Municipal Rate Study meeting

Municipal Rates and Utilities Committee Regular Meeting of April 25, 2024 MINUTES Page 1 of 4 The public may participate and provide public comments in person or via Zoom Meeting. Please be advised that when all Committee Members are attending the meeting in person, the teleconferencing option is provided as a courtesy to the public. If, for any reason, there are technical difficulties, the Municipal Rates and Utilities Committee meeting will continue in person, provided there is a quorum at the meeting. One tap mobile: +16699006833,,86993830361# US (San Jose) Dial by your location: +1 669 900 6833 US (San Jose) Meeting ID: 869 9383 0361 https://us06web.zoom.us/j/86993830361 Written comments that are received by 5:00 PM. on the Monday before the Municipal Rates and Utilities Committee meeting will be disseminated to the Commission and made available to the public for review on the city’s website. Please provide the agenda item number in the subject line of your email or letter. Public comments will no longer be read into the record. Comments must be sent to municipalrates@ci.rio-vista.ca.us. If you do not have access to a computer, please contact Krystine Ball at 707-374-6447, to make alternative arrangements to submit public comment.

Municipal Rates and Utilities Committee Regular Meeting of April 25, 2024 MINUTES Page 2 of 4 RIO VISTA MUNICIPAL RATES AND UTILITIES COMMITTEE CHAIRMAN EDWIN OKAMURA VICE CHAIR CHRIS ARMBRUST RICK DOLK HECTOR DELAROSA MICHELLE STAHLMAN MINUTES BY TELECONFERENCE AND IN PERSON AGENDA THURSDAY, APRIL 25, 2024 6:00 pm CITY HALL COUNCIL CHAMBERS ONE MAIN STREET RIO VISTA, CALIFORNIA 94571 1. CALL TO ORDER – ROLL CALL – PLEDGE OF ALLEGIANCE PRESENT: Chairman Edwin Okamura, Vice Chair Chris Armbrust, Committee Members, Rick Dolk, Hector Delarosa and Michelle Stahlman ABSENT: None Chairman Okamura opened the meeting at 6:06 PM 2. PUBLIC COMMENT Public comment was received. 3. DISCLOSURE OF EX PARTE COMMUNICATIONS See the sub-committee update. 4. ACTION ITEMS 4.1. Approve Minutes from March 28, 2024 Motion to approve by committee member Dolk and second by committee member Stahlman to approve, March 28, 2024, regular Meeting Minutes passed by the following roll call vote: AYES: Chairman Edwin Okamura, Vice Chairman Chris Armbrust, Committee Members, Rick Dolk, Hector Delarosa, and Michelle Stahlman

Municipal Rates and Utilities Committee Regular Meeting of April 25, 2024 MINUTES Page 3 of 3 NOES: None ABSENT: None 5. DISCUSSION ITEMS 5.1. Sub-Committee update The Sub-Committee met on April 25, 2024; they discussed the community meeting on May 30, 2024. The meeting will be held in two sessions at the Veterans Hall. The times will be 3:00 PM- 4:30 PM and 6:00 PM – 7:30 PM 5.2. Grant updates The Public works director gave an update on the grants that have been submitted. 5.3. Water Rate Analysis Committee Members heard a presentation from NBS that discussed the Water Rate Analysis. Committee members commented and asked questions about the presentation. A final presentation will be brought back to the committee to review and recommend adopting to City Council in May. Public comment was received throughout the meeting. 5.4. Timeline update The following timeline was discussed. - June- Wastewater presentation - July- Recommend Wastewater rates to council. 6. FUTURE AGENDA ITEMS - June – Recommend Water Rates to council. 7. ADJOURNMENT ________________________________________________ Krystine Ball, Municipal Rates and Utilities Committee Clerk Krystine Ball

