City Council - Regular Meeting

What brought you here? Prices? Sell your house in the bay? Come here?

We're the kids.

That's your daughter was here first. So we moved to be close to that. It's important. It is. They better love you too. You gotta be nice to them. You can't be a grumpy guy. Only at home. Nice.

I have a family. Your sons and daughters and in-laws. Oh, yeah. They've got to take care of you. They're all alone.

Yeah, we have to be nice to them. That's right.

That's right. Two ways, three.

Of course. It has benefits. We do have benefits.

How many kids did you have? Two. Two? All right. You replaced yourself? Yourselves? Oh, absolutely. Absolutely. And they're doing okay? There's a reason for that badness, yes. They stayed in Tracy, or they were here, and then you came here. Yeah. Or Fremont. Fremont. Yeah, most people in Tracy, they kind of come from the East Bay. Yes. Closer, I guess.

Yes.

Everybody knows somebody that lives in Tracy.

Right.

That's kind of funny. The only thing you have that we don't miss is you have valley trees.

Oh, yeah, you ever got it?

Yeah.

How'd you get it? Well, now we don't. Well, they don't till the dirt like they do. If you drive them fine, like in Lathrop, when they're tilling over there.

All right. Good evening, everyone. We will call the special meeting to order at 6.30 p.m. on June 2, 2026. At this time, we have no disclosures pursuant to Government Code Section 54953.8.3. Roll call on Declaration of Conflicts, please.

Council Member Bedoya.

Present. No conflicts.

Council Member Evans.

Present. No conflicts.

Council Member Nygaard. Present. No conflicts. Mayor Pro Tem Abercrombie.

Present. No conflicts.

Mayor Areola.

Present. No conflicts.

Thank you. We have a quorum.

Thank you, Madam Clerk. Members of the public can participate in tonight's meeting remotely via Zoom by visiting cityoftracy-org.zoom.us slash join and using the information as provided on the screen. This is also available in writing here at City Hall as well as on the city website. That brings us to item two, request to conduct closed session. Are there any members of the public who would like to speak about item 2A? Seeing none in chambers, do we have any online?

No hands online, Mayor.

With that, we will go ahead and close the public comment portion for item 2A. We'll turn to council for discussion and or entertain a motion. Motion to go to closed session. Second. We have a first and a second to go to closed session. Roll call, please.

Mayor Pro Tem Abercrombie?

Yes.

Council Member Evans?

Yes.

Council Member Doya?

Yes.

Council Member Nygaard? Yes. Mayor Areola?

Yes.

Thank you.

All right. We'll convene a closed session and be back shortly. Thank you.

So do you have the notes for it, what they're going to talk about? You're off-front? Yeah. I don't go to a lot of meetings. Well, it's a closed . They're not meetings.

They're not . Are you here for the water?

Yes. Yeah. Yeah.

It's cold, so.

I know.

I know. She'll be here. People don't get involved. Right. Yeah. It's the first time I heard that.

Oh, good.

Well, this has been a long time. But yeah, this went wrong.

Yes, you're right. That's what I figured. Yes, you have to go up there and introduce yourself.

It's on the card. It's not like a big thing.

I think that I've watched people. They get up and they say their name.

You can watch other people. Oh, yeah. Yeah. I don't know.

I haven't heard. That's right. How much is the rainy day fund?

Yeah.

Because the city didn't give away any numbers. I didn't know we had a rainy day fund. No, yeah. They do. They actually have stations for seven council members. Oh, yeah. Yes, you do. Yes, you do.

5D.

There you go.

I never noticed that.

You ever talk to Matt?

I see Matt. No, no, that's what they mail to us. That's what they mail. Oh, no. No, Matt.

You know, I've been in the industry my whole life.

That's what they mail to us. Loud music and my opera. I tell you the wonderful things. Cut this?

Check, check. Check.

Check.

Check.

check check

Thank you.

Check one, two, check. Check.

Check one, two. Check one, two. Check one, two. So you need to .

All right.

All right.

Check one, two, check. Do you hear me? Okay.

Thank you. Thank you.

Thank you.

One, two, check, check. Hi, can everyone hear me?

Hi, can you hear me, sir?

Can you hear me? You can hear? Awesome, okay, cool.

Thank you.

All right, we are reconvened from closed session at 7 p.m. At this time, there's no reportable action. With that, I will take a motion to adjourn. Motion to adjourn.

Second.

We have a first and a second. Council Member Nygaard, roll call, please.

Council Member Zoya?

Yes.

Council Member Evans?

Yes.

Council Member Nygaard? Yes. Mayor Pro Tem Abercrombie?

Yes.

Mayor Ariella?

Yes.

Thank you.

All right, we are adjourned from closed session at 7.01. We need just a minute to turn over, and we'll be back for our regular meeting. Thank you.

Bye. Amen.

All right. Good evening, everyone. We're going to call the regular council meeting of June 2nd, 26th to order at 7.03 p.m. At this time, we have no disclosures pursuant to government code section 54953.8.3. Roll call on declaration of conflicts, please.

Council Member Bedoya.

Present. No conflicts.

Council Member Evans.

Present. No conflicts.

Council Member Nygaard. Present. No conflicts. Mayor Pro Tem Abercrombie.

Present. No conflicts.

Mayor Ariella.

Present. No conflicts.

Thank you. We have a quorum.

Thank you, Madam Clerk.

Please stand and join me for the Pledge of Allegiance.

Now please remain standing for our invocation from Pastor Kevin James of New Creation Bible Fellowship.

Let us bow our heads for the word of prayer. Lord God, first giving you all the glory and honor and praise because of who you are and only you are worthy of our worship and our service. Thank you for remaining faithful to us, even though at times we are not faithful to you. Search our hearts and our minds right now. And if there's any offensive way in us, lead us in your way everlasting. We invite and welcome your presence throughout this entire council meeting. THIS EVENING. WE PRAY, O GOD, THAT YOU WILL GUIDE THE LEADERSHIP OF OUR CITY THIS EVENING, THAT YOU WILL CONTINUE TO BLESS OUR MAYOR, CITY COUNCIL MEMBERS, AND CITY STAFF WITH WISDOM AS THEY PRESIDE OVER TONIGHT'S AGENDA ITEMS. WE PRAY THAT EVERY DECISION MADE THIS EVENING WILL BE WHAT IS BEST FOR THE RESIDENTS OF OUR GREAT CITY. AND WE PRAY THAT EVERYTHING THIS EVENING IS DONE DECENTLY AND IN ORDER. We thank you, Lord God, in advance for answered prayer. Now to you be all glory, honor, and praise. It's in your name that we pray and give thanks and say amen. Amen. Thank you, Pastor James. Thank you for the opportunity.

Before we get started, I wanted to take a moment of silence for a community advocate who's passed. Ann Langley was an incredible advocate in this community. She was known recently for her advocacy for the Aquatics Park, but historically she's been a huge advocate for the arts, especially the Grand Foundation. So I'd like to ask for a moment of silence, please. Thank you. Members of the public can participate in tonight's meeting remotely via Zoom by visiting cityoftracy.org, excuse me, cityoftracy-org.zoom.us slash join and using the information provided on the screen. This information is also available in paper form at City Hall as well as online. That brings us to presentations and we'll go ahead and pass it over to Assistant City Manager Arturo Sanchez for the Employee of the Month.

All right. You can see the smile on my face, right? Because partially it's because my son is right there, but the real reason is because she's right there. I get the honor and the pleasure of recognizing this month's employee of the month, and that goes to Ms. Kyla Gluckie. The June employee of the month is Kyla Gluckie, our public information officer. I I'm just going to go off script a bit here. I had, along with Ms. Lightworth, had the good fortune and honor of being able to hire Ms. Gluckie almost two years ago now as our PIO. And good God, we convinced her to come to this wonderful city. And it was one of the best decisions we ever made because she's been a godsend for us. So here we go. We are delighted to recognize Kyla Gluckie as the city of Tracy. EMPLOYEE OF THE MONTH FOR JUNE 2026. SINCE JOINING THE CITY MANAGER'S OFFICE AS THE PUBLIC INFORMATION OFFICER IN THE SUMMER OF 2024, KYLA HAS CONSISTENTLY DEMONSTRATED EXCEPTIONAL LEADERSHIP, INITIATIVE, AND GENUINE COMMITMENT TO HER COLLEAGUES AND THE COMMUNITY. FROM DAY ONE, KYLA'S CAMARADERIE AND COLLEGIALITY HAVE SET A POSITIVE TONE WITHIN THE COMMUNICATIONS DIVISION. With a staff of one and a group of interns, Kyla quickly built strong relationships across departments, earning trust and respect through her willingness to support others and her drive to go the extra mile. Her ability to self-initiate, adapt, and act with kindness and grace has made her a standout leader. Kyla's flexibility and dedication have propelled several major projects forward, including the city manager's newsletter, city website redesign, social media campaigns, council chambers remodels, which includes this wonderful new podium, which was a murder to get here. It went through God knows how many different iterations. You all remember the god awful Darth Vader's helmet, which was here for several, several weeks and was the bane of Council Member Evans' existence. But this beautiful new podium here, she spearheaded. And as small of an accomplishment as this may be, it actually took quite a bit to get here. And it was a pain in her side for many, many weeks while we continued to hound her about where the podium was. Where is the podium? Where is the podium? Kyla wears the podium. Trust me, we asked her on a daily basis. She has reorganized and unified a talented communications team, which includes wonderful Mr. Cole right here to the side. launched a new website and started a fun, friendly social media campaign that has become a favorite among staff. I'm sure many of you have looked at our Instagram page where we have these wonderful spotlights on our staff, these wonderful, wonderful spotlights for all the work that they do. That was a brainchild of mine. of Ms. Kyla Glucki. It's a wonderful way of spotlighting the good work that our staff does, the hardworking staff of the City of Tracy out there doing good work for you all. Her leadership inspires her team to engage in meaningful discussion about how to better serve both internal city needs and a broader community. A city council member recently praised Kyla's efforts in making the city website more user friendly and visually appealing, highlighting her impact on public facing initiatives. Kyla sets clear, timely goals for her team and provides thoughtful guidance, fostering a collaborative, supportive environment. Congratulations to Kyla, a well-deserved employee of the month whose professionalism, creativity, and positive attitude continue to elevate the City of Tracy and its communications efforts. And on a personal note, Kyla embodies everything we would want our City of Tracy team to always be. to have a spirit of wonder, to always ask why, to wonder how they can do more for each other, to continue to contribute to the city and its residents, to show up every day with a smile, kindness, grace, treat everybody with dignity and respect. And for that, I'm eternally grateful that you decided to come join the team because you've been a wonder to work with, and I appreciate you each and every day. So thank you, Kyla. Well, thank you.

THANK YOU. I WRITE THE SPEECHES.

I CAN DO THAT.

Kyla loves the spotlight, so she's really just soaking this up.

Let's make this awkward. Should we do an awkward family photo? If we can go over here. Or Carl. I know he is. All right, is everyone ready? On one, three, two, one. Cool. You guys ready? Can I let these go?

See, that's what happens when you sneak away. All right, thank you, Kyla. Tonight we have one proclamation. We have LGBTQ Pride Month, and I'd like to invite Andrea Juarez-Smith as well as the Tracy Pride Executive Board to accept the proclamation. All right, LGBTQ Pride Month, June 2026. Whereas the city of Tracy has a diverse lesbian, gay, bisexual, transgender, and queer LGBTQ community, and is committed to supporting visibility, dignity, and equality for all people in the community. WHEREAS MANY OF THE RESIDENTS, STUDENTS, EMPLOYEES AND BUSINESS OWNERS WITHIN THE CITY OF TRACY WHO CONTRIBUTE GREATLY TO THE ENRICHMENT OF OUR CITY ARE A PART OF THE LGBTQ COMMUNITY. AND WHEREAS THOUGH ADVANCEMENTS HAVE BEEN MADE TOWARD EQUITABLE TREATMENTS, RIGHTS AND PROTECTIONS FOR LGBTQ PEOPLE THROUGHOUT THE NATION AND THE WORLD, IT IS IMPORTANT FOR CITIES LIKE TRACY TO STAND UP AND SHOW SUPPORT FOR THOSE AFFECTED. And whereas our nation was founded on the principle of equal rights for all people, but the fulfillment of this promise has been long in coming for many Americans. And whereas some of the most inspiring moments in our history have arisen from civil rights movements that have sought to bring marginalized communities to the mainstream of American society, And whereas 57 years ago, on June 28, 1969, at the Stonewall Inn in New York City, a courageous group of citizens rose up against harassment and mistreatment, setting in motion a chain of events that would become known as the Stonewall Riots and the birth of the modern LGBTQ civil rights movement. and whereas LGBTQ pride celebrations have taken place around the country every June to commemorate this historic turning point in our civil rights history when citizens fought against discriminatory criminal laws that have since been declared unconstitutional. Now, therefore, be it resolved that I, Dan Areola, Mayor of the City of Tracy, on behalf of the City Council, do hereby proclaim the month of June as LGBTQ Pride Month in the City of Tracy and invite everyone to respect, honor, celebrate our diverse community and to continue building a culture of inclusiveness and acceptance for the LGBTQ community.

So good evening. First and foremost I'm actually really proud to stand up here not only as a mother but as a part of the community. One of my biggest I think feats right now is Manteca city of Manteca tonight did their proclamation. They are also putting together a pride event, which I'm very proud of them. Oakdale is also having their first pride event. We're seeing a lot throughout the San Joaquin County, Stanislaus County and throughout the state of California because we're here. We're not going to disappear. We are your neighbors. We're your brothers, your sisters, your family members. And I am one that have been out in the community for many years. But I'm not going to disappear recently, you know. So this is very much of a proud moment this year to see everybody fighting, even though we're getting a lot of hate. The biggest, I think one of the things that we're kind of excited for, or Brian is, we are actually selling fireworks this year. So starting June 28th, we will be on the Tracy Boulevard right in front of the Save Mart. Sorry, I have a brain. Save Mart. So we get to go and sell. So if you guys want to support us, please come out. We will be out there for the week. We also... Just kind of just excited to have our fifth annual event this year. So we've been around for five years. Actually, technically about eight years we've been here, but five years doing the event. So October the 11th, we will be at Tracy Lincoln Park. So hope to see you guys there. Thank you.

Now, everyone ready? On three, two, one. One more. Three, two, one. Thank you.

All right, that brings us to consent calendar. Are there any members of the council that would like to pull consent items tonight? Seeing none on this side, any on this side? Staff, do we have any consent items to pull?

Sorry. No items to pull, but I just wanted to note that we did have some revisions on some of the materials for item 3K. They're included in the supplemental materials there. So if the council should choose to adopt, approve that item, it would be as amended, please.

Thank you. Are there any members of the public who would like to pull any consent calendar items? Seeing none in chambers, I think we know where most folks are here for. Do we have any online?

I don't see any hands online, Mayor.

Okay. All right. At this time, we're going to close out comment for consent calendar. I did have one question. With regards to item 3N, the sewage emergency repair, what is the fund that would normally maintain that repair?

Mayor, I did look at that. It is the wastewater fund, which is an enterprise fund.

Understood. Thank you. All right. With that, we'll turn to council for additional discussion or I'll entertain a motion.

Mr. Mayor, I make a motion to approve the consent calendar as K amended. Second.

We have a first and a second. Roll call, please.

Mayor Pro Tem Abercrombie?

Yes.

Council Member Evans?

Yes.

Council Member Redoya?

Yes.

Council Member Nygaard? Yes. Mayor Areola?

Yes.

Thank you.

All right. That brings us to item four, items from the audience. Just as a reminder, city council is limited by the government code on how we can respond to items not on the agenda. The items from the audience is for any item that is not on tonight's agenda. As a reminder, we do have a bunch of items happening after this. But are there any members of the public who'd like to speak on an item that is not on tonight's agenda? Okay, please see hands raised. We have comment guidelines that'll determine the length of the speech. I see three hands. Four, no, items not on the agenda. So I saw three hands, do we have any on line?

No hands on line, Mayor, but I did receive four speaker cards.

Oh, four, okay. With four speakers, each speaker would get four minutes. Anyone who's not raised their hand would get an additional 90 seconds after that. So with that, we'll go ahead and start with our speaker cards for four minutes.

