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2019 Water, Recycled Water, and Sewer Rate Study Executive Summary <br />EXECUTIVE SUMMARY <br />This Executive Summary presents an overview of the results of the 2019 Water, Recycled Water and <br />Sewer Rate Study (Study) that was conducted for the City of Santa Ana ("City") by Stantec Consulting <br />and Hildebrand Consulting. <br />The primary objectives of this Study are to: <br />i. Develop a multi -year financial management plan that provides for the City's Water and Sewer <br />Enterprise capital funding needs, <br />ii. Identify future rate adjustments to water, recycled water (included as part of the water enterprise <br />fund), and sewer rates that will ensure adequate revenues to meet the respective enterprises' <br />ongoing financial requirements, <br />iii. Determine the cost of providing water, recycled water, and sewer service to customers using <br />industry accepted methodologies, and <br />iv. Recommend specific rate structures that equitably recover the cost of service while minimizing <br />the financial impact to ratepayers and comporting with industry practices and legal requirements. <br />The following describes the drivers that initiated the need for this Study, and a general description of the <br />solutions that were used to address those challenges. <br />Driver: The rate schedules adopted based upon the past 2014 rate study had a planning period that <br />ended during this current fiscal year (2018/2019). <br />Solution: Update the Water & Sewer Enterprise Fund financial plans and rates to meet the <br />revenue needs over the next five years. <br />Driver: The City has recently updated its Water and Sewer Master Plans which provide guidance for <br />capital spending over the next planning period. <br />Solution: Adopt a capital spending plan from the respective Master Plans that provides the <br />enterprises with the needed level of service and maintains the utilities' assets in good working <br />condition, and benefit rate payers by making timely re -investments in critical infrastructure. <br />Driver: The legal environment in California over the past 5 years (namely Proposition 218) has <br />significantly increased the burden of proof required of public utilities to demonstrate that the rates being <br />charged for utility service are proportionate to the cost of providing the utility services. <br />Solution: Conduct a full cost -of -service allocation analysis and make rate structure <br />modification to ensure inter- and intra-class equity in rates charged to water, recycled water, <br />and sewer customers. <br />City of Santa Ana Stantec I ES-1 <br />