Municipal Rates and Utilities Committee Regular Meeting of April 25, 2024 Page 1 of 3 The public may participate and provide public comments in person or via Zoom Meeting. Please be advised that when all Committee Members are attending the meeting in person, the teleconferencing option is provided as a courtesy to the public. If, for any reason, there are technical difficulties, the Municipal Rates and Utilities Committee meeting will continue in person, provided there is a quorum at the meeting. One tap mobile: +16699006833,,86993830361# US (San Jose) Dial by your location: +1 669 900 6833 US (San Jose) Meeting ID: 869 9383 0361 https://us06web.zoom.us/j/86993830361 Written comments that are received by 5:00 PM. on the Monday before the Municipal Rates and Utilities Committee meeting will be disseminated to the Commission and made available to the public for review on the city’s website. Please provide the agenda item number in the subject line of your email or letter. Public comments will no longer be read into the record. Comments must be sent to municipalrates@ci.rio-vista.ca.us. If you do not have access to a computer, please contact Krystine Ball at 707-374-6447, to make alternative arrangements to submit public comment.

Municipal Rates and Utilities Committee Regular Meeting of April 25, 2024 Page 2 of 3 RIO VISTA MUNICIPAL RATES AND UTILITIES COMMITTEE CHAIRMAN EDWIN OKAMURA VICE CHAIR CHRIS ARMBRUST RICK DOLK HECTOR DELAROSA MICHELLE STAHLMAN REGULAR MEETING BY TELECONFERENCE AND IN PERSON AGENDA THURSDAY, APRIL 25, 2024 6:00 pm CITY HALL COUNCIL CHAMBERS ONE MAIN STREET RIO VISTA, CALIFORNIA 94571 1. CALL TO ORDER – ROLL CALL – PLEDGE OF ALLEGIANCE 2. PUBLIC COMMENT – See instructions at top of this agenda page 3. DISCLOSURE OF EX PARTE COMMUNICATIONS Municipal Rates and Utilities Committee Members should disclose any communications they have had on the agenda items at this time. 4. ACTION ITEMS 4.1. Approve Minutes from March 28, 2024 5. DISCUSSION ITEMS 5.1. Sub-Committee update 5.2. Grant updates 5.3. Water Rate Analysis 5.4. Timeline update 6. FUTURE AGENDA ITEMS 7. ADJOURNMENT

Municipal Rates and Utilities Committee Regular Meeting of April 25, 2024 Page 3 of 3 Disclosable public records related to an open session item on a meeting agenda distributed by the City of Rio Vista to the Rio Vista Municipal Rates and Utilities Committee are available on the city’s website & at City Hall for public review at 72 hours prior to a regular meeting and 24 hours prior to a special meeting or, in the event information is delivered to the Commission less than 72 or 24 hours prior to an open meeting, as soon as it is so delivered. To arrange for an alternative agenda document format or to arrange aid or services to modify or accommodate persons with a disability to participate in a public meeting contact the Commission Clerk 48 hours in advance of the meeting date by calling (707) 374-6447. Pursuant to applicable laws and regulations, including without limitation, California Government Code Section 65009 and or California Public Resources Code Section 21177, if you wish to challenge in court any of the above decisions (including any action regarding planning, zoning and/or environmental decisions), you may be limited to raising only those issues you or someone else raised at the public hearing(s) described in this notice/agenda, or in written correspondence delivered to the City at, or prior to, the public hearing. CERTIFICATION OF POSTING – I, Krystine Ball, Municipal Rates and Utilities Committee Clerk, for the City of Rio Vista, declare that the foregoing agenda for the April 25, 2024, Regular Meeting of the Rio Vista Municipal Rates and Utilities Committee was posted and available for review on April 22, 2024, on the city’s website and at City Hall, One Main Street, Rio Vista, California, in accordance with Government Code §54954.2(a). ________________________________________________ Krystine Ball, Municipal Rates and Utilities Committee Clerk Krystine Ball