First speaker is Smitty.

Do you go to here? Yes, sir. Okay, it's my first time. My concern is with, we got a big problem with all these electric bikers riding everywhere. I don't have a problem with the kids riding the bikes, but I have a problem with them going down the middle of Tracy Boulevard and cutting in front of cars and And then riding through parks. I chased them out of the parks over by my house because they're tearing the parks up. So can the city adopt some kind of ordinance or something to control them? They're unsafe. They get themselves hurt. And then you've got to have a camera on your car to protect yourself. Seriously. Because pedestrians have the right of way. And they love to be able to make you hit the brakes or swerve. I don't want to hurt nobody, you know, but accidents happen, and they're going to be the fatality of the whole thing. And the other problem I have, well, it's not a problem. It just happens with these people that are the homeless people. I hope we can find a place for them to go, a place for them to use the bathroom instead of wherever they want. You know, I think that might be on the agenda, you know, something about the homeless people. But it's a situation that's got to be addressed, just simple as that. You know, I don't know if, I don't know, I don't have an answer for it, but I could help. I really would if somebody had a plan, something to do. So that's about what I got to say.

All right. Thank you, Mr. Smitty. Could someone from staff meet with Mr. Smitty to discuss electric bikes and our efforts on homelessness, please? All right. Next speaker, please.

Next speaker is Robert Tanner.

In last week's Tracy Press, there were two items in the police report about fireworks again, including it was alluded to that the kids the night before dropped fireworks down into the sewer system. You need to make all fireworks illegal, period, so that the fees can kick in and the police can do their job. The second part of my comments, Has anyone tried to drive up Lincoln Boulevard north from Lowell to Grant Line? You have replaced south of Lowell on Lincoln with restriping and some paving. But it's like driving over railroad tracks going north, right up to Grant Line. It's bumper season the whole time. You need to get that fixed. You fix Tracy Boulevard, why don't you fix Lincoln completely instead of doing a half-assed job? Thank you.

Thank you, Mr. Tanner. Next speaker, please.

Next speaker is Dan McManus.

Dan McManus from the Southside Community Organization. And as a lot of you have seen through the last probably 13, 14 years, we've done several things to make improvements there. And a member here back in September said, hey, we have a flagpole out there. And so we started doing a little research. It probably was put up about 60 years ago. BUT THERE'S NEVER BEEN A FLAG ON IT. SO I'VE BEEN WORKING ON IT SINCE SEPTEMBER, AND WE'RE GETTING IT RETROFITTED TO TAKE A FLAG, AND IT'S APPROPRIATE YEAR WITH THE 250. SO I WANT TO GIVE A SPECIAL INVITE TO NOT JUST THE COUNCIL, BUT ANYBODY IN THE AUDIENCE. ON JULY 2, WHICH IS OUR GENERAL MEETING, WE'RE GOING TO DO A FLAG RAISING WITH AMERICAN LEGION VFW assisting us. So I think it'll be kind of a nice occasion. It's probably going to be hot that day. So we're probably going to start the meeting inside, go through the regular things and go do a flag raising. So anybody would like to support us, we'd love to see you there on July 2nd. Thank you.

Thank you, Mr. McManus. Next speaker, please.

Next speaker is Gwendolyn Stewart.

I'M GOING TO LYNN STEWART. GOOD EVENING. AND I'M HERE FOR, I GUESS, SOMETHING YOU MAY NOT HEAR TOO OFTEN, BUT I'M HERE TO SAY THANK YOU. I'M HERE TO SAY THANK YOU TO OUR MAYOR AND TO ALL THE PEOPLE ON THE COUNCIL. LIKE I SAY, I'VE NEVER HEARD MANY PEOPLE SAY THANK YOU FOR WHAT YOU DO FOR OUR CITY, AND I'M APPRECIATIVE OF IT. I'm very appreciative of the occasion that's coming up with the naming of the lobby for Dr. Nancy Young. I thank you for that type of voting for our young people that come forth the next generation and be able to witness and see this. I thank you for your leadership. And it makes me proud to be a Tracy Knight, if that's what you want to call it, Tracy Knight, Tracy person. It makes me proud because, and it makes me want to come to our council meetings to see what actually takes place and how you go about making your decisions. And I think they're very good decisions you're making and how you stand by your decisions. I thank you for that. And another thing, second item I wanted to discuss or ask about, was the bowling center that we came to you once before about. We haven't heard anything about what's happening with it. And if you could revisit that, there's a couple of groups that I'm involved with. We really would like to know what's going on with the bowling that's taking place. And if it's a way that you could LET US KNOW IF YOU NEED MORE INFORMATION OR ANYTHING ABOUT IT OR ASSISTANCE, THEN IT'S AN AWFUL BIG GROUP OF US THAT'S WILLING TO ASSIST WITH GETTING THAT MOVING. THANK YOU.

THANK YOU, MS. STEWART. COULD SOMEONE FROM STAFF FROM ECONOMIC DEVELOPMENT SPEAK WITH MS. STEWART ABOUT OPPORTUNITIES FOR THE BOWLING ALLEY? ALL RIGHT. I BELIEVE THAT WAS THE FOUR SPEAKERS. IF ANYONE ELSE WOULD LIKE TO SPEAK, IT WOULD BE 90 SECONDS FOR AN ITEM NOT ON THE AGENDA. SEEING NONE. Yeah, 90 seconds. Yes.

Daniel Penn at Gretchen Talley Park. The whole city knows about this problem. It's been going on 15 years. There's a big upgrade going on at Gretchen Talley, probably 20 million bucks. So he's been living on the park bench under the awning for 15 years. PD's been on it. He's still there. Nothing's happening. If you can get some help on this one, that would be great. I believe it's going to be opened up here pretty soon, the expansion of Gretchen Talley. There will be bathrooms there now. I don't know where this person defecates, urinates, and does their business, but he's been there for 15 years living on the bench. There's Wanda Hirsch's right there nearby. Kids come and go. It's a very nice neighborhood. It's inappropriate. That's all I have to say.

Thank you, Mr. Bennett.

What's that?

All right. Do we have any additional speakers? 90 seconds? All right. All right. Seeing none, do we have any online?

No, Mayor, I don't see any hands online.

Okay. With that, we'll go ahead and close out items from the audience. That brings us to public hearings. We'll start with Item 5A, related to the 2026 Water Rate Study. Staff report, please.

Mayor, can I just say for Mr. Smitty that Chief Millington is in the back to talk with him about the two issues that he had about the, let him know what we're doing about e-bikes, as well as some of the actions we are doing on the homeless. And I think Chief Millington is going to tap him on the shoulder, probably scare him.

Channel 26, if we could get the PowerPoint, please.

Good evening, Mayor Areola, members of the City Council and staff. Stephanie Reyna-Highstand, Assistant Director, Public Works Utilities Division. Thank you for conducting this public hearing and for consideration of the proposed water rate adjustments and associated requests. Tonight, I will provide actions taken since the April 7th City Council meeting where staff were directed to move forward with the Prop 218 process, noticing based on the April 2026 water rate study that was provided. As staff has previously described, these investments in our public water system are urgently needed and will only continue to increase in frequency and size as time goes by. I will also provide information on issues discovered and actions taken with the notice and April 2026 water rate study. Any information that I am not able to provide will be directed to the city's consultant, Black & Veatch, Greg Baird, who is on the phone, our outside city council, Megan Burke with Jarvis Fay, who is here today, as well as finance director, Sarah Castro. Staff have provided a full staff report and the complete May 2026 final draft water rate study for your reference. The next slides will provide the history and the background of the city's water supply system. The Utilities Division of the Public Works Department provides the distribution and treatment of water to over 28,000 residential, commercial, and industrial connections. The city's public water system consists of the John Jones Water Treatment Plant, approximately 565 miles of water lines, five storage reservoirs, eight groundwater wells, one aquifer storage reservoir, numerous booster stations, and multiple imported surface water contracts. It conducts all public water system services with a direct water-related staff of 32 full-time equivalents. The city's ultimate goal for the water utility is to ensure the health and safety of its public water system through operational and financial resiliency and to provide the least impact to its customers and visitors when services are disrupted. Existing revenues no longer provide the reliability and long-term financial sustainability of the Water Enterprise Fund. Therefore, it's critical that a full and transparent financial picture be presented in the proposed financial plan. Currently, the city is experiencing more than $60 million in identified necessary CIP projects related to the public water system, which are in deferral due to an ongoing lack of funding. Similar to other markets, such as grocery and gas, the cost of materials have greatly increased in the last several years due to inflation. Deliverables have longer lead times from purchase to delivery. This creates a longer period for completion of necessary repairs, customer interruptions, and increased costs. The City's Water Fund is under significant financial pressure In the most recent fiscal year ending June 30, 2025, operating revenues for the Water Fund were $25.2 million and operating expenses were $27.5 million, resulting in the use of reserves to meet obligations, which over time is not sustainable. The city also has a standard requirement to maintain a debt coverage of 1.2, meaning the fund's annual revenues divided by its annual debt payments must be greater than or equal to 1.2. Without the use of reserves, the fund is not able to meet this requirement. The financial status of the fund also does not allow for the increase to operations and maintenance staff, equipment, capital repairs and replacements. City staff continuously look for alternative funding for eligible CIP projects and will continue to do so into the future. Sarah Castro will now present.

Thank you. As Stephanie mentioned, the water fund is required to maintain a debt coverage ratio of 1.20. What does that mean? So debt service is the water fund's payments, so like loans or bonds that have been taken out. Debt service means those payments. Those loans or bonds have covenants that require 1.20 times the amount of debt service. So that means the fund's operating expenses, which are your revenues coming in from rates less the operating expenses, must be 1.20 times that amount. So what happens if we don't meet that? Failure to meet those debt coverage requirements results in something called technical default, where you're in default of the terms of your loan. Without foreseeable action, such as rate increases, This could result in a downgrade of credit rating for the fund or higher cost of debt issuance in the future or even denial of future credit. Looking back to previous action that this city council has taken, in September 2019, this is the last time that council adopted a rate plan. They adopted a 25% rate increase. This was the second rate increase that was part of the August 2017 rate study. That allowed for a five-year rate plan. But as you can see, the year after 2019 was 2020 during the COVID-19 pandemic. The increases at that time were deferred. The impacts of not implementing that five full years of that rate plan have led to further shortfalls that have compounded annually. In addition to the proposed rates, staff has proposed council adopt a rate stabilization reserve and an enterprise fund reserve policy. The rate stabilization reserve is aimed to provide stability to the city's water and wastewater enterprise funds in an effort to smooth future rates. The rate stabilization reserve has a target level of 5% of the fund's annual adopted budget that is funded through any annual surplus remaining at the end of the fiscal year after meeting all operating expenses, debt service obligations, and required reserve transferred. Amounts that are specifically appropriated by council or interest earnings in accordance with our investment policy. The funds may be withdrawn for the purpose of revenue stabilization, expense stabilization in accordance with the rate covenant. That means that if there's an unexpected expense, the use of this fund could help to cover those costs so that in the future it doesn't lead to those larger rate increases. The second policy that's proposed is the Enterprise Fund Reserve Policy. It proposes a target of 2% of the utility's net asset value as a capital replenishment reserve, meaning to be able to replace or repair any capital equipment or maintenance needed. The use of the reserves for either of these does require authorization by a majority vote of the City Council.

As previously shared, funding for any public or municipal utility must be fully self-supporting. All operation and maintenance of existing facilities and infrastructure must be funded from the utility's rate payers and revenues deposited into a separate enterprise account. This includes all commercial, institutional, irrigation, residential, and multifamily users. If the collected revenue in the enterprise fund is not enough to sustain the public water system, the city may use an inter-fund transfer loan from the general fund or from another enterprise fund, but must pay it back with interest at the local agency investment fund rate and generally within a five-year period. However, funding from the general fund for operations or maintenance of the public water system cannot occur unless it is a loan. Again, as the utility must be self-supporting from its rate payers. For any new facility or infrastructure to upgrade or increase capacity, this would be funded by the development community through Tracy impact fees and core fees. But these cannot be used for existing needs of the system. only for future needs of the system based on new demand from the new development community. Finally, the City may apply for grants to aid in repair, replacement, or upgrade of the public water system. However, any matching funds for the grant must come from the Enterprise Fund or a loan as described previously. It's important to remember that it is California state law that legally requires public water systems like Tracy to use dedicated enterprise funds to support the operations, infrastructure, and services of the water utility. This ensures that revenue generated by rate payers for the utility enterprise fund may only be used for that utility and it remains self-supporting. When new development comes into the city, whether it's homes, commercial building, or industrial facility, it increases demand on our water system. To ensure existing rate payers are not subsidizing this growth, the city uses development impact fees, or DIFs, to pay for the infrastructure needed to support that new development. These fees are one-time charges that are assessed on developers at the time their project is approved. They help fund capital projects like new water mains, pump stations, system expansions that are required specifically because of the new growth. This ensures that growth pays for growth, maintaining fairness and financial stability in our utility funds. By using DIFs instead of ratepayer dollars, we prevent today's customers from covering the cost of infrastructure that benefits only that new development. This is an important principle in utility financing and is consistent with state law and our master plans. Using development-related funding for expansion allows us to keep ratepayer revenues focused on maintaining, rehabilitating, and operating the existing system. It also reduces pressure on future water rates since major growth-related projects aren't absorbed by this water fund. For many years, the City of Tracy's water system has operated with a significant deferred capital maintenance program and staffing levels that are well below industry standard. The current utility staffing is roughly half of the recommended American Water Works Association median for the city of our size and demand. As a result, many essential preventative programs such as systemic valve exercising, unidirectional flushing, meter testing and replacement, and comprehensive asset management through a new CMS system have not been performed at the recommended required frequency. This has left the city in a reactive posture, responding to emergencies rather than preventing them. If the city is to continue down this path, the consequences could be severe. Emergency repairs that cost three to five times more than a planned work, prolonged service outages, increased non-revenue water losses, reduced fire flow capacity, heightened risk of regulatory violations, and potential impacts to public health. The proposed rates directly address these risks by funding the full capital maintenance program and 29 new positions needed for these preventative maintenance programs. This investment will extend the life of our assets, improve system reliability, reduce long-term costs, and provide the high-quality, safe drinking water our residents expect and deserve. As discussed in the previous slide, a significant portion of the cost to provide a water service is driven by inflation and years of deferred capital maintenance. Each year, a needed project is postponed. The cost to complete it increases in the following fiscal cycle, often substantially, further compounding long-term financial pressures. Further, the state continues to implement stricter regulatory and compliance requirement. These mandated standards carry associated costs that must be reflected in our rates. This slide represents the request to city council at the April 17th meeting, city council meeting, identifying that if the council approves the resolution at that time, the staff would immediately begin the formal 218 process. Staff informed that the following day, April 8th, the full draft rate study and Proposition 218 notice would be posted on the city's website at 2026waterratesatcityoftracy.org. We further informed that public notices would be mailed to every affected parcel no later than April 17th, 2026, providing the legally required 45-day review comment period. The public hearing would then be requested to be scheduled for June 2nd, at which time you, the City Council, would consider any timely written protests and decide whether to adopt the proposed rate if a majority of protests has not been reached. If adopted, the new rates would take effect on July 1st. The following slides represent actions and considerations taken by staff since that meeting. At the conclusion of the April 17th staff presentation, city council directed staff to proceed with scenario one, the proactive fix it before it fails financial plan that had been developed by the city's consultants. Black & Veatch finalized the draft, 2026 water rate draft, dated April 2026, and updated the model accordingly. The study fully incorporated Council's direction and presented a complete five-year financial plan, cost of service analysis, proposed rates for fiscal years 2027 through 2031, and a rate study is still considered in draft form until approved at the public hearing. The study was posted on the city's website on April 8th and the notice was mailed to 27,599 unique addresses on April 14th via a third party vendor. All legal requirements were satisfied by the Prop 218 process and based on the recent appellate court decisions, a uniform volumetric consumption charge was established. After the notice was mailed and the April 2026 rate study was posted, an error was identified in the consultant provided published rates. This will be discussed further in the presentation. However, City Council may adopt the proposed corrected five-year rate plan without providing additional mailed notice to rate payers because the rates that were included in the notice were higher than the rates that are proposed for adoption tonight. Here, I want to emphasize that the city is taking proactive steps to avoid sharp or unexpected rate increases in the future. The rate stabilization fund requested tonight acts as a financial cushion. Any surplus revenue that remains at the end of the fiscal year will be deposited into this fund. This is important because it allows the utility to build up reserves during more favorable years rather than relying solely on rate adjustments when unexpected costs arise. The long-term goal is to maintain a fund balance equal to 5% of the annual utility budget. Hitting that target gives us the ability to address unforeseen operational needs, such as emergency repairs, spikes in chemical costs, or regulatory updates, without having to come back to ratepayers immediately. In short, this policy helps smooth out the financial ups and downs in operating complex water systems, protecting both system reliability and customer safety. affordability. Another major step we're taking to control long term costs is conducting a full energy efficiency audit of our water system facilities. As most of you know, energy is one of our largest operating expenses. Everything from pumping groundwater to treating imported water requires substantial electricity. The audit looks at opportunities such as solar, wind, and other renewable high-efficiency technologies that could significantly reduce our power costs. By identifying where we can modernize our operations, we can pursue projects that will generate substantial savings over time. These savings directly reduce pressure on the rate structure, helping to keep future rates increases lower than they otherwise would have been. This work is part of a long-term strategy to lower operational costs and ultimately lower impacts on our customers.

