rates for high water consumption but INCREASE the rates for low water consumers. That makes no sense for those of us that are trying to conserve water.

This may be read at the public meeting on March 1st.

Thank you.

Janet & Tim Knowlton, Property Owners 7 Locke Lane Mill Valley Parcel No. 030-037-21

1

Hannah Politzer

From: Sent: To: Subject:



To: Mill Valley City Council From: Dr. Sandy Ross

Sandy Ross < [email protected] >

Thursday, January 21, 2021 3:06 PM city council

Disability rate for new sewer service charges

Follow up Completed

Protest Proposed Sewer Charge as Does Not Have Disability Rates

I see that you have lower-income sewer service rates, but am wondering why you do not have same - and request that you so do - for those people who have disability rates with MMWD on the water they use. It would take little extra work as MMWD has already vetted those who are eligible, and I presume can provide the information to your system (probably with permission from those on the llst). Also consider that people with disabilities often have extra people attending and living with them - which means extra water gets used because of said disability. And they often have limited income, but perhaps not as much as PG&E requirements - though they may have PG&E disability rates, another guideline you might use.

Please enter my Protest that you Do Not Have Disability Rates on Sewer Charges@ the public hearing March 1, 2021 -and favor me with a reply.

Sandy Ross, Sandy Ross <[email protected]>, 415-383-5343 (speak slowly and clearly as I am hard of hearing) 76 Lee St, Mill Valley, Ross Family Trust, property ID 027-042-22

Singed copy send by USPS

1

Hannah Politzer

From:

Sent: To: Subject:


CAUTION: External Sender

Peggy Chipkin <[email protected]> Saturday, January 23, 2021 12:15 PM city clerk Sewer Service Charges

Follow up Completed

I do not understand--and I would like to protest-why low water users are penalized (will have to pay more).

We conserve water consciously and would prefer not to be charged for it.

Thank you

Peggy Chipkin

30 Altamont Ave

Mill Valley

1

Hannah Politzer

From: Sent: To: Subject:


CAUTION: External Sender

Good morning,

Mai Anh Phan <[email protected]> Tuesday, February 02, 2021 10:45 AM city clerk Public Comment RE: Sewer Rate Change

Follow up Completed

I am writing in response to the notice received regarding proposed changes to the sewer service charges. This is not a protest - I simply have some questions that I would like to have answered during the public hearing. In reviewing the notice's proposed sewer rate schedule, it looks like none of the fixed rates will be charged to commercial customers. Since these fixed rates cover the costs of infrastructure repair and replacement needs, these costs should be spread out among all customers, not just residential. Are the commercial customers paying for any of these fixed costs already that is not shown on the rate schedule provided? If not, is it the City's intention to charge these costs to the commercial customers at any point? lf not, why not?

Please confirm receipt of this email and let me know if this issue will be addressed during the public hearing. Thank you.

Sincerely, Mai Anh Phan Residential customer

1

Hannah Politzer

From: Sent: To:

Bret Andrews <[email protected]> Wednesday, February 03, 2021 11:21 AM city clerk

Subject: FW: New Sewer Rate Structure


j CAUTION: External Sender

Follow up

Completed

please enter this email into the record and put it in the packet and minutes for the upcoming meeting regarding sewer rates. Please confirm by email.

From: Bret Andrews [mailto:[email protected] J Sent: Wednesday, February 03, 2021 11: 15 AM To: '[email protected]' Subject: New Sewer Rate Structure

Dear City of Mill Valley Council Members:

You are treading on thin ice with the proposed new sewer rate structure. Most California sewer districts historically have charged 100% fixed rates based on two facts:

1. sewer rates were so low, no one really complained and prior to Prop. 218 it did not even matter 2. without access to cheap LT., using water records would have been difficult

A number of years ago, you changed to where typical sophisticated sewer districts like Los Angeles and San Francisco Counties - that is 100% volumetric.

Now you are going backward, part way into the stone age.

One hundred percent volumetric is ALWAYS the most equitable. Think about electric and gas rates - they do not charge any fixed fees. Large houses of which Mill Valley has plenty mixed with small ones typically use more water and have more infrastructure so why should they pay the same fixed fee as small houses?

Answer: they should not. The easy way around this is to just charge 100% volumetric. This applies to multi-family as well. There are large 3 bedrooms multi-family housings and studios ... This "one size fits all" for multi-family is not fair either.

Part of the reasoning for the part fixed fee is to make revenues more consistent. This is NOT a valid reason for charging a given rate based on Prop. 218. The fact that you mention this in various literature is a sure way to lose in court. PGE does not use this argument to charge fixed fees.

One way that you could get around the whole issue of consistent revenue while maintaining 100% volumetric rates is to enact a rate plan a large range of possible sewer rates per CCF of water to charge and set them each year for the following year based on the total consumption of all users in Mill Valley during the prior winter. Then if total MV usage is low, rates are higher and vice versa.

1 spent years in court with TCSD (Tam Valley) over their unfair rate structure. This cost TCSD almost $100,000 and cost me a filing fee. The outcome was and still is quite embarrassing for TCSD. Please do discuss this with the GM, Heather Abrams. I would hate to see Mill Valley follow a path to the dark side.

1

I encourage you to reconsider this whole change and enact wider allowable ranges to be set each spring of 100% volumetric sewer rates for the city of Mill Valley where I grew up and attended Edna, MVMS and Tam.

Kind Regards, Bret Andrews 415 302 9674

2

staff report mayor and city council faryal saiidnia

Documents