Water Rate Study Presented by: Sara Mares Director, NBS

2 Agenda Draft Rate Design Results Rate Study Methodology Financial Plan Cost-of-Service Analysis

3 Rate Study Methodology Here, the city works out how to fairly split the cost of its services between all the people who use them. It's about making sure everyone pays an amount that's right for the service they get, and that all laws and regulations are followed. Cost of Service AnalysisThis step examines how much money the city has coming in and what's going out. It helps figure out how much the city needs to charge for its services and thinks about any changes that might need to be made in the future. Financial Plan The last part is about deciding the best way to charge people for city services so that the city collects enough money to cover its costs. It's all about creating a fair system that works for everyone. Rate Design Analysis

4 Operations and Maintenance (O&M) Bucket: This is the first bucket. It covers the costs of running and maintaining the service or infrastructure. The day-to- day expenses to keep things going. Rate-Funded Capital or Other Expenditures Bucket: If there's money left over after filling the first two buckets, it can then be allocated to other areas like rate- funded capital projects, representing discretionary or non-essential spending. Capital Reserves Bucket: Once O&M is funded, the money can flow to the next bucket. This bucket is for capital reserves, used for future significant investments or infrastructure upgrades. Financial Plan – Water Utility Revenue: The total income generated from customer service rates to cover operational expenses, debt repayments, and capital projects, minus alternative income sources like fees and fines. It includes a provision for reserves to ensure the utility's long-term financial stability and service reliability. Utility Revenue Discretionary Spending

5 Summary of Changes from September 28, 2023 Presentation • Revisions to O&M Budget based on input from rate committee and staff • “Major maintenance” projects included in O&M budget rather than CIP • Includes Projects 6-10 previously shown in CIP • Revisions to Capital Improvement Program (CIP) based on input from staff • Refinement of projects, timing and budget for Water CIP • Debt service assumptions • Refinement to use of debt service during projected 5-year rate period • Cost-of-service analysis updated to reflect changes to O&M budget, CIP budget and debt service assumptions • Rate Design Alternatives unchanged from two options presented in September • Alternative 1: 85% Fixed/15% Variable • Alternative 2: 80 Fixed/20% Variable

