Item 04 - Sanitation Users Charge Adjustment

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EXECUTIVE SUMMARY This Executive Summary represents a summary of the results of the 2025 Sanitation Services Users Charge Cost of Service Study (Study) that was conducted for the City of Santa Ana (City) by SCS Engineers’ Management Services team (SCS). BACKGROUND Santa Ana, with a population of about 310,000, is a City in and the county seat of Orange County, California. It is located in the Greater Los Angeles region, and is the second most populous city in Orange County. The Sanitation Services Users Charge is paid by approximately 92,800 customers on a bi-monthly billing basis. Among the services provided are Roadway Cleaning and Environmental Sanitation Programs and they include street sweeping, alley and sidewalk cleaning, abandoned item collection and power washing, weed abatement and sanitation code compliance inspections. These programs also coordinate with neighborhood associations to assist in beautifying their neighborhoods. In fiscal year 2025, the City is projected to incur total expenses of $13.8 million. This budget encompasses several critical allocations, including $775,000 earmarked for one-time capital improvements, $1.1 million for contract maintenance staff to boost sanitation services, and $831,000 for hiring four maintenance workers and three program support employees. Furthermore, a significant ongoing expenditure of $3.0 million is earmarked for the introduction of a new street sweeping contract. This contract is geared towards enhancing service frequency, especially in key arterial and commercial corridors, thereby upholding elevated standards of cleanliness and maintenance. These strategic allocations in FY 2025 are vital in addressing the evolving needs of the City and its residents, fostering a cleaner and more efficient urban environment. The City last updated its rates when it reduced the monthly charge of $6.47 to $5.35 in 2019. City user charges generate approximately $6.0 million in revenues. Realizing that current revenue is insufficient to fund ongoing costs, the City has chosen SCS to develop a financial management plan and an updated user charge to generate the required revenue while minimizing the impact on City residents. OBJECTIVES The objectives of this Study were as follows: 1. Revenue Sufficiency Analysis – Project the sufficiency of the City’s sanitation user charge revenues to fund its annual sanitation expenditures over a 10-year projection period. Develop a long-term financial management plan that will satisfy the City’s operating expenses, capital program, and debt service payments, while maintaining adequate debt service coverage and working capital reserve requirements 3