One thing that's included in this rate plan is a loan from the city's general fund. So this rate plan proposes that the city's general fund will loan $1 million to the water fund to help meet that required debt coverage ratio in year one. It also helps reduce the full impact on the rate payers. The loan is expected to be repaid over five years with interest and and does mitigate how high that rate increase would have been in year one of the rate plan. Another thing that the city offers is a low-income rate assistance program that is known by the name of LIRA. The city's low-income rate assistance program does waive the monthly minimum meter charge for qualified residents. So qualified residents can either apply to the program via the email address that is shown on the screen here, customerserviceatcityoftracy.org. To be a qualified resident, you need to qualify for the PG&E care program. If you meet those requirements, you will also meet the city's requirements for assistance. The program is currently receiving a discount of $26.05 off the total monthly utility bill. And if this rate increase moves forward, the proposed discount will be $29.66 to those qualified customers. In addition, Council has recently taken action regarding utility rates. On April 7 of this year, Council adopted Resolution 2026079, which memorialized future dates for rate studies to begin. This resolution requires staff to keep these rate studies on a five-year cycle instead of allowing a longer period of time to occur. With this, it will allow less time to pass between the rate studies and minimize the impact of increase in future rate studies. Up next is a solid waste rate study that is expected to begin in 2027. That'll begin earlier in 2027 and later in 2027, the waste water rate study will begin. And in year 2030, which is about year four of this rate plan, the water rate study will begin. And so typically you see about 12 to 18 months after the rate studies begin that a draft study can come before council and rates can be reviewed.

City Council selected scenario one from the April 7th regular meeting, which was designed to deliver the strongest long-term stability for our water utility. It fully funds the 68.5 million in rate payer funded capital improvement projects that were identified in the 2023 Water Master Plan and physically identified needs by staff at an average of 13.7 million per year. These projects include critical items such as the John Jones Water Treatment Plant Upflow Clarifier Rehabilitation Project and extensive transmission and distribution pipeline. Financially, the plan maintains a minimum 1.2 debt coverage service, a capital replenishment reserve, and a new rate stabilization reserve supported by the $1 million general fund loan. Finally, the proposed rate structure retains meter size based fixed charges while moving to a single uniform volumetric consumption charge for all customer classes, a structure that is fully compliant with regulatory requirements. This slide represents the proposed rates for both volumetric and fixed base rates over the five-year term. These rates are lower than the previously posted and noticed rates as described earlier. An increase in fiscal year 2029 percentage created a cascading effect in fiscal year 30 and 31. In fiscal year 29, instead of the proposed 5% increase of $4.08, the April notice showed $5.13, a difference of $1.05 per unit. This carried through fiscal year 30 and 31 with a decreased rate of $5.29 to $4.28 and $5.66 to $4.49, a decrease of $1.11 and $1.17, respectively. It's important to note that these lower rates, the plan continues to generate sufficient revenue to cover all operating expenses debt service at 1.2 coverage, full funding of the 68.5 million, the phased staffing and all target reserves. This gives city a balanced approach that protects both our utilities future and our rate payers. This slide illustrates how Tracy's proposed water rate compares to those of nearby agencies. Because most agencies only publish rates for the current fiscal year, long-term comparisons over multiple years are not practical. As a result, the comparison shown here reflects only a one-year snapshot of surrounding regional rates. This chart demonstrates that even with the proposed rate adjustment, Tracy's monthly residential bill, estimated at $69.31, would shift from being the lowest in the region existing to aligning more closely with the mid-range of neighboring agencies. This means Tracy's customers would continue to pay rates that remain competitive and consistent with industry norms. The next few slides describe how the rates will affect our residential customers and how to find their meter size. In order to determine the effect that the rate increase could have on a residential customer, the customer would look for these two areas, which determine their fixed based rate and their units of consumption. A single unit in HCF or CCF is equal to one unit. One unit equals 748 gallons. California standard for average use per person per day is about 77 gallons. 30 days at 77 gallons per day is approximately 2,300 gallons or three units per month per person. This includes all types of water use both indoor and outdoor. Please note that the proposed rate increase only affects the lines identified as water here usage and base. Sewer, storm drain and garbage are not impacted by the proposed water service rate increase. This slide shows the effect of the increase on the residential customer based on their meter size and prioritized seasonal rate. Older homes in Tracy generally have a three quarter inch meter while new homes have a one inch meter. The difference in these meter sizes are the gallons per minute they are able to provide. The three quarter inch meter can only provide landscape irrigation to approximately two stations while a one inch might be able to sustain four to five. This is also evident in the length of time it takes to fill something up. For instance, a bathtub while bathing will take longer to fill with the smaller meter size. This slide also provides a look at what it means to be a typical family residential customer in fiscal year 2027. A tenant or homeowner is able to look at their existing bill as shown on the previous slide and determine their water units volumetric along with the size of their meter, their fixed base on a base price. They could then look at the chart to determine the approximate amount of increase to their water bill at this 32% increase. For a home with a three quarter inch meter using 16 units of water per month, common summer usage the current monthly amount is $44.50 as highlighted here. Under the proposed fiscal year 2027 rate the bill would increase to $69.31 an increase of $24.81. While this is a noticeable change it's important to note that even after the increase the city still remains goes from the lowest water rate in the region to just the mid-range. The $1 million general fund loan helps to reduce the fiscal year 2027 impact. In addition, the city continues to provide its discount through its LIRA program so that qualifying households continue to receive meaningful support. The detailed bill impact table for various usage levels was included in the staff report for your review. This slide highlights why delaying action has real, tangible consequences for the community and for the long-term reliability of our water system. These risks are not hypothetical. They are conditions we are already experiencing due to years of deferred investment. When necessary, capital improvement projects continue to be postponed. The system becomes more vulnerable. Small issues grow into larger failures and the cost of repairing or replacing assets increases dramatically over time. What could have been a planned lower cost project becomes an emergency repair at a much higher price. Without proper funding, we face the possibility of falling out of compliance with state and federal requirements. This can result in violations and fines adding additional financial pressures. Most importantly, these regulations exist to protect our public health, so failing to meet them poses a serious concern. Critical programs such as valve exercising, system inspection, and preventative maintenance cannot be fully implemented without adequate resources. These programs are essential for maintaining system integrity and reducing the likelihood of service disruptions. Under funding forces, the utility enter a reactive mode. addressing problems only after they occur. This is expensive, inefficient, and unsafe compared to proactive planned maintenance. Water infrastructure is directly tied to community health and safety. Failing to adequately invest increases the risk of contamination events, service outages, inadequate fire protection due to system failures. Continued depletion of reserves weakens the utility's financial position and can impact our credit rating. A weaker credit rating means higher borrowing costs for future projects, ultimately costing our ratepayers even more. This proposed rate adjustment requests a responsible, forward-looking investment in our water infrastructure and operations. It will reverse years of deferred maintenance, improve system reliability, protect public health, and ensure sustainable service for decades to come, while keeping rates as affordable as possible through the refinements that have been made. In summary, staff recommends City Council conduct a public hearing, and if no majority protests exist, adopt a resolution adopting the May 2026 water rate study with errata, adopt the proposed water service user rates for fiscal year 2027 through 31, effective July 1, 2026, and annually thereafter through the five-year rate plan. It asks that you approve the enterprise fund reserve policy, approve a utility rate stabilization reserve policy for the water and wastewater utilities, and authorize a general fund inter-fund loan for $1 million at a five-year term with interest at the local agency investment rate. Thank you for your time and attention. Staff are happy to answer any questions you may have. Our outside legal counsel, Megan, is here, as well as our consultants are available by phone. Thank you.

Thank you. That was a lot of information. I'm going to go ahead and start with preliminary questions from Council. Do we have anyone who'd like to start? Mayor Pro Tem.

Thank you. So right now it's 32-32-555, right? Is it possible to spread those out over if we were to take all that and spread it out evenly across? Is that a possibility instead of an initial 32 at the beginning?

The City Council cannot adopt rates that were higher than what was in the notice. So since the rates in the notice in the outer years were only 5%, you can't adopt anything that's higher than that.

Okay. Thank you. I don't know if anybody knows or not, but in 2017, when they adopted the rate increase Did they do the needed amount at that time, or was it less than what was actually needed? I think the slide said 25%. Was that what was requested at that time, or was it requested higher? I don't know if anybody knows or not.

Through the Chair, Mayor Pro Tem, while I was here at that time, I wasn't over this particular division. However, my recollection is that we, Council approved a rate that was lower than to fully implement a proactive plan.

So that put us behind also. And then stopping... not following through. And I understand why they did that, but not completing the full increase also set us even farther behind. Is that right?

Correct. It had a compounding effect, much like taking a vacation from a credit card bill.

Right. Okay. Since 2017, have there been any state laws or mandates that have been added on that have causing additional fees or costs to the city that are being passed on to the taxpayers.

Okay. I don't think. Megan, do you want to take that?

I'm not aware of any state laws specific to water that have increased costs. There have been recent Prop 218 court cases that have addressed the proportionality requirements under Prop 218, which is why the city, in order to be in compliance with Prop 218, is moving from a tiered rate system to a flat rate system.

Okay, thank you. Could a Home renter have filed or can file a protest to this. Someone who's renting a home. So they're not the property owner. They're renting the house. Could they file a protest to this?

Any rate payer. So if a renter is a rate payer and is the person who pays the water rates or any property owner can file a protest, although only one protest per parcel will be counted.

Correct. But someone who's renting could have filed the protest or may have filed a protest.

Correct. If someone is renting and they're a customer, otherwise known as a rate payer, they can file a protest.

Okay. And then just to reiterate, we could not take money from the general fund or any other funds to cover the cost. We can loan it, but eventually it's going to have to be paid back with a substantial interest is my understanding, correct?

That is correct. Okay.

All right, that's all I have right now. Thank you. Thank you, Mayor Pro Tem.

Anything, Council Member?

Council Member Bedoya. Thank you. There's a couple questions, I'll be brief. Can you clarify it, like, for apartments or for, I guess, where it's not a single-family home? How does that work with APNs and filling in a protest page?

It depends on, you know, it depends on whether those different units are on different parcels. If they're only on one parcel, then it's just one protest per parcel.

Okay, that helps. I guess, generally... How are apartment, are they, like in our city, are they on one parcel or are they?

On utility billing, if it's a larger apartment complex, typically it's one utility bill, one parcel. Sometimes you may see in a duplex, maybe they have separate water meters that would count as two, but generally it is, if there's multiple units, a lot of the time it is one parcel.

And then split up, okay, by property measure. Okay, thank you. So I just have a little bit of context to my question. On April 7th, I had initially supported option two. Almost, almost your time. Sorry. On April 7th, I had supported option two. I felt that it was less burdensome on the public than scenario one. I did go with scenario one with the majority on the caveat, as we heard today, that whatever comes back after the Prop 218 process, Council can adopt lower than the proposed Prop 218 rates. for staff, I understand the factor, the 1.2 factor that puts us at certain risks. What would be the minimum required increase per year so that we don't fall into that, below that 1.2 multiplier? And if it's not, if you can't do exact on the spot, what's an estimate so that we may possibly implement less than with the proposed tweet, what went out to the public, that ceiling. And that'll, I guess, you know, yeah, that'll answer my questions.

Councilmember, it would take some analysis to answer that question. I don't think we have an exact number at this moment.

Thank you. Councilmember Evans. Thank you, Mayor. Quick comment before my question. I have two questions. The comment is people understand cost of goods and services goes up over time. They don't go down. They go up. They expect those services to go up usually commensurate with inflation, 2% to 3% a year. Most people, they can digest that. They have a hard time when we're looking at massive increases all at once. It's hard for people to budget. So Because this wasn't addressed previously, we're looking at a decision between bad and terrible. There's no great solution. I'm open to hearing other solutions, but unfortunately, it's a difficult decision. But with that said, my question number one is regarding the proposed loan from the general fund. It's proposed at a million dollars, correct? Is it possible to consider, would it be an option to consider raising that amount? And if we did look into that, is it possible that could somewhat reduce or minimize the initial impact of the rate hike?

Thank you, Councilmember. I am going to defer this question to our rate consultant with Black & Veatch. But while he's getting on the line to unmute, we have had this discussion and I have been told that the larger, the general fund loan, it would need to be much larger than $1 million for it to make an impact. But I will let them speak a little bit more to kind of what that looks like. Would it be five, you know, what actually tips the scale in terms of the rate?

All right, I believe we have Greg Baird on the line, and I've sent the unmute request. You're unmuted. Please go ahead, Greg. Greg, you're unmuted. Go ahead. Greg, I see you there.

Mayor, we're checking to see if we have a cell phone number where we can just put them up to the microphone.

I have a second question, if you want me to ask that first, we can come back to this one. Okay, second question is, so we know there's a substantial community effort that's been underway for the last couple of weeks or so. Signatures have been gathered. And so I wanted to make sure that the rate payers and community members are all clear on the process. If staff can explain what constitutes a majority protest and what happens if a majority protest is achieved.

Thank you, Megan.

A majority protest is if 50% plus one of the parcels receiving water service from the city submit written protests. The city did provide a protest card with the Proposition 218 notice that it mailed to ratepayers. It was not required to do that under law. A valid protest would contain a statement that they are protesting, the name of either the ratepayer or the property owner, an original signature, and the APN number or the address of the property associated with the ratepayer or property owner.

And what happens if that's achieved?

If that is achieved, the city council cannot adopt the rates tonight.

Okay. Okay. Thank you. And so back to the original question, are we connected at this point?

I'll try once more on Zoom. Greg, you're unmuted and you're a co-host now in the meeting, so you should be able to speak at will. Okay, you just muted and then unmuted. Yeah, so you're unmuted now. I think Greg might be having audio troubles.

Is it possible to connect via telephone, possibly?

Let me...

Okay, we'll ask staff to continue to work on that.

Greg, if you have a phone, you can call into the meeting as well.

Mayor, if I may, may I just repeat the call-in information in the event that Greg can hear me?

Sure. Okay. So Greg, the number is 1-833-928-4610.

And the meeting ID is 845-6873-7697.

Passcode is 701-442. So that will allow you to call into the meeting by phone. It's also on the screen.

Okay. While he attempts, we'll hold the line open and we'll just continue. Do you have any additional questions, Council Member Evans? Those are my only two questions. Okay. Council Member Nygaard.