6 Financial Plan – Water

7 Financial Plan – Water Projected Operating & Maintenance Expenses Actual Actual Budget FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FUND 80 WATER SYSTEM Salaries & Wages 3 615,430$ 698,129$ 763,476$ 786,533$ 810,286$ 834,757$ 859,967$ 885,938$ Overtime 3 30,900 37,689 23,650 24,364 25,100 25,858 26,639 27,443 Dental Insurance 3 10,666 11,184 12,476 12,853 13,241 13,641 14,053 14,477 Health Insurance 3 97,497 91,940 120,326 123,960 127,703 131,560 135,533 139,626 Life Insurance 3 1,373 1,390 1,920 1,978 2,038 2,099 2,163 2,228 Employee Assistance Program 3 206 207 206 212 219 225 232 239 Vision Insurance 3 1,334 1,342 1,768 1,821 1,876 1,933 1,991 2,052 PERS Retirement 3 122,240 147,574 160,316 165,158 170,145 175,284 180,577 186,031 Social Security/FICA 3 45,779 49,586 56,454 58,159 59,915 61,725 63,589 65,509 Worker's Comp. Insurance 3 38,501 36,615 40,146 41,358 42,607 43,894 45,220 46,585 Boot/Uniform/Equipment Allowance 3 1,278 757 1,775 1,829 1,884 1,941 1,999 2,060 State Unemployment Insurance 3 1,517 4,221 3,300 3,400 3,502 3,608 3,717 3,829 Accounting & Auditing 2 5,748 6,131 6,303 6,520 6,745 6,978 7,219 7,468 Legal Fees 2 5,746 6,778 5,000 5,173 5,351 5,536 5,727 5,924 Printing 2 6,613 7,561 6,000 6,207 6,421 6,643 6,872 7,109 Chemicals & Gases 4 66,416 57,131 150,000 158,171 166,786 175,871 185,451 195,553 Conferences & Meetings 2 1,438 13,665 25,000 25,863 26,755 27,678 28,633 29,621 Contractual Services 2 213,944 171,529 300,000 310,350 321,057 332,134 343,592 355,446 Equipment Rental 2 4,668 18,432 20,000 20,690 21,404 22,142 22,906 23,696 Equipment (Non-Capital) 2 4,438 2,341 5,000 5,173 5,351 5,536 5,727 5,924 Fuel & Mileage 7 12,352 31,985 30,000 32,123 34,397 36,832 39,439 42,231 Flood & Fire Insurance 2 44,476 61,215 83,815 86,707 89,698 92,793 95,994 99,306 Liability Insurance 2 66,763 78,699 98,230 101,619 105,125 108,752 112,504 116,385 Finance Charge 2 - - 500 517 535 554 573 592 Laboratory Testing 2 36,258 58,995 50,000 51,725 53,510 55,356 57,265 59,241 Legal Notices & Publications 2 714 3,350 6,000 6,207 6,421 6,643 6,872 7,109 M & R Machinery & Equipment 2 22,518 29,765 40,000 41,380 42,808 44,284 45,812 47,393 M & R Real Property 2 173,200 81,359 60,000 62,070 64,211 66,427 68,718 71,089 M & R Vehicles 2 5,805 7,615 6,000 6,207 6,421 6,643 6,872 7,109 Membership Dues 2 4,193 18,554 10,300 10,655 11,023 11,403 11,797 12,204 Misc. Services & Supplies 2 32,257 39,206 30,000 31,035 32,106 33,213 34,359 35,545 Computer Hardware 2 19,303 4,655 20,000 20,690 21,404 22,142 22,906 23,696 Office Supplies & Materials 2 11,000 12,000 12,000 12,414 12,842 13,285 13,744 14,218 Computer Software 2 38,764 40,466 25,000 25,863 26,755 27,678 28,633 29,621 Permits & licenses 2 41,866 48,888 60,000 62,070 64,211 66,427 68,718 71,089 Postage 2 2,236 2,717 3,500 3,621 3,746 3,875 4,009 4,147 Safety Equipment 2 2,726 3,138 3,500 3,621 3,746 3,875 4,009 4,147 Bad Debt 9 - 858 - - - - - - Telephone 2 11,612 7,037 12,000 12,414 12,842 13,285 13,744 14,218 Utilities - PG&E 6 291,141 211,303 260,000 281,712 305,236 330,725 358,343 388,266 Emergency Repairs 2 87,875 96,927 130,000 134,485 139,125 143,925 148,890 154,027 SUBTOTAL: WATER SYSTEM EXPENSES 2,180,792$ 2,202,935$ 2,649,961$ 2,753,111$ 2,860,971$ 2,973,800$ 3,091,877$ 3,215,499$ 5-Year Projected Rate Period DESCRIPTION Basis

