Item 23 - Public Hearing to Consider Proposed Water and Sewer Rate Adjustments

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Water and Sewer Rates March 17, 2026 Page 6 and 128 sewer lateral repairs. In addition, four (4) pump stations and 16 groundwater wells were downed due to mechanical and/or electrical failures. While PWA made cost-effective repairs, continued deferral of capital project investment will eventually result in system failure and loss of critical assets. The proposed rate plan allows for the City to invest an average of $8 million annually on water capital improvements and $5 million annually on needed sewer capital improvements over the next five (5) years. Proposed projects include (Exhibit 3): • Water Facilities o Garthe Pump Station Improvements o Walnut Pump Station Improvements o New Groundwater Wells o Crooke Pump Station Improvements Water Main Improvements o Fisher Park Neighborhood Water Main Improvements o Heninger Park Neighborhood Water Main Improvements o Thornton Park Neighborhood Water Main Improvements o Riverview West Neighborhood Water Main Improvements o Madison Park Water Main Improvements • Sewer Main Improvements o Washington Square Sewer Main Improvements o Santa Ana Memorial Park Neighborhood Sewer Main Improvements o Wright Street and Old Grand Sewer Main Improvements o Warner-Garnsey Street Sewer Main Improvements o Casa Bonita Neighborhood Sewer Main Improvements o Riverview West Neighborhood Sewer Main Improvements Operations & Maintenance Plan The water enterprise's FY 2025/26 budget includes $73.5 million in operating expenses, of which $26.6 million is for the purchase of water supplies and $3.2 million is for the cost of electrical power to pump, treat, and distribute the water. Costs for wholesale water as well as electrical power are expected to continue climbing year over year. Maintenance of the City's public water systems must adhere to strict standards set at both the State and Federal levels. Additionally, the presence of PFAS in the groundwater supplies has required unprecedented investment in PFAS treatment facilities, which will result in additional, annual maintenance and operations costs for the City. Total operating expenses are expected to increase by approximately 4% each year, based on applying specific inflation factors to each budget line item. By the end of the five-year rate -setting period, total operating expenses are expected to reach $89.4 million. Without adjustments to revenues, sustaining current service levels over the planning period would be unsustainable.