Thank you, Mayor. Thank you, staff, for the really in-depth presentation. I had a couple clarifying questions. One, I know it was mentioned that the mailer went out and it did meet all legal requirements. Is that correct? So what the city and the other contracted uh consultant we met all of the 218 requirements for our our legal obligation for that mailer that was correct that is correct okay thank you um and then i have um my utility bill here i'm single i'm retired i the majority of my income is social security But I live in the north section of town, in the older part of town, so that will, my pipe would be five-eighths inch, because it does state here that my water base is 1850, which you already had on a previous slide. So the water base is the set amount, that is costing that water to be delivered to your home. So that includes your operating costs, your maintenance costs, personnel, et cetera. Is that correct? For the water, that would be the base, the water base amount. That's the delivery of the water to your home. That's correct. That's correct. Okay. Yes. Our water usage is the amount of water that we actually consume. And you are saying it's the CCF, that is the unit of measurement.

Yes.

I live in a small home. I have a large, I have my entire front yard is all pollinator gardens, so I'm constantly watering flowers. My backyard is a home garden, so I grow a lot of my own produce. My usage for the last two years, because I bought my home two years ago, has been zero because I have not met that unit of measurement. I did one month last year when we had three weeks of 110 weather. Remember when we were all just melting? I went up to two units. Excuse me? In Tracy?

So, well, public comment will be later, sir. Okay.

So I'm understanding my rate, the 1850, according to your chart, will actually go up by the end of the fifth year to the 3378, correct? Yes. Okay. And then if I do use a unit of water, I am under for 2027, the 295, which then will go up to at the end of 3031, $4.49. Is that correct? Okay. So I deeply understand the frustration. I watched a couple years back the garbage rate and how impactful that is. So I do have a lot of, yes, concern for how large this rate increase is. But had we, can I ask, had we stayed on a consistent streamline effective rate increase, hypothetically, where we have kept up with maintenance, we kept up with operations, what could be the projected yearly increase had we stayed on top of our demand for good, effective water delivery?

We identified that in the very first meeting that we had in February, that the rate study went back for 29 years, and had we done a 4% increase over every single year, we would be at that additional, it would be 4% a year.

Okay. So, and also you mentioned, if we commit as a city over the next four to five years to decrease operational costs by investing in, like you said, solar, wind. Because yes, I know, I've looked it up, our PG&E bill for just our wastewater treatment plant, I believe, is $2 million a year. If we can invest in decreasing our operational costs and maintenance, we would be able, by the next time our rate study comes around, be actually hypothetically looking at maybe 2%, 3%, or 4% each year instead of this 32%, 32%, 5%, 5%, 5%. Is that a possibility, a likely possibility? I do hope that our city does commit to that, and we do work hard at decreasing that PG&E utility bill. So I... I feel the impact. I understand that it is going to hurt larger homes and larger families.

Councilmember, sorry, are we still doing clarifying comments? Yes, I know.

Just one last one. Can a I think with Councilmember Bedoya's comment about reducing the rate increase, the percentage by maybe two or just 3% on the first or second year, those bigger bulk, would that affect our debt ratio?

THROUGH THE CHAIR, COUNCIL MEMBER, IT WOULD LIKELY IMPACT OUR DEBT RATIO, BUT WE CANNOT TELL YOU TODAY AT THIS MOMENT WHAT THAT WOULD BE BASED ON THE COMPLICATED CRUNCHING OF THE NUMBERS THAT NEEDS TO BE DONE. ONE THING THAT IF WE WERE TO COME BACK WITH THOSE NUMBERS, It could potentially, you know, we may be coming back with different numbers because this is scheduled for a July 1 implementation date. We only have one other meeting between now and July 1. So we could get that information for you, but we would not be able to do it tonight. Okay. All right. Thank you so much.

I appreciate your time.

Thank you, Councilmember. I just have a few additional questions. Council has asked me the same questions I had. One thing I want to highlight, oftentimes we hear from the community that we want new development to pay for their own development. I just want to be very clear. These rates, do they have anything to do with the new development, with new stuff going on at Tracy Hills or Ellis? What is, does this affect that at all?

That does not, no. All new infrastructure is paid by the developer. Once the home is purchased and the homeowner becomes a homeowner and has a, they will pay the same water rate that everybody else is. But the initial infrastructure that's in there is on the developer to pay.

Okay. So this has nothing to do with new development. This is about existing infrastructure for the city.

Correct.

Thank you. All right, we will have public comment in just a second. So again, they are paying for their development. So is new development paying for for those costs?

I think the developer pays a fee for the impact that their project is having on the growth. So, for example, if we had to do a wastewater treatment plant expansion, they pay for the installation of the infrastructure, the pipes going from the house to the main line and the main line that we have to put out there that the city owns. And then what I understand Stephanie Rayna was saying that, so the developer pays for that infrastructure to get put in because there's nothing out there, there's just dirt, so they've got to connect to our city's system. And if their development triggers that we need more capacity at our wastewater treatment plant because of these 400 units, for example, they also pay a fee that is based on the impact of their growth. And then once the homeowner home is purchased, the homeowner then becomes a rate payer and they would be subject to these rates. So they would be paying for the maintenance of those pipes that the developer paid to put in and also that the city maintains and they will be paying for their per unit usage as well. So developer pays to have the infrastructure put in and then rate payers and the city maintain the infrastructure once it's in. But any new infrastructure would be paid by the development, whether that's an industry or a home builder.

I was just going to say that if there is an existing pipe that has to be built, has to be expanded, so say we have a 20-inch pipe, in order to provide service to a new community, it has to be a 24-inch pipe. Existing rate payers pay for that 20-inch. The additional 4-inch is paid by the developer because that's their impact to the new system.

Thank you. But what we're talking about today is only about maintenance of existing water systems. Correct. Thank you. We talked about a variety of potential opportunities to try and lower this and one of the things that was highlighted was applying to grants. Has the city applied to grants for any of this to attempt to lower costs for regular rate payers?

So yes, we did apply for some 9,000 meter replacements to the Bureau of Reclamation and that is still in process. So we haven't gotten word back whether or not we have received that grant.

Okay, and then to Council Member Nygaard's point, we have currently put out RFP for the energy audit. Can you give us an update on what they're looking at, what's the timeline for that, and how would that affect these current rates?

Give me one second. I'll have a staff member that can answer it.

Good evening, Anush Najjar, Director of Public Works. The RFQ has been issued. We're in the process of evaluation. We expect to issue the RFP by the 8th of June.

Okay, so it is ongoing, but that doesn't fix the rates we have today.

That'll be for the next study.

Yes. Thank you. All right, and then... Earlier tonight for item 3N, there was a repair that we had to, an emergency repair that cost $100,000. Is that the type of repair that we could anticipate seeing if we're not investing in our infrastructure regularly?

Yes.

Okay, and about how much of a cost difference is that compared to engaging in regular maintenance on an ongoing schedule?

We have about a two-mile stretch of pipe on Larch Road That four years ago had an engineer's estimate at $850,000 to make that repair. And today's price is $4.2 million.

Okay. So it's always compounding when we're not investing in a timely manner.

Okay. And then the last question I have is I think Ms. Castro's...

called it a technical default. So if we fail to meet these particular requirements so that the enterprise is self-financing, you said it could potentially downgrade a credit rating, could have a higher rate, could have denial of future credit. What would that mean for the entirety of fiscal sustainability for the city?

So overall, I'll start with the Water Enterprise Fund. This rate study factors in borrowing in the fiscal year 28 because there's a large capital project that enough cash from rate payers can't fund in that year. So to pay the upfront costs, we plan to borrow from the state revolving fund. If credit rating is downgraded or denial of credit occurs, right? So first, if credit is downgraded, we may pay higher interest rates. to borrow those funds if the credit is denied we won't have a source to borrow those funds meaning that that project is going to have to be deferred until the city raises enough cash to do that project and then if deferred it would be cost to be compounded yet again correct okay and um

My last question is, I think we have discussed a future item for a policy in which, I believe it was to either Council Member Evans or Nygaard's point, if we could have just a regular small increase more parallel to COLA, you know, it would have been 4% over a number of years had we done this every single year. This Council has requested a future item so that all of our utility rates could do that. When is that item coming back to Council?

We adopted that in in April. We are on it. Okay.

And then the calendar for those studies was on a previous slide.

That's right. Correct.

Perfect. All right. Now it's time for our... Mayor, if I may.

I'm sorry. It looks like our consultant.

I'm sorry. I was just hoping to get back to my question.

We'll go with Madam Clerk.

Okay.

All right. Okay, Greg, I see you. You're here by phone. If this fails, I will call you and hold the microphone.

Let me know if you need me to reread the question, too.

All right, Greg, I've sent the unmute request. I sent the unmute request. Go ahead and accept it. Star six, star six. Okay, Greg, I'm going to give you a call. Okay.

Go back to carrier pigeons.

Yeah. I can hear you on the phone, and I'm going to hold the phone to the microphone. And do you need the question repeated?

is an increase for the general fund transfer to the water fund to be able to buy down rates we had analyzed that in a number of different ways because the general fund money acts as a one-time only funding, it then helps meet the debt service coverage in that first year, and then it drops below to help out the reserves as we pay it back over the five-year period to then be able to do that Every year, it would take yet a substantial amount, several million dollars, to be able to really reduce what that revenue increase is. Because every year we have the expenses going up, we don't want to... draw down the reserves anymore. We want to be able to meet that debt service coverage and we want to be able to meet our reserve coverage and still be able to pay for So I know we had run some different analysis, and it was almost as we would have to run it on each individual year, how much could you potentially write it down? And we would see where all of a sudden it would go from $1 million to potentially $5 or $7 million, but it would only push – the rate increases needed for the future, we would still need that revenue. So any one-time adjustment to the general fund as a transfer, we would still have to make up for that, plus the loan costs and any other inflation of pushing things out into the future years.

Okay. Yeah, fair enough. Thank you for that analysis. Okay, and then Council Member Nygaard, do you have an additional question?

Just one. Just really curious, how often is the city responding to a water issue, emergency repair?

We respond to one to two emergency water repairs each and every day, including weekends. Seven days a week? Seven days a week. We have standby that goes out on the weekends. Thank you.

Okay. All right, it's now time to hear from the public. I'd like to remind everyone that if you wish to file a written protest against the proposed rates, you may deliver it to the city clerk at this time. That's over here. Only written protests that are received by the clerk before I close this hearing tonight will be counted. If written protests are received from a majority of the parcels that would be subject to the new rates, council will not adopt the rates. I will now open the public hearing for item 5A at 8.32 p.m. Can I please see hands raised for a number of folks who'd like to speak on this particular item? I got 20, oh, was it about 20?

Yes, and I have five speaker cards in my hand, and I don't see anyone with their hand raised online this time.

Okay, then for that number of speakers, it's two minutes, and we will go ahead and start with the speaker cards, please. Okay, the first speaker is... Oh, sorry, Ms. Quintanilla, did you need to collect any cards at this time, or can you please...

I did receive three protests... at the beginning of the meeting if there are additional protests you can go ahead and bring them to me now or just throughout the public comment process. I will give a total after you know towards the end of the public hearing once we have everything because people can submit them through through the hearing.

Okay and I ask that you start with the speaker cards please.

Yes sir. The first speaker is Joanne Alstrand.

Ms.

Okay. Thank you. Next speaker is Robert Tanner.

First off, this mailing that you did for the city, a lot of people threw them away or shredded them because they just thought it was information to the utilities. I paid my bill. City of Tracy got their money. I'm happy. Whatever. These were not fully disclosed as to what it was going to be. People do not read the Tracy Press all the time or some don't even get it. Word of mouth was changing the people's ideas, but by that time it was too late. There's been a petition at the farmer's market for those to fill out. Some didn't even realize the rates were going to be increased as high as they were. I also noticed in the study, charts, tables 3-1 and 3-2 show industrial and construction, literally no change. So are you guys not going to be looking for industrial jobs, high paying? If not, why not? Remains 38 for the whole five years and construction remains at 836. No change at all. Fire hydrants. Meters. Are we getting new meters? It was at $18. Now it's going to go up at the end of five years, 42. And you got rid of meter readers and started these readers that are stationary and you can read it in the office. I think mine's been about 20 years. So are we going to get new meters because we're increasing in price or not? I think not because you guys really don't give a damn. The other thing is, is that whatever we say here tonight, it's not going to make any difference. You guys are still going to increase the rates as high as they're going to be without any thought to the citizens. Thank you.

Thank you, Mr. Tennant. And then I'll ask staff to also keep a note of questions, and I'll have staff respond at the end. Next speaker card, please.

Dennis McLaren? Or McCarran, I'm sorry. Dennis? Okay, I don't think we have Dennis. DANIELLE SMITH.

GOOD EVENING, MAYOR AND MEMBERS OF THE CITY COUNCIL. I DO APPRECIATE THE QUESTIONS THAT YOU ASKED THEM OVER THERE BECAUSE IT DID ANSWER MANY OF THE QUESTIONS THAT I HAVE TONIGHT. BUT I STILL HAVE SOME MORE ISSUES WITH THE RATE INCREASE. I'M HERE TO RESPECTIVELY OPPOSE THE PROPOSED WATER RATE INCREASE TIMELINE AND URGE THIS COUNCIL TO RECONSIDER PLACING THIS FINANCIAL BURDEN OVER A MORE REASONABLE TIMELINE FOR US CITIZENS. FOR MANY FAMILIES, RISING UTILITY COSTS ARE NOT AN ABSTRACT ISSUE. THEY ARE REAL AND GROWING BURDEN ON HOUSEHOLD BUDGETS. RESIDENTS ARE ALREADY DEALING WITH HIGHER COSTS OF HOUSING, GROCERIES, GAS, INSURANCE PREMIUMS AND OTHER BASIC NECESSITIES. WATER IS NOT A LUXURY. IT IS A FUNDAMENTAL SERVICE THAT EVERY HOUSEHOLD DEPENDS ON. ANY INCREASE, ESPECIALLY ONE OF THIS MAGNITUDE, SHOULD BE APPROACHED WITH EXTREME CAUTION. WE'VE BEEN TOLD THESE INCREASES ARE NECESSARY BECAUSE OF A 2.3 MILLION ANNUAL DEFICIT, AGING INFRASTRUCTURE, INFLATION, RISING OPERATIONAL COSTS, AND MORE THAN 68 MILLION IN CAPITAL IMPROVEMENT NEEDS. We've also been told that rates have not increased since 2020. However, these explanations raise serious concerns, but they do not justify placing such dramatic increases on residents in an unrealistic timeline. First, regarding a 2.3 million deficit, how did the city allow the Water Enterprise Fund to operate at a deficit for years without addressing an issue sooner? Second, we are being told that much of our infrastructure is nearly 70 years old and urgently needs repair. Respectively, infrastructure does not suddenly age overnight, Third, while inflation has increased operational cost, inflation is also affecting every resident in this city. Families are already stretched thin. A 32% increase this year, followed by additional increases of 32%, 5%, 5%, and 5% in the future is simply too extreme and financially disruptive. Additionally, residents deserve full transparency regarding all factors driving these increases. If part of these rising costs includes obligations related to employee compensation packages, including CalPERS, pension liabilities connected to water reclamation employees, that should be clearly disclosed.

Ma'am, your time's elapsed.

Oh, okay. Thank you.

Thank you. Thank you, Ms. Smith. Next speaker card, please.

Marco Ulloa.

Don't start timing me yet.

Two minutes is not enough time.