8 Financial Plan – Water Projected Operating & Maintenance Expenses, cont. Actual Actual Budget FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 CAPITAL MAINTENANCE PROJECTS Project 6 - Required State & Federal Reporting Annua l Lea d Servi ce Reporti ng To Sta te 8 - - - 20,000 22,000 24,000 26,000 28,000 Annua l Wa ter Suppl y And Dema nd As s es s ment 8 - - - 10,000 11,000 12,000 13,000 14,000 8 - - - 15,000 17,000 19,000 21,000 23,000 Annua l Urba n Wa ter Us e Objecti ves (Ja n 2024 ) 8 - - - - 17,000 19,000 21,000 23,000 8 - - - 20,000 22,000 24,000 26,000 28,000 EPA Ini ti a l Lea d Servi ce Inventory (Oct 2024) 8 - - - - 30,000 - - - Urba n Wa ter Ma na gement Pl a n (Jul y 2026) 8 - - - - - - 30,000 - 8 - - - - - - 10,000 - Project 7 - Public Works Staff Support Engi neeri ng Support For Publ i c Works 8 - - - 20,000 22,000 24,000 26,000 28,000 Project 8 - Hydraulic Modeling Wa ter Sys tem Eva l ua ti on Upda te 8 - - - 100,000 - - - - Engi neeri ng Support For Hydra ul i c Model i ng 8 - - - 20,000 22,000 24,000 26,000 28,000 Project 9 - Hydraulic Modeling Support 8 - - - 10,000 11,000 12,000 13,000 14,000 Project 10 - SCADA SCADA 8 - - - 50,000 50,000 50,000 50,000 50,000 TOTAL: CAPITAL MAINTENANCE PROJECTS -$ -$ -$ 265,000$ 224,000$ 208,000$ 262,000$ 236,000$ GRAND TOTAL: WATER EXPENSES 2,205,792$ 2,227,935$ 2,819,461$ 3,192,668$ 3,264,761$ 3,367,006$ 3,544,689$ 3,648,113$ Basis Annua l Wa ter Los s Audi t & Wa ter Los s Control Performa nce Sta nda rds Monthl y Drought And Cons erva ti on Reporti ng (Due Qua rterl y) EPA Ri s k And Res i l i ence As s es s ment (June 2026) And Emergency Res pons e Pl a n (Dec 2026) Annua l Hydra ul i c Model i ng On-Ca l l Support For Improvement Projects DESCRIPTION 5-Year Projected Rate Period Actual Actual Budget FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 Miscellaneous Expense 2 - 0.06 2,000 2,069 2,140 2,214 2,291 2,370 Capital Outlay - Mach & Equip 8 - - - - - - - - Capital Outlay - Vehicles 8 - - 142,500 147,488 152,650 157,992 163,522 169,245 Transfer Out 9 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 SUBTOTAL: WATER SYSTEM EXPENSES 2,205,792$ 2,227,935$ 2,819,461$ 2,927,668$ 3,040,761$ 3,159,006$ 3,282,689$ 3,412,113$ DESCRIPTION Basis 5-Year Projected Rate Period

9 Financial Plan – Water

10 Financial Plan – Water Projected Capital Improvement Program Costs (in future year dollars) FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 Capital Outlay Capital Construction 18,260$ 655,000$ 135,914$ -$ -$ -$ -$ -$ CIP - 2020 Water & Sewer CIP Project - 416,461 - - - - - - CIP - 2021 Water & Sewer CIP Project - Waterline Replacement - 324,000 301,360 - - - - - CIP - Water System Project - 590,000 - - - - - - CIP - Well#16 Scada Integration and Upgrades - 25,000 100,000 - - - - - Project 1 - 5 Year CIP Plan 1 Highland Dr., Hamilton Ave., Bruning Ave., St. Gertrudes Ave., - - - 1,039,100 - - - - 2 Crescent Dr., Delta Way - - - - 1,079,729 - - - 3 Rolling Green Dr., Virginia Dr. - - - - - 1,121,946 - - 4 Laurel Way, Thereza Way, Linda Vista Way - - - - - - 1,165,814 - 5 Montezuma St., Seventh St., Morgan Lane - - - - - - - 1,211,398 6 3Rd Street - - - - - - - 969,118 Project 2 - Lead Service Replacement 1 Lead Service Replacement - - - - 269,932 280,487 291,454 - Project 3 - Well 17 Development/Booster Station/Storage Tank 1 Well 17, Booster Station, Storage Tank - - - 1,413,176 1,468,431 1,525,847 1,585,507 1,647,501 2 Well 17 Arsenic Treatment - - - 519,550 539,864 560,973 582,907 605,699 Project 4 - Well 18 Development 1 Well 18 - - - - - 1,121,946 1,165,814 847,978 2 Well 18 Arsenic Treatment - - - - - 1,121,946 1,165,814 605,699 Project 5 - Booster Station at Amador Tank 1 Booster Station - - - - - - - 1,514,247 2 Generators - - - - - - - 121,140 Project 12 - Fire Hydrant Maintenance 1 Fire Hydrants - - - 119,377 124,045 128,895 133,935 139,171 Total: CIP Program Costs (Future-Year Dollars) 18,260$ 2,010,461$ 537,274$ 3,091,203$ 3,482,001$ 5,862,040$ 6,091,246$ 7,661,951$ Project Description

