1. Water and Wastewater Five Year Rate Schedules City Council Meeting May 13, 2008

2. WATERFY 08/09FY 09/10FY 10/11FY 11/12FY 12/13 Presented April 2211.510.5 9 Corrected11.0%10.5% 10.0% WASTEWATERFY 08/09FY 09/10FY 10/11FY 11/12FY 12/13 Presented April 2218 1585 Corrected18.0% 15.0%9.0%4.0% 5-Year Water Rate Schedule 5-Year Waste Water Rate Schedule

3. Rate Studies  Existing rate structure adopted 1996  Periodic rate increases (CPI only) started in 1999 for Water, 2001 for Wastewater  Rate study prepared in 2003; not implemented  Rate study updated April 2005  6% (inclusive of CPI) increase approved by Council for FY 2005-2006; CPI only for Wastewater  Rate study updated, presented at May 2007 study session  Nexus Study December 2007  Study Session April 22, 2008 – preferred rate schedules selected by Council; staff directed to return for formal approval May 13, 2008

4. Low Income Provisions Presently, service charge is waived for qualified low income customers In proposed new structure, low income customers will receive a discounted first tier rate (discounted $0.69/ HCF) for water, and discounted unit price for wastewater (discounted $1.52/HCF) Sample Low Income Bills: (Avg. 14 HCF usage) CURRENTPROPOSED Water$13.44 Wastewater$10.14

5. Timeline Approval of rate schedules, reserve fund enhancements, rate structure changes, low income rates, and adopt resolution setting public hearing for July to adopt new rates -- May 13, 2008 Mail out Prop 218 notices to Property Owners of Record and rate payers; Mailing date -- May 20, 2008 Min. 45 day response period for owners to submit written protests; protest period will close at the July 8, 2008 public hearing (49 days from 5/20/08) Majority protest of property owners required to prevent implementation Absent majority protest, Council can adopt new rates -- July 8, 2008 New rates implemented – August 1, 2008

6. Summary Recommended Action 5/13/08 FY 08/09FY 09/10FY 10/11FY 11/12FY 12/13 Water 11.0%10.5% 10.0% Wastewater 18.0% 15.0%9.0%4.0% Approve 5 year rate schedules Approve water/wastewater commodity-only rate structure Approve low income rates for water/ wastewater Approve revised funding levels for Water/Wastewater reserve funds Adopt resolution setting July 8, 2008 public hearing for final rate adoption