Members of the council, Marco Ulloa, 434 West 10th Street. Two minutes isn't enough time to address everything that they talked about, a lot of things that I don't understand. I understand layman's stuff. AND I'VE GIVEN YOU GUYS A FORMAL OPPOSITION TO THE WATER RATE HIKES. THE FIRST IS A QUESTION I HOPE YOU GUYS ADDRESS IT AND GET BACK TO ME WITH MY CONCERNS IN THE WRITTEN PAPERWORK THAT I HANDED YOU GUYS. I'VE BEEN A RESIDENT OF THIS TOWN MY WHOLE LIFE. I'VE SEEN A LOT OF CHANGES AND I UNDERSTAND California's water system. You guys wouldn't believe how I understand it. All the way from the Sierras down to Clifton Court, how we pump it to LA and the pipe that went over the hill, Mulholland's pipe to feed them. If we didn't have the infrastructure we had, this place would be underwater. Dams and all the pumping system that we have. This podium's pretty sturdy. My house isn't. I have a well on my property. Years ago, IN THE EARLY 2000S WHEN THEY FIXED THE WELL ON SIXTH STREET, THEY DUG IT DEEPER, THEY DRAINED THE AQUIFER. AND SHE TALKED ABOUT REPLENISHING AQUIFERS. HOW CAN I DO THAT IF I CAN'T EVEN WATER MY YARD? YOU KNOW, THE WATER'S GOT TO GET IN THE GROUND TO REPLENISH IT. WHEN THE BUS PASSES BY MY HOUSE ON 10TH STREET, IT SHAKES. IT SHAKES BECAUSE THE GROUND IS DRY. YOU GUYS DRAIN THAT WELL THAT WAS IN THE BACKYARD. AND I DIDN'T WANT TO USE IT ANYWAYS. I USED THE CITY WATER. And just the rates for a disabled person and someone who's aging, the cost is unbearable for us. We have Ellis, we have Tracy Hills going in, and I don't understand why you didn't make them eat the cost. If we're pumping to them, they should eat the cost. I just took a drive. I know Patterson passed a creek. There's no water coming down it. Corral Hollow has no water coming down it. Hospital Creek has no water coming down it. And I went all the way to Patterson. There's a little bit of water coming through Del Porto Canyon. Those hills, they don't produce water. But we're sending water up there. And our houses are grandfathered in. their old houses regardless of who is the resident of these houses in the downtown area of Tracy. These houses have been here since the 40s.

Sir, your time's elapsed.

Consider that.

Thank you. Do we have any additional speaker cards?

No additional speaker cards, Mayor, but we did have a hand go up just now on Zoom. So I think it would be 90 seconds if you would permit them to speak.

Well, let's have our regular speakers go first.

Oh, okay.

Okay. Okay, so for those 21 speakers, you have two minutes. You can go ahead and line up, and the time is yours. And then, excuse me, I'm gonna ask that everyone speak from the microphone, because even though we can hear you in here, we might not be able to hear you online, just for the record.

Good evening, council members and audience. I have one sentence for you. The problem is that it's not, it's the budget, okay? It's not you, your predecessors have not served this city You need to look at that problem and not expect these people to fix it in one lump sum. Thank you.

Thank you. Next speaker, please.

Hi, good evening, Daniel Helm.

Good evening.

I understand about the infrastructure needing to be repaired. On my street, in the last five years, we've had five water main breaks. AND THEY'VE FIXED EACH ONE. SEEMS TO ME LIKE THEY SHOULD'VE JUST REPLACED THE WHOLE THING. PROBABLY WOULD'VE BEEN CHEAPER, OKAY? DO IT ALL, BECAUSE EVERYONE'S GOING TO BREAK. I'M NOT A MATH MAJOR, SO I HAD TO GO TO THE CALCULATOR. A 32% INCREASE, AND THEN ANOTHER 32% IS A 74% INCREASE. 74% OVER TWO YEARS IS RIDICULOUS. I understand none of you were on the council when the previous council continued kicking the can down the road and didn't spend the money. And if any of you were on the council, well, shame on you. I don't think you were. But to me, that's absolute negligence. And I would almost call it corrupt. I hope you guys do better. Mayor Pro Tem Abercrombie, I appreciate your comment about could this be smoothed out. My water bill is about $100 a month. So two years from now, it's going to be $174 a month. That's a bunch. We're not even talking about wastewater and every bit of wastewater is coming from new development. And I can't, I don't have the documents, but I really don't think that those people paid their full share. Common about a 20-inch pipe to a 24, okay? Do they pay for the entire 24, or do they just pay a quarter of it? It's a good question.

So your time's up.

Thank you. Next speaker, please. Hi, my name is Jerry Stoller. The fire hydrants that I read about, 2,500, how often are they checked for proper usage, that they have water in them? Or do they have a lifespan that they need to be replaced? That's one. The other one is that we have these homes in Tracy Hills, thousands of them going up, huge warehouses. Do we have enough water to sustain them? Or is there an adjustment needed to be made? But my main really concern is that we have a water park going in. A lot of these homes are going to have a high usage. How does that impact the city?

Thank you. Next speaker, please.

Hi, Mayor, Council. Good evening. My name is Phil Costello. Steve, long time no see. I CAME HERE JUST TO OBSERVE. I DON'T REALLY HAVE A COMPLAINT. I JUST HAVE A COUPLE OF ADDITIONAL QUESTIONS FROM THE QUESTIONS THAT YOU GUYS BROUGHT TO THE FOLKS OVER THERE. AND IT ALWAYS COMES BACK TO PAYROLL. WE TALK ABOUT ADDING BASICALLY DOUBLING THE SIZE OF THE EMPLOYEE BASE. AND MY QUESTION IS, DOES THE PROPOSAL FACTOR IN ALL 29 NEW EMPLOYEES COMING ONLINE AT THE SAME TIME OR ARE THEY STAGGERED IN TO HELP IN ABSORBING THE COSTS OVER THE LONG TERM? AND THEN, NUMBER TWO, WHAT PERCENT OF THE TOTAL REVENUE THAT'S GOING TO BE GENERATED IS GOING TO BE COVERING THESE NEW SALARIES? BECAUSE THAT'S ALWAYS THE DISCONNECT FOR ME, IS THAT WE HAVE THIS NEED BECAUSE OF IN THE PAST, BUT WE'RE GOING TO COMPOUND IT BY ADDING MORE PEOPLE. AND USUALLY, PEOPLE ARE THE BIGGEST COST ON THE EXPENSE LINE. THAT'S IT.

THANK YOU. THANK YOU, MR. STELZ. Next speaker, please.

Hi. My name is Vladimir Nagorny from Hidden Lake. I have two concerns, mostly what's not written here. I will not question any numbers that you have here. For example, expenses for maintenance operation costs will increase from $30 million to $30 $8 million from 2027 to 2031. So it's 27%. And take into account that we grow about, in the last five years, 8.5% if it goes like this, you know, population. Then the rate, I want initial rate. And the final rate, after all this, you know, $68 million or whatever, goes back. I want it to go back to normal rate. And I didn't see this in this document. It has like, you know, you start with 150, then you add with 5 to 66, or 459, 95, something like this. But what next? I want to see the next number to be what, like 17% higher than today. That's what I see. And it could be because this document, I don't like how it's made. It's like increasing the rate, increasing the rate. We have to have some regular rate. It goes like with the inflation or something like this, maintenance, regular maintenance. And we have a project. And put it extra as a project. And project ends. You paid for all that stuff. That part goes to zero. And that's what we want to see in the documents. So I want to see begin and the end, because you mix together two things which you shouldn't mix. And the last thing I want to say is that, OK, we've finished this project. Everything's almost new. So why do we have the same maintenance costs? Just one question. Why do we need maintenance costs like one every day, few times emergency or something? It should be like new. Maintenance costs should go down. Thank you, sir. Your time's elapsed. That's the point of making it.

Thank you. Next speaker, please.

Good afternoon, Mayor, City Council. They keep talking two years. We're talking 13 months that it's going to go up 64%. I feel that's really excessive. Dottie brought up a thing asking the question, was that mailer legal or was it, I forget how you put it, but was it correct or something? It was really misleading. Myself, we almost threw it out. But the thing I'm trying to bring up is this is going to affect low-income and fixed-income people the worst. They said we can't change the rates or raise the rates on the last three years, but I think definitely we need to lower the rates on the first two years. It's excessive, and it's really going to hurt, like I said, low- and fixed-income people. The main thing, though, is... It's got to be over 1,000 new homes with Ellis and Tracy Hills and all this stuff. So you're talking about bringing the water to the meters. Well, we have 1,000 new meters now, not including all the apartments that we have and stuff like that. So I think if we could lower the first year and see how well we did and then lower the second year as needed, then maybe we won't need to raise it. on the last three years. You know, that's my idea anyway. Thank you.

Thank you, Mr. English. Next speaker, please.

My name is Patrick Ferguson. I've been in Tracy since 1944, and I've seen so many different things go through. And what the lady over here said, It's like putting a snowball and just keep rolling it down and rolling it down. We've had bad politics in the way back. We've had changes. Nobody adjusted it, took care of it. It's just the way it is, and it just keeps going. But now we've hit a point. It's like we're hitting Mount Everest. And I'm going to tell you what, they're talking about people leaving California. Hell, people are going to be leaving Tracy. And I've been here since 1944. I love this town. Steve Abercrombie, I mean, he's been here for a long time. I mean, my family was, oh, we go way back. And this was a great, great town. And it's just like we let it go. We're just letting it go. And something's got to be done. We just let it go to now and then we have to take care of it. You people have to take care of it. You have to make ideas and what you're going to do and how we're going to handle it. And we're talking about borrowing money and we're no better off than our country. Look how far in debt we are. And I mean, it's the same thing. It's the same thing. And it just goes on and on and on. I'll be dead and gone and it'll still be going. And people are going to come right back here and do the same thing. Different people, different ideas. I haven't even got to know the new mayor, but it sounds like you got a job ahead of you, partner. You really got a job. But I wish you all the luck in the world.

Thank you, Mr. Ferguson. Next speaker, please.

Good evening, Mayor and Council. Rosario Taze, resident. I saw the message in the slide, fix it before it's break down. I want to ask the city staff why they waited for last six years to bring this to the city council. We need to address this one. I know the pandemic came in 2020, so rates are deferred, I agree with that, but things has to be steadily progress, not overnight increasing 32, 32, like that's so much of impact on the public. I know Niagara was pressing about the operational cost, everything. We need to bring more business to bring the generated revenue so that that will help for the city. And at the same time, not only the operational cost, the infrastructure development. Just for example, the Lammas Road and the Valpico. How many times you are going to dig and dig and dig still is going on. How much money we are spending on the labor and the material costs and everything. So we need to do a cost-cutting in everything. Not only the operation costs, infrastructure. So again, increasing the burden at one stage is too much for the community. Increasing gradually, if that makes sense. I know city staff has always preferred to compare the Bay Area. Don't even compare the Bay Area, Pleasanton, Dublin. We are in the Central Valley. There's a different region and different rates applies and different kind of around people lives here. Don't compare the Bay Area for everything. Bay Area, different, entirely different. Their revenue structure is different. Their earning is different. And not only that, tomorrow we are going to get the aquatic center, the student pipeline, how we are going to address this water issue. So we need to think everything in a broader way. try to bring more revenue, more business, and support the business so that that helps us to reduce the cost and don't increase drastically, go stage by stage. Thank you. Thank you.

Next speaker, please.

Hi.

Hi.

Cherie Lavasser, Tracy resident. You know, I have a couple things. One, I'm going to speak from the heart. I have a child with a disability. I CANNOT CONTROL HOW MUCH LAUNDRY I DO BECAUSE OF HIM. I CAN'T EVEN BEGIN TO THINK OF THE IMPACT THAT THIS IS GOING TO CAUSE TO OUR FAMILY. I CAN TELL YOU I'VE DONE NINE LOADS OF LAUNDRY IN ONE DAY. I'M HITTING OVER YOUR MARK. I CAN'T IMAGINE THE IMPACT THIS IS GOING TO HAVE ON OUR FAMILY AND WE DON'T QUALIFY AND I DON'T WANT TO QUALIFY BUT IT'S GOING TO HURT US. You've asked the question about can we lower the rate. Instead of 32%, can we reduce it to 20, 15, something. The people over here, they didn't even give you those options. You're asking them, and they did not have a scenario for you to lower the percentage. You're comparing us also to cities, Fairmont, Pleasanton. Why didn't you compare us to Stockton? If you compared us to Stockton, we would have been above. Compare us to cities that are truly in the valley. And lastly, the grants, one of the grants going to be expected to, do we qualify or not? If you're going to qualify for six months, can we postpone this for six months to see if we qualify? If we don't, then give us the increases. But it's not fair to qualify. the residents of Tracy for this giant increase. And lastly, if you're looking to raise funds, I got a great idea for you. Street sweeping day. Make the residents move their cars. If you're looking to generate funds, make them move their cars so we can actually get our streets sweeped. My neighborhood has 12, my neighbor has 12 cars. I cannot get my streets sweeped because they have 12 cars and they're constantly on the street. There, there, I just made you money. Ticket them.

Thank you, Ms. Levaster. Next speaker, please.

Hey there, City Council. So as you know, we're in an affordability crisis. So the lady prior kind of mentioned it. Increase 50 cents over eight years, not $4 over four years. Slow it down. Do 50 cents over eight years. Is that possible to slow it down? I think that makes common sense. As far as the windmills and powers that was mentioned before, I've sent counsel some emails. They're climbing up the hills now. If you haven't seen them, there's like six of them climbing up the hills, our beautiful hills that overlook our beautiful city. They're monsters. They're non-recyclable, the blades. They kill millions of birds. So as far as these windmills that bring down energy costs, I wanted to share that as well. But again, to repeat, Look at seriously looking at look at it over 50 cents increase over eight years instead of a dollar every four years. I think that's could be legal. Get the bonds, city bonds and all that. I think really look at that real hard to increase it. Slow down the increase. Thank you very much.

Thank you. Next speaker, please.

Thank you, Mr. Mayor and city council people and particularly Ms. Doty. I appreciate, I apologize by calling Ms. Doty. I appreciate what you said. I am also retired and living on social security. My husband has a disability. I am very concerned. I just paid my water bill and my garbage bill, $161. When I moved to Tracy 26 years ago, it was $70. I am very, it's not just water, it's the garbage. So what the previous speaker has said, what else are you going to add on to the cost of the citizens of the city? This is ridiculous. I am talking about, am I going to have to move like somebody else did? Am I going to have to even move California? This, the cost of living, I moved here because of the wonderful city this was. I moved from the Bay Area. Yuck. and came out here to be in a, my daughter was in junior high, she went to Jefferson Junior High. It was a wonderful, wonderful education. She has now got her master's in teaching children with disabilities. She got a wonderful education here. I love the city, but this cost of living is astronomically, what else are we going to be adding on that Social Security recipients will not be able to address and pay? Thank you all very, very much.

Thank you. Next speaker, please.

Hi, Kathy Espitia. First of all, My bill right now today, the base rate is 3850, which is nowhere on any chart that I saw. And my last bill last month was $190, which looks like with these increases, it'll be like $300 or $400 by the time 2031 comes around, which is 79% is too much to ask of people. That's just out in the stratosphere. So one way that we might be able to save money is You know, everything the city wants to do, they hire consultants, but we already pay employees. So why do we have consultants? That's paying twice for the same issue or every issue. So why don't we get rid of the consultants and save all that money and take care of the water bill or the water infrastructure or take whatever else the city needs? I'm sure we have lots of needs besides water. The other thing I was thinking, and I think I mentioned this to you, Steve, is when people see their water bills go up that much, they're going to say, I don't need a yard. I'm going to cement it over, or I'm going to put fake grass in, both of which ruin the environment and are terrible for climate change. So that's not an answer. You know, this is going to drive bad behavior, and we don't need that here. Could we... Water our landscape with potable water instead of using, you know, good water. And especially, can we stop watering the parks in the middle of the afternoon in the summer? Because that's very wasteful too. Plus, a lot of the times the parks aren't monitored and the water is going everywhere but on the lawn. Now supposedly there's the guys that mow the lawns are supposed to watch and make sure that you know they don't see dead spots and notice and notify somebody to come and fix that.

Ma'am your time's elapsed.

But it's not happening.

Thank you. Next speaker please.

I'm just kind of working off the fly here. I feel there should be better notification about when these rate increases go into effect. I'm a homeowner and I have a few friends that are homeowners and they weren't even aware that they received these in the mail. So whether it needs to be a bright red envelope or something that gets a person's attention, so that way they can protest. That's another issue I have. I don't feel like we're getting the numbers on how many people are actually protesting this. I mean, she dropped a number, I think she said 27,900 letters went out, but How much of that is actual people that can protest this? That way we can get to our 50% mark. I don't know if that makes sense, what I'm trying to put out there. I'm not sure everybody is getting the information so that they can protest. Other question I have is, how do we know how much the developers are paying? There should be transparency. We should be made aware of all these new homes that are going in, Tracy Hills, Ellis. How much of that share are they picking up and what are they picking up? We have a right to know that. The other thing, she dropped a number about Larch Road needing, maybe I heard it wrong, 700K worth of repair and one year later it's at $4 million. That didn't make no sense to me how it could go up that much. So if you're going to drop facts, at least substantiate it somehow. Because to me, that felt like you're just trying to throw something out there to BS me. And then there's this AI data center, not completely related to this, but from what I understand, it's going to consume a lot of water. And how is that going to affect us? Okay? Is it going to cost us, the individual, more money? Is it really, to me, it's more is it going to use resources that we don't have available to us? Okay? And that's about it. Thank you for your time.