11 Financial Plan – Water Projected Capital Improvement Program Costs (in future year dollars), cont. Project # Project Description 2 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 Project 23 - Airport Road Tank Lining 1 Airport Road Tank - - - - 1,079,729 - - - Project 27 - Well 10 Media Replacement 1 Well 10 Media Replacement - - - - 323,919 - - - Project 28 - Well 16 Media Replacement 1 Well 16 Media Replacement - - - - - 78,536 - 84,798 Subtotal: CIP Program Costs (Current-Year Dollars) -$ -$ -$ -$ 1,403,647$ 78,536$ -$ 84,798$ Total: CIP Program Costs (Current-Year Dollars) 18,260$ 2,010,461$ 537,274$ 3,091,203$ 4,885,649$ 5,940,576$ 6,091,246$ 7,746,749$ *Note: Only CIP projects with funding requirements during the 5-year rate period are shown on the tables in Slides 10 and 11. A complete summary of planned CIP projects over the 20-year horizon are shown on Slide 16.

12 Financial Plan – Water

13 Financial Plan – Water Actual Actual Budget FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 Sources of Water Funds Rate Revenue 3,147,712$ 3,167,177$ 3,189,580$ 3,256,054$ 3,322,528$ 3,389,002$ 3,455,477$ 3,521,951$ Non-Rate Revenue 11,770 71,404 31,000 31,646 32,292 32,938 33,584 34,230 Interest Earnings 14,118 80,941 30,000 16,268 21,292 22,993 44,309 65,888 Transfer In 9,684 - 20,680 20,680 - - - - Total Sources of Funds: 3,173,599$ 3,319,522$ 3,250,580$ 3,303,968$ 3,376,113$ 3,444,934$ 3,533,370$ 3,622,069$ Uses of Water Funds Operating Expenses 2,205,792$ 2,227,935$ 2,819,461$ 2,927,668$ 3,040,761$ 3,159,006$ 3,282,689$ 3,412,113$ Debt Service 319,341 328,568 322,493 321,361 330,110 323,559 321,950 1,350,608 Rate-Funded Capital Expenses 18,260 2,010,461 537,274 858,477 1,530,193 - - - Total Use of Funds: 2,543,394$ 4,566,963$ 3,679,228$ 4,107,506$ 4,901,064$ 3,482,565$ 3,604,640$ 4,762,722$ Surplus (Deficiency) before Rate Increase 630,205$ (1,247,442)$ (428,648)$ (803,538)$ (1,524,952)$ (37,632)$ (71,270)$ (1,140,653)$ Additional Revenue from Rate Increases 1 - - - 1,156,389 1,635,608 1,668,332 1,701,056 1,733,779 Surplus (Deficiency) after Rate Increase 630,205$ (1,247,442)$ (428,648)$ 352,851$ 110,656$ 1,630,700$ 1,629,786$ 593,127$ Projected Annual Rate Increase 0.00% 0.00% 0.00% 35.00% 10.00% 0.00% 0.00% 0.00% Cumulative Rate Increases 0.00% 0.00% 0.00% 35.00% 10.00% 10.00% 10.00% 10.00% Net Revenue Requirement 2 2,507,822$ 4,414,619$ 3,597,548$ 4,038,912$ 4,847,480$ 3,426,634$ 3,526,746$ 4,662,603$ 1. As s umes new ra tes a re i mpl emented Jul y 1, 2024. 2. Thi s i s the a nnua l a mount needed from wa ter ra tes . [Net Revenue Requi rement = Tota l Us e of Funds - (Non-Ra te Revenues + Interes t Ea rni ngs )]. Summary of Sources and Uses of Funds and Net Revenue Requirements 5-Year Projected Rate Period

