FEE INCREASES Public Work Shop June 2, 2018

The Workshop Presentation Questions and Discussion The Need The Rates The Process The Schedule Questions and Discussion Conclusion and Next Steps

The Need: The Systems Sewer Water Two Wells Water Treatment Plant (in design) Two Water Storage Tanks Water Distribution System with 627 connections and 54 hydrants Two Sewer Plants Three Lift Stations Four Leachfields Two Sewer Collection Systems with 394 connections

The Need: Overview Financing a New Water Treatment Facility Increasing Costs of Maintenance, Repair, and Replacement of Existing Water and Sewer Facilities Increasing Costs for Operation: Labor, Subcontractors, Equipment, Materials, Utilities Paying Current Debt-Service Maintaining Reserves No Fire Tax Increase

Five Year Need: Water Financing a New Water Treatment Plant District under a Compliance Order Remove Arsenic to meet Federal Standard of 10 ppb Reduce Manganese and Iron Improvements, Replacement and Repair Hydrants Pressure Release Valves Well 2 repairs, VFD Storage Telemetry Water Master Plan for Well and Tank Replacement

Water Treatment Plant

Water Treatment Plant

Five Year Need: Sewer Improvements, Replacement and Repair Lift Station 7 Improvements (Compliance Order) Repair Leaking Manholes-stop infiltration Treatment Plant 7 Galley Painting Water Reclamation Filtering Repairs to Waste Treatment Plant 6 Master Planning: DHLF, Increase Reclamation Debt-Service WWTP 7 Dynamite Hill Leachfield

Five Year Need: Assumptions Labor: 24/7 operation, 5 day a week office hours Class III Operators for Treatment Plants Full-time General Manager Administrative Support Increasing costs of benefits-medical, dental, vision, retirement Subcontractors, Equipment, Prevailing Wage, Insured Specialize Equipment-Pumps, Panels, Pipes and Valves Utilities Electricity, Propane, Septic, Waste Collection

Five Year Need: Assumptions Reserves Operating Reserve= 90 days of O&M Capital Reserve= 1 year of capital expenses (variable) Bond Reserves will meet loan requirements Existing reserves adequate

The Fees: Limits Fees must be related to the cost of providing service Operation and maintenance including overhead Capital Improvements: replacing, repairing, adding facilities and equipment Debt service Proposed rates include increases based on a Consumer Price Index

Adhere to District Fiscal Policy The Fees: Rate Study Determine the revenue required to operate & maintain water, sewer, and fire protection system into perpetuity Meets State of California SRF Requirements Goal 1 Determine Revenue Clearly define fiscal policy Create financial performance target levels Goal 2 Adhere to District Fiscal Policy Simple to understand by Ratepayers Simple to manage by staff Goal 3 Simplicity

The Fees: Rate Study Compares the revenues of the PECSD to future expenses to determine the size of the rate adjustment Revenue Requirement Equitably allocates the revenue requirements between the classes of customers using the concept of EDUs Cost of Service Design rates for each class of service to meet the revenue requirement plus any additional rate design goals and objectives Rate Design

The Fees : Residential

Water Fees

Water Fees

The Process: Prop 218

The Process: Ordinance

The Schedule Start of Rate Study Dec 31, 2017 Final Rate Study Report April 30, 2018 Prop 218 Mailing May 11, 2018 Public Hearing June 2, 2018 Introduction of Ordinance June 13, 2018 Final Date for Accepting Protests June 27, 2018 Adoption of Ordinance June 27, 2018 Effective Date July 1, 2018

Questions and Comments