Thank you. Next speaker, please.

Bad soft man. I... I spent a lot of time just Googling, and so I found this interesting statement. On December 31st of 2025, there was the city treasurer report that said the current value, market value was $608,105,251. Good on us, the city, well prepared for any financial disaster. But you'd already previously stated that there was obviously an error in what the rates were being charged for the water. It wasn't enough to keep it maintained or whatever. So my recommendation would be that the city would say somebody in the past, some previous elected officials or whatever made this error and created this problem. We're going to fix that, raise the rate to whatever it's going to take to move forward, but make that shortfall that you're trying to cover with your 30% increase. Just pay the bill with your money out of your fund. You have $608 million. Thank you.

Next speaker, please.

Hi, my name is Patricia. I've been in Tracy for 30 years, and ma'am, you said that your base rate is $18. I only live with one other person, and I've been living there, like I said, 30 years. My base rate is $61.61. So how are you getting yours for $18? And my bill, when I first moved to Tracy, was $77, which I thought was great. And now my bill is that average $195. I am also on fixed income Social Security. And in the future, when you mail this letter, write on this important letter RATE INCREASE SO PEOPLE LIKE ME CAN READ IT BECAUSE YOU KNOW WHAT I THOUGHT THIS WAS JUNK MAIL AND IT WAS GOING IN THERE'S GOING TO GO IN THE TRASH UNTIL SOMEONE SAID OH DID YOU GET THE LETTER FROM THE CITY OF TRACY I'M LIKE NO SHE GOES WELL I WENT HOME IT WAS STOCKED UP WITH JUNK MAIL SO IN THE FUTURE IF YOU WANT US TO INCREASE OUR RENT I MEAN INCREASE THE RATE SEND APPROPRIATE LETTER TO US

Thank you. Next speaker, please.

Maurice Francis, 1455 Vintage Court, Tracy resident. Mayor Arreola and the council members, I guess this question is more towards the staff if I may ask the questions directly to staff. You can ask it to us and then we will ask them afterwards. Okay. So I just want to know who is the subject matter expert representing the city of Tracy residents that reviewed this report? because here on the last page, Section 50, black and whites, the consultants, they state that they have certain limitations on how this report was prepared, where they were commissioned by the city to make independent analysis. They did not verify the information provided to them, render any independence judgments on the validity of the information provided to them. They use available public information, They use best practice engineering practice to come up with this report, generate these assumptions that have come up with this proposed rate increase. So the question I want to know is, who on the city, the subject matter expert, whether it's the city engineer, senior engineer, or public works department director that's representing the citizens, have reviewed this report and can put their stamp of verification that the report is correct and accurate? Thank you. Next speaker please.

Good evening, Mayor, Council, Cynthia Camacho, resident of Tracy, staff. So I'm hearing a lot of concerns, and one of the concerns that I have is the consultant. Their numbers were wrong, and they had to go back and fix it. So I want to make sure, and I believe a lot of residents are concerned with this number that they came up with. I feel that at this moment in time that maybe we should take a minute and revisit the whole thing. And, yes, you guys have a five-year. Why can't they spread it to maybe seven years, eight years to lower that rate? You're going to be hurting a lot of residents here in Tracy, especially our seniors, our veterans. A lot of our individuals are going to feel this pain. And as our council and our mayor, I'm asking you to please be on the side of the residents. Thank you.

Thank you. Next speaker, please.

Hello. I have a question. It's probably more for the staff. I heard that the loan that you guys are going to get, They're going to have a substantial interest rate. I'd like to know what that means, substantial. What is the number, not just the word substantial? Secondly, in the letter you guys did send us, one person addressed it. You're going to hire 29 full-time employees. Why? Why? I just want to know why. And is it necessary? And then the third thing is, I've heard some people mention a water park. I can tell you, I do not believe for one second that there's going to be a water park here in Tracy.

Thank you. Next speaker, please.

So I asked before the time starts that if they could bring up one of the PowerPoints, because I want the residents to know what I'm talking about, and you're already starting my time without even having my question asked. People are not going to understand what I want to say.

You can identify the slide, and we'll try and find it as you speak.

Okay, so but my time has, I haven't even spoken yet.

This is your time, ma'am.

Start the time then. You guys didn't put up the PowerPoint what I want to say. So give me my rights, my freedom of speech. You took almost two hours to talk and you're limiting our speech.

Please identify the slide and continue to speak.

For the sake of the audience, this is a big mistake they put here. You guys put up a PowerPoint to mislead the residents of Tracy. Warehouse and commercial are not paying their fair share. They started at $14.18. They're getting five years. They're going to end up at $14.84. The first four years is minus $446, $135. Tier the house number eight, they're paying less. They're only going to be paying $8.50. I need the place so they understand. We're going to be paying $15 more and they're only going to be paying $11 at the end of five years and $850, but you're imposing this burden the first two years while they get credit. $446, $135. Where is the... Okay, so now they're only going to pay the base rate all even, but then you're also giving them back the money. That's not right. They haven't been paying their fair share for the last six years. Mayor, you know that. You've been on city council for six years. You have to have them accountable. This is our livelihood. This is our quality of life. You know that I've always been fighting for the quality of life of Tracy, and now it's the livelihood of these people that are out here, and the working family, because their water usage is going to go up. Yours is wrong. You're going February's number. Nobody uses that much water usage. And thank you for violating my rights. You didn't reset the clock, Mayor, just for the record. This is wrong. You guys know it. Look at this.

Thank you, Ms. English.

You didn't run on increasing the water, did you?

Thank you, Ms. English. Next speaker, please.

There's corruption and it doesn't smell good. Next speaker, please.

I'd say good evening, but it's a pretty tough one for you guys up here.

I'm sorry, excuse me. Oh, sure, take that. Is that my notebook? And I'm turning in 1,784 petitions.

This is my time. Thank you. So it's difficult. We've all been hit with a lot of increases. When I just go have breakfast with my wife, it's phenomenal how much it costs. And, you know, I've suffered deferred maintenance on projects that I've worked on. So I get that we have to do something because I don't want things to fall apart. But that said, when I look at the low-income rate assistance program, I think you should look at that a little more deeply. For example, you are only allowed to apply if you are a rate payer. So if you are a tenant... your rent is going to go up because the landlord is not going to absorb that cost. So I think that's something that you should look at. And so if you can't afford to pay, PG&E does a program. But again, it's ratepayers. So that's my suggestion.

Thank you, Mr. Machakos.

I did have one other thing that I'm a little confused. I heard somebody say that there are 29 employees that are going to be hired. And when I read quickly through this, there was something about $5 million over five years. I think it's hard to pay 29 employees $5 million. So anyway, that's not significant.

Thank you, Mr. Machakos. Next speaker, please. Please.

Chuck Duby, I had no intentions of speaking, but I just need to say that Before you make your decisions, you need to ask about how the rates go, because Mrs. Nygaard shouldn't be paying 0%. We don't have a minimum flat rate. You pay for all the water you use, so obviously her meter's not working. And if you go with what she's thinking about, then you need to ask how our rates work. Thank you. Thank you.

Next speaker, please. No, unfortunately.

Ingrid Sparks, Tracy resident. So is it true that we're getting a data center here in Tracy?

No, but please continue. We'll stop questions at the end.

OK, because everybody knows that data centers, and I know a little bit about computers, OK, because that is my job, eat a lot of water. So with the rumors being out there that Tracy is getting this data center, and now coincidentally having this immense rate increase, one has to wonder if they are connected. You also mentioned that all the new construction does not have anything to do with the maintenance of current, water, pipes, and things like that. But my question is this. You're making the builders pay for putting the pipes in, putting the infrastructure. from the main that is on the street, okay, to the new housing developments. But are you also making them pay for the increased water that you need to bring in to satisfy the new housing developments? What about the water treatment center that now has to work a much harder capacity? Are you charging them fees for that as well? Because when we look at Tracy Hills, and they continue to build, and Ellis, and they continue to build, right? They are using a lot of our... water infrastructure right now, and it is not sufficient, right? So are the developers paying for that, for the increase? And if so, then why should we, the citizens, pay a larger burden instead of making the developers pay for that increase in capacity that is needed? Thank you.

Thank you. Next speaker, please.

GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING. GOOD EVENING THE MAYOR, THEY WANT TO SUPPORT IT. HOW ABOUT IF WE MAKE THE STUDIES TO SOME PROGRAMS, TO SOME CONTRACTORS YOU HAVE IN THE CITY, IT'S WASTEFUL, IT'S NOT DOING ANYTHING, AND COLLECT THE MONEY AND HELP TO YOUR COMMUNITY. PUT ALL THE MONEY FOR SOME PROGRAM THAT'S NOT WORKING, IT'S NOT DOING ANYTHING. LIKE I WANT AN EXAMPLE, ALL THE PARKS, HOW MANY PEOPLE SEE THE OLD PROGRAMS WE HAD IN THE PARKS, LIKE GARDENS AND EVERYTHING, THEY DON'T DO ANYTHING. ALSO, IN THE WINTER TIME, WE HAVE A PROGRAM ABOUT LIFTING THE LEAF ON THE FOOT. TO ME, I WAKE UP AT 3, 2 IN THE MORNING. THERE LOOKS A PARADE. THE MACHINE GO AROUND TO THE CITY. THEY DON'T DO ANYTHING. JUST GO SPEND ALL THE MONEY FOR US AND DO ANYTHING. the sweeping machine. They go around to the city, just waste the fuel, waste our money, don't do anything because all the cars in the street is parking and they do anything. Why we don't study all the programs and put it back to our water system and help to our community and all the people living for the low cost of money, we don't make money. We commute, we pay more gas now. Our expenses go more higher. We need help. But look like the city don't see that. The city look like they see like we got money, but we don't have money. Somebody got money, maybe we can donate it, right? But I don't think that's why we're here because we don't have money. We need help. We need solution. And I think this meeting has to be over.

Thank you. Next speaker, please. Okay, seeing none in chambers, do we, oh, you've already spoken, sir. We only have once. No, only once. I don't think you, I don't think you have. That's fine, you can, yeah.

Look, I'll be frank, I'm the youngest person here. I really am. I really am, and I'm living here for 30 years, was born in the Bay Area, moved here, I'M NOT A MATH GUY. I JUST LOOKED ALL THE NUMBERS. IT MAKES SENSE TO ME. YOU ALL ARE PUBLIC SERVANTS. YOU HAVE TO MAKE HARD DECISIONS ABOUT THINGS. AND WE AS THE PUBLIC HAVE TO LISTEN TO ALL OF THOSE AND TRY TO INTERPRET ALL THESE THINGS AND UNDERSTAND ALL THESE THINGS. I'M JUST TRYING TO SAY THAT A 30% INCREASE FOR THE FIRST YEAR, 30% INCREASE, 5, 5, 5, IT'S GOING TO KILL A LOT OF PEOPLE. IT'S GOING TO MAKE EVERYBODY MOVE AWAY. IT'S GOING TO MAKE EVERYBODY NOT WANT TO LIVE HERE ANYMORE. I don't know how people from my generation can actually make it in this city and in this state and in this country anymore. Yeah, I make a good wage. I make a good salary. I help my parents out when I can and stuff. And I just, I can't see a good path forward for anything here if we keep making decisions like this and we can't put a good foot forward. So I ask you all with prudence and care and consideration to not only think about the people who are at the later stages of their life, but at the beginning stages like I am, and to try to make good decisions, be good public servants, and just be good human beings, please. That's all I had to say. Thank you. Thank you.

Next speaker, please. Seeing none in chambers, do we have any online?

No, Mayor. I don't see hands online.

Okay. With that, we will go ahead and close the public hearing.

Mayor, before you close the public hearing, do you want to make one last call for any outstanding protests?

Yes. My apologies.

And then close. Thank you.

Okay. Do we have any last call for outstanding protests before we close the public hearing? Okay, and I believe everything was submitted to our city clerk. Was that a comment you wanted to make? Yes, two minutes.

My name is Sylvia Mejia. Good evening, everyone. Mayor, council, staff. I just want to say that I work for a lot of low-income families, and I know this is really going to affect them. IT'S HARD FOR ME TO STAND HERE AND SEE EVERYBODY CONCERNED ABOUT THIS. AND I COULD TURN AROUND AND SEE EVERYBODY THAT'S PROTESTING ABOUT THIS AND HOW WE ALL FEEL ABOUT THIS. IT'S A HARD DECISION FOR EVERYBODY IN FRONT OF ME, I KNOW, BECAUSE YOU'RE LOOKING FOR THE BEST FOR OUR CITY. BUT IF EVERYBODY IN THIS ROOM, BECAUSE I'M ASSUMING IF I SAY, If you raise your hand, you're going to see the majority of the people here are against this. And I can't imagine the city and all those people that don't have a voice tonight. So I feel like there's a lot of things that need to be looked into. Maybe see what other cities are doing. I don't know. I just think that it's something that needs to be REALLY LOOKED INTO TO BE ABLE TO PROPOSE SOMETHING TO TAKE EFFECT JULY 1ST. YOU KNOW, I KNOW THAT I'VE SEEN A FEW OF YOU GUYS, I'M SORRY, I'M A LITTLE NERVOUS, I'VE SEEN A FEW OF YOU GUYS IN TOWN, YOU KNOW, WHEN WE WERE TRYING TO GET THESE SIGNATURES TO HELP THOSE PEOPLE THAT DON'T KNOW, THAT WEREN'T AWARE, AND I MYSELF, AND I'M LIKE, HOW AM I GOING TO BE ABLE TO DO THIS WHEN I MYSELF, YOU KNOW, RENT AN APARTMENT AND I'M GOING TO BE PAYING A RATE AND I'M GOING TO BE PAYING A RATE AND I'M GOING TO BE PAYING A RATE THAT'S GOING TO BE BASED THAT'S GOING TO BE BASED THAT'S GOING TO BE BASED ON WHATEVER EVERYBODY ELSE ON WHATEVER EVERYBODY ELSE ON WHATEVER EVERYBODY ELSE IN MY DUPLIX USED. IN MY DUPLIX USED. IN MY DUPLIX USED. BECAUSE I'M ASSUMING BECAUSE I'M ASSUMING BECAUSE I'M ASSUMING THAT'S HOW IT'S GOING TO BE. THAT'S HOW IT'S GOING TO BE. THAT'S HOW IT'S GOING TO BE. THERE'S NO METER. THERE'S NO METER. THERE'S NO METER. SO THERE'S A LOT OF THINGS SO THERE'S A LOT OF THINGS SO THERE'S A LOT OF THINGS TO TH

Ma'am, we did have an individual raise their hand.

Understood. Did you speak on this item? I can't remember.

Okay, you have two minutes. Again, I'm Smitty, and I was just concerned about the increase for us SENIORS, BUT NOT ONLY THAT, I SAW ON THE WATER BILL THAT SENIORS ARE SUPPOSED TO GET A DISCOUNT, OKAY, FOR THE GARBAGE BILL AND THE WATER BILL. BUT WE'RE NOT GETTING THAT DISCOUNT. I DON'T SEE IT. AND SO, AND THE OTHER THING WAS, HOW MANY FLIERS GOT MAILED OUT? I HEARD YOU SAY THAT. HOW MANY? I didn't hear it.

It was approximately 27,000.

Anyway, I was wanting to know how many flyers got mailed out. It seemed like they said a low number, under 20,000. 27,000. Huh?

27,000.

27,000. And what's the population here? Almost 100?

It goes by parcels.

You know, say it's 90,000. So you sent the flyers out to one-third of the people? No. And nobody else got the, I mean, I didn't get nothing in the mail. I only happened to hear about it because I read about it. So all I'm saying is not all residents that are important about this got anything in the mail about it. No notification, no nothing. I'm thankful I was able to come here and at least listen and say something. Thank you.