14 Financial Plan – Water

15 Financial Plan – Water Actual Actual Budget FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 Operating Reserve Ending Balance 565,118$ 637,941$ 735,000$ 741,474$ 769,558$ 799,920$ 831,311$ 863,716$ Recommended Minimum Target 551,000 557,000 705,000 732,000 760,000 790,000 821,000 853,000 Capital Reserve Ending Balance 3,958,828$ 1,722,026$ 527,040$ 910,364$ 1,014,229$ 2,637,560$ 4,280,264$ 4,571,626$ Recommended Minimum Target 1,191,900 1,276,800 1,270,700 1,418,100 1,668,700 1,975,000 2,281,300 2,677,600 Total Ending Balance 4,523,946$ 2,359,967$ 1,262,040$ 1,651,838$ 1,783,787$ 3,437,480$ 5,111,575$ 5,435,342$ Total Recommended Minimum Target 1,742,900$ 1,833,800$ 1,975,700$ 2,150,100$ 2,428,700$ 2,765,000$ 3,102,300$ 3,530,600$ Beginning Reserve Fund Balances and Recommended Reserve Targets 5-Year Projected Rate Period Summary of Unrestricted Reserves Summary of Restricted Reserves Actual Actual Budget FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 Capacity Fee Reserve Beginning Reserve Balance -$ -$ -$ -$ -$ 1,813,531$ 3,159,085$ 4,174,801$ Plus: Interest Earnings -$ -$ -$ -$ -$ 23,376$ 40,721$ 53,813$ Plus: Capacity Fee Revenue1 -$ -$ -$ -$ 2,590,758$ 2,676,072$ 2,764,195$ 2,855,220$ Less: Use of Reserves for Capital Projects -$ -$ -$ -$ (777,227)$ (1,353,894)$ (1,789,200)$ (2,125,150)$ Ending Connection Fee Fund Balance -$ -$ -$ -$ 1,813,531$ 3,159,085$ 4,174,801$ 4,958,684$ Beginning Reserve Fund Balances and Recommended Reserve Targets 5-Year Projected Rate Period

16 Capacity Fee Analysis – Water In its simplest form, capacity fees are the result of dividing the cost (or value) of the Utility’s current system assets plus planned capital improvements, by the expected number of future customers. As a result, future customers connecting to the City’s water utility would enter as equal participants, along with current customers, regarding their financial commitment and obligations to the utilities. The table to the right summarizes the anticipated total project costs for the water utility’s planned capital improvements over the next 20 years (in current year dollars).

17 Capacity Fee Analysis – Water Equivalency Factor Maximum Continuous Flow (gpm) 1 Equivalency to 3/4-inch Meter 3/4 inch 30 1.00 $10,955 $10,955 1 inch 50 1.67 $10,955 $18,258 1.5 inch 100 3.33 $10,955 $36,515 2 inch 160 5.33 $10,955 $58,424 3 inch 320 10.67 $10,955 $116,848 4 inch 500 16.67 $10,955 $182,575 Unit Cost Per 3/4-inch meter Calculated Capacity Fee Per Meter Meter Size The two primary reasons for conducting a capacity fee study are as follows: • (1) to ensure that the fees are updated to comply with legal requirements and industry standards, and • (2) to ensure that these fees reflect the cost of capital infrastructure needed to serve new connections, or any person requesting additional capacity in the District’s water system (referred to throughout as “future customers”). Below are the preliminary results of the water capacity fee analysis by meter size: *Note: Household connections that require a 1-inch meter to accommodate fire sprinklers will be assessed the fee based on ¾-inch meter domestic use.

18 Overview: Cost-of-Service Analysis (COSA) How Are Water Costs Assigned to Customers? Cost of Service Analysis (COSA) allocates costs based on the cost to serve each type of customer. • Water Costs are typically allocated by: 1. System Capacity Costs (based on system peaking factors) 2. Commodity Costs (annual consumption) 3. Customer Costs (number of accounts) • Cost Allocations – Costs are then allocated to each customer class based on their proportional share of the above criteria. Commodity-Related Costs 1,784,143$ 40.0% Capacity-Related Costs 2,497,800 56.0% Customer-Related Costs 178,414 4.0% Net Revenue Requirement 4,460,357$ 100.0% Classification Components Cost-of-Service Net Revenue Requirements (FY 2024/25)

