65B - PROPOSED WATER AND SEWER RATE ADJ

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Table ES - 2: Economic Impact of Delaying Proposed CIP Households SEWER RATE STUDY I City of Santa Ana, CA $129,700 - $1,078,500 Total household claim payments. Businesses $324,100 - $2,696,300 Total business claim payments. Local Economy $1,577,400 - $13,122,200 Range depends on the severity of breaks. Total $2,031,200 - $16,897,000 . Black & Veatch recommends that the Sewer Enterprise initiate a program that will help establish recommended reserve balances for both its operational and capital needs over the planning period, as well as a $1 million emergency fund. Given the level of infrastructure in critical condition, establishing an emergency fund to address unexpected main breaks would be prudent. For the analyses conducted herein, forecasted operations and maintenance (0 &M) expenses are based on an inflation rate of 2 percent for personnel, 4 percent for benefits, 3 percent for maintenance, 2 percent for general and administrative (G &A), and 5 percent for utilities. • Status Quo Scenario. Under the Status Quo Scenario, implementing no revenue increases over the planning period results in the Sewer Enterprise running a deficit starting in FY 2016. By the end of the planning period, the cumulative deficit position grows to ($14.1 million). • Scenario 1. The implementation of annual revenue increases allows the Sewer Enterprise to maintain a positive balance in the Operating Fund while still executing the proposed CIP. Table ES 3 summarizes the proposed revenue adjustments for the proposed scenario examined. All increases are effective July 1 of the fiscal year, except for FY 14/15, which has a March 1, 2015 effective date. Table ES - 3: Proposed Revenue Adjustments 14 March 2015 8.8% July 2015 8.8% July 2016 8.8% July 2017 8.8% July 2018 8.8% 65B -173 NOVEMBER 20 14