Thank you. Unfortunately, everyone only gets to speak once. I can't remember if you spoke.

My name is Ruben Cordova, and I work for the city almost 30 years. I used to be a mechanic at the wastewater and water plant. And we had a very good crew, and we used to stop the water plant in the wintertime when there was no big demand, and we used to have enough capacity FOR THE CITY TO RUN WITHOUT THE WATER, JOHN JONES WATER PLANT. AND WE DID THE MAINTENANCE AT THE WATER PLANT. NOW I DON'T KNOW WHAT THEY'RE DOING RIGHT NOW. I DON'T KNOW WHAT KIND OF MAINTENANCE THEY HAVE. BUT THEY BUILD TRACY HILLS AND ALL THE SUBDIVISIONS. SO I THINK THEY'RE PUTTING A BIG LOAD ON THE WATER PLANT. SO I THINK SINCE THEY WENT OUT THE WRONG WAY, THEY SPENT MILLIONS OF DOLLARS ON THE PIPELINE, RIGHT? AND NOW IT'S OVERLOADED. SO WHEN I USED TO WORK THERE, PUBLIC WORKS USED TO BORROW MONEY. THE OTHER DEPARTMENTS, WE HAD ENOUGH MONEY So we never had no problems running out of money. So something is wrong from the department. Maybe the main supervisor, they're not doing their job or something. Yeah, and we used to work on the big pumps. Now probably they're not doing that. So they need to take a look at the maintenance supervisor to see what they do in the maintenance. Thank you.

Thank you.

Okay. Has anyone spoken that hasn't spoken yet? Okay. Do we have any online?

Yes, Mayor. One hand.

Go ahead.

Leon Lee. You're unmuted.

Hey, how's it going? We were at the council meeting, but we had to run because we've got to put our kids to sleep. Currently joining the Zoom meeting from Walmart. I just want to say we own one parcel in Edgewood. I got the notice. I'm not sure a lot of my neighbors have been checking, but I wanted to clarify, is this our only chance to protest was today? Because we don't have a lot of... you know, just how fast things went forward and with, uh, you know, how deceptive the mailers looked, uh, you know, a lot of my neighbors, uh, you know, I spoke with them. They, you know, at least in Edgewood, a lot of us weren't properly notified. Um, you know, a lot of it might've been junk, but, um, you know, if we were under this, uh, 51% of the votes, uh, You know, I don't know. It was designed by intent to be like this way. But I wanted to clarify to see if we have another chance to fight this thing. Because, you know, June 2nd, I mean, we all went out to vote. You know, if we're not paying attention, this is, you know, we're kind of just. We're pretty much just hoodwinked by this whole situation. So I don't know if there's any other recourse in the future. We can have some kind of amendment or some kind of special measure to renegotiate the terms of this. Yeah, I got 20 seconds. I just want to say thank you to Miss English for collecting those 1,700 signatures and everybody who came out tonight to fight this thing. Because, yeah, it's not right, you know, what's going on, how this whole thing was conducted.

Sir, your time's elapsed.

Thank you.

Do we have any additional speakers online?

No, Mayor, no additional hands raised.

Okay. And then has everyone had an opportunity to present their protest to our city clerk? Any last call?

Okay.

All right. With that, I will go ahead and close the public comment period for Item 5A at 9.33 p.m. And... Mayor?

Mayor, given the number of protests we've received, I'd like to request maybe a five to ten minute recess so that I may count them and report back.

Sure. All right. We'll take a brief recess for Ms. Kintania can calculate. Thank you.

Thank you.

Just to let you guys know, since we're in recess, I didn't have a chance to say that our increase on the average, not the high, not the low, it's going to be $3,000, $3,200. You're going to be paying by next July. That's including your sewer and your garbage.

All right, folks, our city clerk is back. I'm going to ask folks to take their seats. And I will go ahead and turn it over to Madam Clerk.

Thank you, Mayor. Upon review of the protests we received, because there are 27,599 parcels subject to the rates, the number of protests received is actually less than one half. So we did not receive a majority number of protests. The number of protests received was at 2,629. What was the number? 2,629. 2,629. Thank you.

All right. So per the 218 process, that particular process fails when it comes to counsel for the decision.

That is correct.

All right. So we had a number of public comments about a number of questions. I had asked staff to try and list them and I'm going to ask staff to go through your list and answer the questions you have. Anything that you've missed, I'll try and add at the end and have you respond to those as well. So I'll go ahead and turn it over to Ms. Lightworth or staff to respond to the questions as you have them.

Okay. Thank you, Mayor. If you will allow, I'm going to kind of go through them in order as I heard them and then myself or the appropriate member up here will try to answer the question. The First question I think was from, and I'm not going to get all the names, but Mr. Tanner talked about, asked about whether or not we were getting, folks were getting new meters. And I'll have Stephanie respond.

Yeah, so the only, when a meter is over 20 years old or meets its life expectancy or we have a zero meter read, then that meter does get replaced out. So just because the fee is going up doesn't mean they're going to get a new meter.

All right. And then a gentleman asked about are we going to be replacing fire hydrants? He talked about exercising the fire hydrants. And maybe you could talk a little bit about the process that the fire department goes and the requirements to make sure that there's proper pressure.

Correct, so we have various pressure zones within the city and the fire hydrants are expected to meet a certain pressure zone. Those are tested by the fire department. If a fire hydrant gets hit or a fire hydrant has an issue, we do replace those. But I can find out the life expectancy for you, but I do not know what the life expectancy of a fire hydrant is at this time.

Another question was, do we have enough water to sustain new development? And I think this was in the context of some of the larger developments that we have, residential developments in particular. Stephanie, can you maybe talk to us about how water supplies are secured?

So when a development comes to the city, they have to do what's called a water supply assessment. And that water supply assessment determines whether or not the city has the capacity to be able to serve that development. The question specifically was about Tracy Hills. Tracy Hills purchased water through Byron Bethany Irrigation District that the city treats and supplies to that community to meet their water supply.

Okay. The 29 full-time, or 25 new employees was asked if they were going to be brought in all at once or staggered. I think the goal would be to hire the employees in a staggered fashion. Obviously, we can't even absorb 29 employees on day one, but that would be as the funding does come in. Additionally, I'll tag it. I know there's a later question about the use of consultants. The city does use consultants. FOR A NUMBER OF REASONS FOR PERSONNEL, THERE ARE OFTEN A SUBJECT MATTER EXPERTISE THAT IT DOESN'T PAY TO HAVE ON STAFF WHEN YOU'RE GOING TO BE USING THEIR EXPERTISE, YOU KNOW, SIX MONTHS EVERY FIVE YEARS. FOR EXAMPLE, IN THE CASE OF A RATE STUDY OR IF YOU HAVE A PARTICULAR specialty of an engineer, a traffic engineer or a structural engineer, we don't necessarily hire those people full-time and take on that full cost of a full-time employee all year long for multiple years if we're only going to use that expertise. That's why you will see Council, you've approved several on-call lists so that we can pull in those subject matter experts for those particular projects and just pay them on an hourly or per product basis. So for those 29 employees, THAT WOULD BE STAGGERED OVER TIME, AND IT IS, YOU KNOW, WITH GROWTH, OBVIOUSLY, A LOT OF PEOPLE HAVE TALKED ABOUT HOW LONG THEY'VE BEEN HERE, AND OUR POPULATION HAS GROWN AS WELL AS OUR STAFFING HAS HAD TO GROW TO KEEP UP WITH THAT AMOUNT OF INFRASTRUCTURE AS WELL. Someone asked about the list of what I call the CIPs or capital improvement projects. They are listed. That $68 million that is going towards the deferred maintenance, those were actually listed in the reports that we have brought to council. And it's available on our website. So we can, if you need help, we're happy to point you to what those particular CIPs are. They're actually listed out and the costs for those and in what years those, what we call CIPs, those projects will get built. I'LL HAVE STAFF TALK LATER ABOUT THE IMPACTS OF LOWERING THE RATES IN THE FIRST AND SECOND YEAR. WE HEAR THAT FOLKS ARE NOT UNDERSTANDING OR NOT WANTING THE RATES TO BE AS HIGH IN THE FIRST COUPLE OF YEARS. A LITTLE BIT ABOUT, QUITE A BIT, ABOUT WHY THOSE RATES HAVE TO BE ADJUSTED HIGHER IN THOSE FIRST FEW YEARS. WE KEEP TALKING ABOUT THE DEBT RATIO. SARAH, I DON'T KNOW IF THERE'S ANY MORE YOU WANT TO EXPLAIN ABOUT. we we can council can approve a rate that's lower than the 32 32 for example um but we can't tonight tell you what the impacts will be which which things won't get done um we will we will not be able to tell you that tonight right um we would need to go back with the consultant rerun some of the numbers in the scenario and um then come back and say you know one percent two percent five percent reduction in any of the years, how that impacted. Again, it's compounded over time, right? So if you don't pay as much up front, what you pay later will increase from what it is today. Same thing on a mortgage. If you pay extra on your mortgage early on, it reduces your rate later on. But if you wait to the very end to pay off your car loan, for example, you don't get as much of a savings because the interest has already accrued. Okay. Let's see. There was a question as to how or why we compared certain cities. There was a Bay Area city. I think there was some up towards Sacramento. I can't remember if it was Roseville, Vacaville, or... Something out that way. We're not just looking to the region, but, for example, they're looking at different demographics. So it's, you know, cities that are similarly situated to us in terms of whether that's the size, the age of their infrastructure, the mix of the age of their infrastructure, new as well as old. Stockton, I think Stockton was mentioned. Stockton actually has... water district as well as their own water facility and that changes the costing of things and so it's not apples to apples and that's why we didn't include Stockton but Manteca is a pretty good close in proximity and has a similar enough makeup so that's a that's why we included the cities that we included. We hear the comments about street sweeping. That's separate, but city managers, here's the comments, and we'll take a look at that. There was a couple of folks who suggested that if we could spread this over a longer period of time, say six, eight plus years, and I'll have Director of Finance, Ms. Castro, explain the constraints that we're under as to why we have to do it in five-year increments.

Thank you. Each rate study is only looking out to the future in that five-year window. So if we spread these rates over a longer period of time, those future years haven't been studied as to what the costs are. So there is a... there's a chance that you may not fully cover the cost to provide the service in those outer years. And I will defer if that is a legal requirement for it to only be five years, but I do know five-year rate studies are the industry standard.

The city can only adopt five years of rate increases at any one time. So you can only go out for five years.

question came up about how do we know how much developers are paying? Where can we see that? I'll have the finance director talk about we have nexus studies, we have where it is in our budget that we have to that we produce these numbers.

So every year, the city produces a report called the AB 1600 report. And that is publicly available on the city's website. But it, it details the amount of developer impact fees by the different programs whether that be water, sewer, the different developer impact fees and what projects those funds are going to.

Data centers? The city of Tracy has not been in receipt of any permit requests for data centers. We understand that there was some chatter online a few months ago about a data center going in along the city border in the county. By all our attempts in working with the county, they also do not have any permit in for a data center here in Tracy. What we can tell you, there's a plot of land out on Schulte Road, and there was a development, an industrial development that was approved. This is through the county, so I'm just repeating what I heard. in the county in 2020-21 timeframe. They haven't broke ground yet. That was for some smaller warehouses. But because they're in the county, they don't have the infrastructure for the water and power demands. They're on wells, and that is by our experts here in our planning are saying that that particular land, as it currently is in the county, a well would not support that type of industry. But We are not in the city is not in receipt of any permits requesting data centers Mr. Huffman Mentioned the treasurer's report where we the city has assets in excess of 700 million dollars that are invested. I will have Sarah Castro our finance director talks a little bit about the different pots of money, if you will, that we have and that each one has specific uses that you can and can't pay out of, so. Thank you.

So while the treasurer invests all of the city's money, the city is using fund accounting, right? So that means our various funds make up that 700 plus million dollars that is in the bank. They each have their own unique requirements for use. When we talk about our water funds specifically, it is an enterprise fund, meaning that it is intended to be self-supporting, essentially only collecting the cost to provide the service. No more, no less, and it is not intended to be subsidized by any other funds. So when we say that in this case with this rate plan that the general fund is going to loan it $1 million, it must be repaid back to the general fund with interest so that it maintains that separation. So even though there is a larger amount of cash in the bank, it belongs to other funds within the city. Is that a legal requirement? Yes, that is legal requirement.

Okay. Next, data centers, I answered that. There was a question about a senior discount. The city does not currently have a senior discount. I'm not sure we are able to, but also there are some opportunities if council directs us to look into options to expand our low income program. That's the LIRA program. We do have automatic enrollment. If you are enrolled with PG&E once a year, we reconcile the records and we will automatically enroll those who are eligible. We currently have about 5,000 accounts. So of the 27,000, 5,000 of those are currently receiving the low income waivers or deductions, if you will. How many flyers got mailed? 27,599. That's all I've got. So I'm sure, Mayor, if you had others or...

I have a couple. There was the question about the substantial tax increase. Oh, yes.

I'm sorry. Yes, yes, yes. The question about, there was a discussion under the general fund loan that it would have to be paid back, and I think the term substantial, the consultant used the word substantial, but we can talk about, we also have rules on interest that we can charge ourselves. So I'll have Sarah.

The loan from the general fund, as I mentioned, it would be repaid with interest. We use the local agency investment fund rate, which is the same rate that the city would earn if we are investing funds. The expected interest rate of the loan would be around 4.41% repaid over those five years in the rate plan. It amounts to approximately $88,000 in interest repaid to the general fund through that loan.

And then there was also the question from Mr. Cordova about does the water plant still shut down? You know, maybe maintenance needs to be performed. And yes, our water plant does shut down, Ruben, every year still from November till February, sometimes March, depending upon the need of water demand at the time. And that's when all the maintenance is done on that facility.

Okay, so I had some additional questions I'll ask staff to respond to. One was about the use of potable water. If staff had an opportunity to verify the consultant's report. There was a question about warehouse and industrial rates. A question about why rates did not go up over the period of the six years or so ago when we had the last study. Is there an opportunity to force developers to pay beyond the impact fee amounts? And would an aquatic center have any additional effect?

I can start. I can start, yeah. So the potable water, potable water is drinking water. Potable water is the domestic water that goes through our pipeline. So I'm not sure what The question was because we are utilizing potable water.

I think it was about if non-potable water is being used in other areas.

I wonder if she meant like recycled water or non-potable water. I don't remember who asked that. So in certain parts of town, it's the newer construction that was required to install what we call purple pipe so that they would have the ability to have both potable water to their homes and then recycled water for irrigation outside. We are just getting to... We've been working on... How many years, Stephanie? You want to talk about our recycled water?

Yeah. So recycled water, we are currently in the process. Recycled water cannot go to residential homes. That is not a legal use in the state of California. It cannot go to homes for irrigation, recycled non-potable water. It can be used in park strips, it can be used in parks, it can be used in cities' medians, but it cannot, and it also is going to be used to supplement water in, like Tracy Lakes, the water will go into their lakes and they will use that water for their irrigation. But it cannot go directly to homeowners to utilize. It's Title 22.

Mayor, as to your question about whether or not we can have developers pay more than what their impacts, unfortunately not. There's a Nexus study that's done in which their impacts are addressed. EVEN IF WE WERE TO SAY WE WILL NOT APPROVE YOUR PROJECT UNLESS YOU PAY X, Y, AND Z MORE ON TOP, THERE HAVE BEEN CASES WHERE SUBSEQUENT TO THAT THE DEVELOPER HAS COME BACK AND SUED AND THEY HAVE ONE WHERE THEY BASICALLY SAID THAT THE CITY PRETTY MUCH HELD THEM HOSTAGE. SO WE CAN ONLY, YOU KNOW, CHARGE BASED ON WHAT THE IMPACTS ARE AND WE DO THAT BASED ON THE STUDIES THAT COME OUT.

AND THEN FOR THE WAREHOUSE, APRIL, CAN YOU BRING UP THAT SLIDE?

Channel 26, can you display the PowerPoint please?

Thank you. Just to address, there was a speaking about warehouses and about commercial not paying and that we did not include on this slide what was done on a notice that was put out on the website to identify the error. This slide is a slide that shows the new proposed rates. That is why the existing rate is not on there because this is only to identify the rates proposed from fiscal year 27 through 31 for all of the categories. And that each of the categories, categorical users had to, they're required that everybody pays the same price uniformly across the board for water.

