Title
Report regarding a resolution establishing sewer service rates for the Fiscal Year 2026-2027 amending the Master Fee Schedule to include the Fiscal Year 2026-2027 Sewer Service Rates; and adopting the Report of Annual Sewer Rentals Charges for Fiscal Year 2026-2027. (Brian Schumacker, Plant Superintendent)
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RECOMMENDATION
Recommendation
Staff recommends that the City Council conduct a public hearing and adopt a resolution establishing sewer service rates for the Fiscal Year 2026-2027, amending the Master Fee Schedule to include the Fiscal Year 2026-2027 Sewer Service Rates; and adopting the Report of Annual Sewer Rentals Charges for Fiscal Year 2026-2027.
Body
BACKGROUND/DISCUSSION
The South San Francisco-San Bruno Water Quality Control Plant began service in 1952 to protect public health and help safeguard San Francisco Bay. Operating 24 hours a day, seven days a week, the system can treat up to 62 million gallons of wastewater per day during peak wet weather conditions. Wastewater from throughout South San Francisco is conveyed to the plant through more than 165 miles of underground sewer pipelines and thirteen sanitary sewer pump stations, forming a complex and critical infrastructure network that protects the community and the environment.
Local, state, and federal regulators heavily regulate the treatment processes. These regulations help to protect the health and safety of humans, animals, plants, and the environment. Sewer fees collected from the users fund critical services such as the operation, maintenance, compliance monitoring, and upgrade of the sewer collection system and treatment plant required by the National Pollutant Discharge Elimination System (NPDES) permit.
Public Works staff have started or completed several reliability improvements projects and engineering studies for the sewage collection system and the main wastewater treatment plant.
• Completed:
o Standby Generator No. 1 Replacement Project
o Effluent Storage Pond Relining Project
o WQCP Rehabilitation Building Seismic Retrofitting
o Pump Station No. 2 Upgrade
o Bulk Chemical Storage Tank Rehabilitation
o WQCP Secondary Clarifiers No. 1 and No. 2 Rehabilitation
o Plant-Wide Industrial Re-Coat
o WQCP Switchgear & Cogen Controls Update
o Pump Station Industrial Re-Coating
o WQCP Wet Weather and Digester Improvements
o Sanitary Sewer Master Planning
• Under planning and design:
o Sanitary Sewer Rehabilitation
o Pump Station No. 4 Redundant Force Main
o WQCP Solar Photovoltaic
o Dissolved Air Floatation Thickener Rehabilitation Project
o Sea Level Rise Study and Army Corps Project Matching
o Headworks Improvements and Rehabilitation
o Vactor Truck Receiving Station Rehabilitation Project
Public Works and Water Quality Control Plant management consistently look for opportunities to operate more efficiently and to implement cost-savings measures, including the following:
• Low-interest Clean Water State Revolving Fund (CWSRF) funding resulting in a lower interest rate on debt service; and $4 million in principal forgiveness
• Impact Fee offset
• Impact fees paid by developers offset rates by $16.5 million. Replacement of two low-efficiency centrifugal blowers with two high-efficiency turbo blowers. These new turbo blowers use up to 25% less electricity.
• Staff-directed digestion process redesign that replaced two conventional anaerobic digesters with one high solids digester.
• This redesign saved 50% on tank construction costs
• 205 kW solar photovoltaic (PV) covered parking. This project can reduce plant electrical costs by up to 20% per year
Regulators continue to make discharge requirements more stringent since the passage of the Clean Water Act in 1972. The Clean Water Act requires adequate plant upgrades to meet new state and federal mandates. The most recent mandate requires additional plant upgrades and necessitates the adjustment of user sewer rates to fund the needed changes.
On January 12, 2022, the City Council conducted Proposition 218 process to set sewer rates. Subsequently, this process approved a five-year rate plan that increased sewer fees to fund the mandated sewer collection system and treatment plant improvements, as follows:
• In Fiscal Year (FY) 2022-23, a 2% increase across all rate types.
• In FYs 2023-24 through 2026-2027, there was a 3% increase each year across all rate types.
Staff recommends applying the 3% increase for FY 2026-27 approved by City Council in 2022 to continue to fund mandated capital improvement projects and fiscally support the operation and maintenance of the wastewater system.
The following table displays how the City of South San Francisco’s residential sewer rates compare to other cities within San Mateo County.
|
City/Agency |
Monthly Charge (Rounded) |
|
Hillsborough |
$359 |
|
Burlingame Hills Sewer Maintenance District |
$182 |
|
Montara Water & Sanitary District |
$172 |
|
Emerald Lake Heights Sewer Maintenance District |
$160 |
|
Crystal Springs County Sanitation District |
$160 |
|
Millbrae |
$135 |
|
Foster City |
$133 |
|
San Mateo |
$130 |
|
Brisbane |
$129 |
|
San Carlos |
$128 |
|
West Bay Sanitary District (Menlo Park) |
$126 |
|
Half Moon Bay |
$112 |
|
San Bruno |
$109 |
|
Belmont |
$109 |
|
Pacifica |
$108 |
|
Redwood City |
$105 |
|
Fair Oaks Sewer Maintenance District |
$95 |
|
South San Francisco |
$70 |
|
Bayshore Sanitary District |
$61 |
|
Burlingame |
$61 |
|
East Palo Alto Sanitary District |
$55 |
|
Daly City (North San Mateo County Sanitation District) |
$54 |
|
Average |
$125 |
|
Median |
$119 |
The City’s Municipal Code requires the Director of Finance to file a report containing a summary of the annual service charges with the City Clerk. The City Clerk published the notice of the public hearing per the applicable state law and Municipal Code requirements. Following adoption of the resolution approving the report of sewer service charges for FY 2026-27, the City Clerk will file a copy of the report with the County Auditor. The County will then collect the service charges on the official tax assessment roll.
Staff also notes that in 2018, the City Council approved via Resolution No. 78-2018, a City Sewer Rebate Program for residents who qualify for the California Water Service Low Income Rate Assistance (LIRA) program. This rebate program has continued through the past few years. The accompanying resolution will allow the City Council to affirm its desire to continue the low-income sewer rebate program.
RELATIONSHIP TO CITY COUNCIL PRIORITIES ACTION PLAN
The Public Works Department’s sanitary sewer system funding promotes public health and environmental stewardship. Continuing to supply the Sewer Enterprise Fund positively affects the quality of life for South San Francisco residents by protecting public health and safety.
FISCAL IMPACT
Staff developed the FY 2026-27 Sewer Enterprise Fund budget based on revenue from the proposed rate. Projected revenues for FY 2026-27 are $27,056,388 when approved by the City Council.
CONCLUSION
Staff has updated the financial forecast for the City based on predicted operational costs, state NPDES permit requirements, and estimates of Sewer Fund revenues and expenses. Staff recommends the existing rate structure remain as set forth for FY 2026-27 within the five-year rate plan adopted by City Council in 2022.
The City determined service rates following state guidelines. Independent financial consultants trust the proposed 3% rate increase represents a fair and equitable allocation of costs to the various classes of users and are in proportion to the amount of sewage discharged into the sewer system.
ASSOCIATED DOCUMENTS
1. Proposed FY 2026-27 Sewer Rate Plan Presentation
2. Notice of Public Hearing FY 2026-27 Sewer Service Charges