19 Fixed vs. Variable Revenue Collection Alternatives FY 2024/25 % of COS Rev. Req't. % Fixed Revenue % Variable Revenue Revenue from Volumetric Charges Revenue from Hydraulic Capacity Charges Revenue from Customer Costs Residential 3,437,149$ 77.1% 85% 15% 515,572$ 2,762,516$ 159,061$ Mobile Home 18,081 0.4% 85% 15% 2,712 13,674 1,694 Multi-Family 125,862 2.8% 85% 15% 18,879 98,316 8,667 Commercial 180,996 4.1% 85% 15% 27,149 148,666 5,180 Irrigation Only 698,269 15.7% 85% 15% 104,740 589,717 3,812 Total 4,460,357$ 100.0% 669,054$ 3,612,889$ 178,414$ Customer Class COSA Net Revenue Requirements NET REVENUE REQUIREMENT - ALTERNATIVE 1 FY 2024/25 % of COS Rev. Req't. % Fixed Revenue % Variable Revenue Revenue from Volumetric Charges Revenue from Hydraulic Capacity Charges Revenue from Customer Costs Residential 3,437,149$ 77.1% 80% 20% 687,430$ 2,590,658$ 159,061$ Mobile Home 18,081 0.4% 80% 20% 3,616 12,770 1,694 Multi-Family 125,862 2.8% 80% 20% 25,172 92,023 8,667 Commercial 180,996 4.1% 80% 20% 36,199 139,616 5,180 Irrigation Only 698,269 15.7% 80% 20% 139,654 554,803 3,812 Total 4,460,357$ 100.0% 892,071$ 3,389,871$ 178,414$ Customer Class COSA Net Revenue Requirements NET REVENUE REQUIREMENT - ALTERNATIVE 2

20 Proposed Draft Rates – Water (Alternative 1) FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 Monthly Fixed Service Charges (in $/mo) Residential (SFR, MFR, MH) 3/4 inch $34.32 $46.04 $50.64 $50.64 $50.64 $50.64 1 inch $34.32 $74.91 $82.40 $82.40 $82.40 $82.40 1 1/2 inch $34.32 $147.08 $161.79 $161.79 $161.79 $161.79 2 inch $34.32 $233.69 $257.06 $257.06 $257.06 $257.06 3 inch $34.32 $464.64 $511.10 $511.10 $511.10 $511.10 4 inch $34.32 $724.46 $796.90 $796.90 $796.90 $796.90 Non-Residential (COMM & IRR) 3/4 inch $34.32 $46.04 $50.64 $50.64 $50.64 $50.64 1 inch $85.79 $74.91 $82.40 $82.40 $82.40 $82.40 1 1/2 inch $171.58 $147.08 $161.79 $161.79 $161.79 $161.79 2 inch $274.52 $233.69 $257.06 $257.06 $257.06 $257.06 3 inch $514.73 $464.64 $511.10 $511.10 $511.10 $511.10 4 inch $857.88 $724.46 $796.90 $796.90 $796.90 $796.90 6 inch $1,715.75 $1,446.18 $1,590.80 $1,590.80 $1,590.80 $1,590.80 Uniform Rate for All Customers $0.56 $0.82 $0.90 $0.90 $0.90 $0.90 Water Rate Schedule Proposed RatesCurrent Rates Variable Charges for All Water Consumed (in $/HCF) Drought Surcharge Schedule (in $/HCF) Current Rates FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 Up to 15% n/a $0.0495 $0.0605 $0.0563 $0.0522 $0.0474 Up to 25% n/a $0.0935 $0.1142 $0.1063 $0.0985 $0.0896 Up to 35% n/a $0.1511 $0.1845 $0.1717 $0.1592 $0.1448 >50% n/a $0.4210 $0.5139 $0.4783 $0.4434 $0.4033

21 Proposed Draft Rates – Water (Alternative 2) FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 Monthly Fixed Service Charges (in $/mo) Residential (SFR, MFR, MH) 3/4 inch $34.32 $43.37 $47.70 $47.70 $47.70 $47.70 1 inch $34.32 $70.45 $77.50 $77.50 $77.50 $77.50 1 1/2 inch $3