So Stephanie is that tiered rates that are going away?

The tiered rates are going away and it's going to that uniform rate on the bottom. Everybody has to pay the same price regardless of what classification you are. Megan might be able to expand on that a little bit.

My understanding from the consultant is that the reason there is a decrease in the fixed rate for the larger meter sizes is because the cost of service analysis assigns costs to either fixed costs, which are costs that don't vary as much per unit of water used, and variable costs, which do vary more per unit of water used. And there's less costs under the new model that are being assigned as fixed costs. So although the tiered rates are going away and everybody's paying the same rate per unit of water used, the amount of costs that are being brought in through that meter charge are less proportionately. And then...

There was a question about verifying the rate study and who our SMEs were, our subject matter experts for the city. Finance, public works, city manager's office, we are all combined the subject matter experts. All of the information that's provided for this rate study comes from the city and from our munis system, from our billing system, from what we see in the field, from our water master plan. So all of the information is given by us to the consultants who run their model. We are all the subject matters experts.

And then the effects of an aquatic center on the rate payers. obviously their home usage will not be impacted by the aquatic center. It is the way that the city or the residents will feel any kind of impacts of an aquatic center is the day-to-day running of any of our facilities, right? That we, that we, that's how, whether it's, you know, running the electricity here at city hall, whether air conditioning, whether to maintain a building. So it won't show up in their water rates, so to speak. But if the question is, do we have enough water to fill up a aquatic center, that is the process we will be going through as we do a water, you know, do the aquatic center. As Stephanie mentioned, whenever a developer is coming in with a project, they've got to do a water analysis and availability study. So that will reveal itself, you know, in that process. But aquatic center is going to take a significant amount of water and we won't be able to use recycled water.

Okay, then the last question I think I have is, you know, why didn't these rates go up last time when we had a study?

Mayor, The last time we conducted a rate study was in 2017. The rate study was completed in 2018 and we raised rates in 2018 and 2019. The last three years of that rate plan would have been 2020, 21, and 22, at which point we opted not to increase the rates during COVID. Right around 22, staff was bringing forward a solid waste rate study that council adopted, I believe, in 23, followed by the wastewater rates in 24. So as soon as those were completed, staff moved into studying the water rates, which you are seeing now. Okay.

Quick follow-up question. Mayor Patem. So let's just, before everybody jumps out of their chairs, let's just say that we did this rate increase but then we get we receive a grant and then we realize we don't need 20 employee 29 employees so we may not can would that allow that maybe we don't need those additional increases in years three four and five is that or we set in stone that those are going to go up or if certain things happen would that prevent How would that process work, if that's possible?

Mayor Pro Tem, yes. If situations changed, and to your point, if the city received a grant where less revenue from rate payers was required in that upcoming fiscal year, the council could in that year either reduce or eliminate the rate increase in that year.

And then, so we had a workshop based on various scenarios, several scenarios, weeks, months ago, there were three various scenarios that were prepared for us. Some of them did have lower rates that were considered. When asked earlier if we were, if we managed, if we lowered rates in at least the first two years, your response was that we don't know the impact of any particular percentage change. However, we do know some, and those were the prior scenarios that were presented. For the three scenarios that were previously presented, should we choose an alternate scenario, would that get us to a stabilized budget such that in any future study we could have the potential for a slow COLA rate, you know, 4% to 5% over all those years? Would it get us back on track to do something like that?

Mayor, yes, that is correct. If my memory is correct, and Stephanie will correct me if I'm wrong here, the three scenarios that we brought forward to council back in February were the scenario three, the lowest of the rate increases did not address all the backlog of deferred maintenance, but it did address some of the maintenance. So it would allow for meeting of the debt coverage ratio in the first year. It would be very close, very, very close to that 1.20, meaning that if there were any unexpected expenses that it could cause us to not meet that debt coverage ratio, but it does. I believe it's still a little proactive, and that is why council at the time opted to go with the first option, which was proactive instead of reactive, but it does meet the essential needs.

Okay. And for the, what were the, because essentially what we're hearing over and over again is that this is too high of a spike for our community members. So what was the percentage in the alternative rates?

28, 28, 4, 4, 4, 32, 32, 5, 7, 5, 3, and I believe it was 35, 32, 7, 5, 3. Is there a slide that you could find so we could see all that at once? Okay. We would have to go back to, I believe you would have to go back to the February 7th, 2026 meeting and the slideshow would be on there. Yes, February 17th. And that was a representative of a high, medium, and low rate is what was presented to you. And the low took into consideration of kind of the status quo. Things would remain where they're at. We would be able to do some of the smaller maintenance items, but that we weren't going to get ahead.

We wouldn't get ahead and be the status quo, but it would get us to a position such that we would overcome these spikes for the next cycle?

I don't believe so. Megan was, yeah.

Yeah, this is probably a question for our consultant, but ultimately it's hard to say what the rate increases would be after the five years. But if you don't address this kind of deferred maintenance and these, you know, expenses that have accumulated, then the risk of having higher rate increases in the next five-year period would be higher.

Okay. So those are the questions I had. I'm going to return to council for additional questions. Mayor Pro Tem.

So if you could back up. So the scenario one that we did adopt has 35-32-753, but that's not what we're looking at tonight because there were some things that were done, correct? Correct.

That changed that. Correct. They were able to lower from a $2 million loan to a $1 million loan. Which reduced the first year, so they were able to smooth it out a little bit. So it went to 32, 32, and then 555. Okay.

So if we went to the third scenario... 28, 28, 444. Would that same change happen, or is that one set in stone?

Until the modeling was done, I don't think we could...

Could we defer to our rate consultant with Black & Veatch to answer that question?

I don't know if he's on the line still or not.

I see Greg online.

I know he was trying to reset his system.

Can you hear me?

Yes.

Okay. I wouldn't say it's set in stone, but we would have to remodel that Lois scenario for staffing. We were trying to meet some of the bare minimum to not allow staff further deterioration of the system, but it still meant that all of the valve exercising and all the meter replacement, all of that was not going to really be occurring at the rate that needs to happen to be able to catch it up at that 2828444. So we could go back and look at some of those different changes I do want to point out that the rate structure change moving towards both cost of service and moving towards a uniform rate, what we're really experiencing is the biggest impact of a $1.50 tier one per unit going up to $2.95. So the rate change by itself starts getting to the revenues that we need almost before any other costs are being added into it. And what was proposed or accepted to try to build into the rate study was that 29 FTEs phased over five years And so four or five positions in the first year and five positions the next year, then it ramps up to nine. So that was phased over the five-year period. Moving to that 28-28-4-4-4, you're probably still going to need to, at some point, get back to those FTEs that you need to actually do the work, but it would just go outside of that five-year period.

All right. Do we have any additional questions from Council?

Council Member Evans. Thank you, Mayor. First of all, I just want to say thank you to staff for the report and the study. I think as we discussed, I think the process was a little bit flawed. It was flawed. I did meet with staff and you guys have my comments, recommendations up to you how you want to apply those. But I do think the lessons learned was the mailer. I think we need to take a look at that and come up with the best practice because while it met the minimum requirements, I still think that It didn't meet the public's requirements, obviously. It was flawed. I also agree with comments about the Bay Area. In my personal opinion, we should only stick for comparisons to Central Valley. I think whenever anybody sees the Bay Area, it's kind of a trigger. We're not the Bay Area. It's not a fair comparison, and I see Pleasanton on the list, and Pleasanton's a completely different demographic, and they're having major water problems right now, and There are issues with water. I think ours pales in comparison to what's going on there. So my opinion on that is it's a poor comparison for that particular city. So I think we should look at that in the future for other comparisons. It's pretty clear people don't want that initial rate. They want it minimized, basically. So we did get 2,629 signatures. That's a lot. It may not meet the requirement for a protest, but I think it warrants us looking into this as much as we can, doing our due diligence and revising or reviewing and coming up with a determination if we want to revise our first decision on this. When we first looked at it, you know, my opinion, we didn't get a lot of public comment at that time. This is completely different scenario, but I think council as a whole, I'll speak for myself, looked at overall costs to the rate payers. And for me, I wanted to minimize that overall cost. And I think the solution we came up with did that, but it is very clear that that pain up front is not going to be digestible to our community. That's, abundantly clear tonight. So I do want to look at other options. And I guess my questions at the moment, I want to look back into the question about dipping into the investment fund, specifically the emergency fund. And I know I got the answer on this. It's half a billion dollars sitting there. And is there any, I guess, what's the criteria to consider it an emergency to use some of those funds? Is there any clarity we can get on that?

Councilmember, are you referring to the general funds reserve policy or the enterprise funds?

I guess either one.

The general fund is restricted that emergency contingency policy only applies to a major emergency where funds would be needed and would require a four-fifths vote of counsel. In your enterprise fund... What's a major emergency, I guess? I'm sorry, I know I'm really... Fire, earthquake...

Okay, like natural disasters.

Natural disasters. Okay. Things of that nature.

Public safety is involved and... But I guess it's like an imminent public safety issue that needs to be immediately addressed, not kind of looking at potential public safety if we don't address this, but this doesn't meet that criteria. Okay. I guess I just want to be sure, have we really looked into that 100%? Like, I mean, is that the last word on this is... Because we do have money sitting there. This is a very concerning issue.

Councilmember, any funds that came outside of the water fund itself would have to be on a loan basis. The enterprise funds are meant to be standalone support. They're meant to collect the cost to provide the service. So if you borrowed money from any other place, including general fund or wastewater, solid waste, any other place, it would have to be repaid with interest. So I think it may compound some of the problem longer term.

Okay. I just wanted to be certain on that one. And I know I'm kind of going back on some items here, but I just want to be absolutely sure. On the warehousing rates... I felt like the answer was good, but I wasn't fully confident. It started with my understanding is from the consultant is, and the consultant didn't chime in. So I guess are we certain the warehouse, using a broad term, the 6, 8, and 10-inch meter sizes, are we certain that those numbers are where they are and they cannot be adjusted? I just want to be sure that we're 100% positive on that.

We will defer to our rate consultant to provide some expertise on that.

Okay. Go ahead. I sent the unmute request. Go ahead.

Okay. Can you hear me?

Yes.

Yes. So you are correct that the base charge for the two inch through the 10 inch meters shows a decrease in the early years. That change isn't because the larger customers are paying less overall, it reflects an update on how costs are split between the fixed cost meter charge and the volume-based charge. So the city continues to use the industry standard for meter ratios consistent with American Water Works Association to assign costs directly to the meters But it's that cost of service where we had to actually look at, say, for the 10-inch diameter or meters. For those 45 customers, we had to actually go back and make sure that the fixed charge is only – adding the meter size related costs, the public fire protection, the billing services into that bracket category. So what we're seeing from that current, say, 10-inch rate at $1,418 moving down to that $971.80 is really not only the reallocation, but it's actually a correction to make sure that there's not any subsidization or anything going on that they're actually paying for their fair share of what it should be under this new rate structure. And then we're really then getting to a point where increases are across the board and the uniform rates are, everyone is paying that same cost of service for every unit of water that they're used. And that's where commercial customers, industrial customers in the past, some of their rates, their volume rates may have been actually fairly close to a system-wide uniform rate. And that's why they're not seeing that big of adjustment. Whereas the Tier 1 residential rates that were very low at $1.50 per CCF, that's where we're really seeing that biggest increase to be able to get where everybody is paying the same unit cost for water.

Okay, thanks for that. The first time the question was answered, there was something that led me to believe there was more than one cost model that could have been applied to this. Is there any other cost model that we could utilize, or is this it?

Um, well, uh, under California law, they really want that cost of service, uh, to then be able to allocate the cost based on, uh, where it needs to go. And so we've applied that and we are using the AWWA standards. for allocating those costs and kind of dividing it up based on the meter size. So that's pretty much by the book standard and accepted across the United States and accepted in California.

Okay. And when you say the state really wants us to do it that way, do you mean that they require it?

Well, the state wants to see that there's appropriate costs in every bucket and that you're not adding in other types of costs that wouldn't be applicable. And that's the process that we go through when we do the cost of service component. And that's what we have done here to be able to reset everything. Cost can shift and change over time. and and that's where uh you know and this is another reason why everybody says every three to five years you should do a cost of service study because we want to make sure that these costs are allocated in the proper buckets and then you can do the revenue increases on top of that and that's exactly what we've done here uh and you know but that did shift and change the model from what had previously been in place back in 2017.

Okay. Thanks for that explanation. I guess the only other two items I have is it was noted that we can look into expanding the senior discount. I think it's Lira, right? I guess what will that take?

Not the senior discount, the low income. We don't have a senior discount.

Okay. I know we've talked about senior discounts in the past and there was some complexity there that think there was a reason that it would be difficult or is there a fixed income discount or something like that?

Most cities do a low income discount rather than a senior discount to avoid any claims of discrimination.

That's right. That's what it is. Thank you. Okay. I do recall that now. Okay. So what will it take for us to look at expanding the low income discounts?

Three council members directing staff to go do the work.

Okay. Can I get a second?

Second. I'll support that. I just want clarification on that. Would that expand eligibility or increase the subsidy, or would you be looking at both options?

We'd bring back a discussion item for council to tell us what they'd like us to explore. We could come with a few suggestions of what maybe others might be doing. Okay. And during council items tonight, we would ask that a council member get the support of two other council members and direct staff to bring back an item for discussion where you can give us some more specific guidance and then we can go work on a program.

Sounds like we have that. Thank you for that. And then remodeling the 28-28-4-4-4 model to take the same direction for that. I would be curious where those numbers end up.

That is, are you asking if council gives the direction tonight for us to go back and remodel? I think that's your question. Yes, council can do that. It would, we could run those numbers, but it would change the date, the effective date of this, so it will reasonably increase costs from anything that we would have studied back in February, for example, because we currently are using a July 1 start date. It would probably, I don't know how long it would take the consultant to rerun these numbers, presumably not as long as it took us to get here as they were developing the model. But I would imagine it's a few months. You have legislative break that's coming up.

A few months, we think.

I don't, is Greg, are you on the line? Yes. Are you able to provide an estimate if we were to have direction to go back and model scenario three off the top of your head, what type of timeline would that take to run that model and then get back to council?

And before the consultant responds, I just want to be sure, I believe the reason that we were talking about is because of the errors on the first run on this report, correct? So with the new information that we have, that's why we would potentially have different numbers, correct? So I would hope that they would work expeditiously to get those numbers.

So, yeah, we can quickly respond to meet some of the city's deadlines and be able to review it with staff. The model itself didn't have any errors. It was some of the cut and paste tables that went into the documents that in that year three had that error that was corrected in the published documents. So in the scenario for the 2828444, you know, is the request to say what else can be done? Are you asking for multiple general fund loans to try to buy it down and and reduce the early years where that 4-4-4 then would actually increase? I guess I'm trying to quantify exactly what the ask is.

Sure. Well, initially we started off with the first year being 35, and now it's 32. I guess 28 sounds even better. I mean, one of the main concerns that I'm hearing is, you know, eating this first year you know, major increase is going to cause people heartache. So I'd like to see where those numbers come out if they change based on the new numbers. If they don't change, then I don't think it matters.

Can I ask a follow-up question? Because I think I'm hearing what you're saying. So the 32-32-555? The numbers that we presented for the proposed rate, that is 32-32-555. Right. Yeah.

Okay. Well, does the 28-28-444 change or is that just what it is right now?

That still remains 28-28-444. Okay.

Then there's not going to be any adjustment then to moot point, I think. Okay. Yeah, I guess then I'm just asking for other options.

Do we have the slide? If I remember correctly, there was actually, I thought, a dollar amount associated with these to show the ratio of what a 32% increase versus a 28% increase. My recollection, in dollars, it was not a large dollar amount between, and that was one of the factors that council considered when they were looking at the difference because... between 28 and 32%, the actual dollar change was not...

It was $3. Was it $3? I think it was $3, yeah. I don't think it was $1.

I'm pretty sure there was a slide, so we're just going to take a minute.

$28 is still too high. Victoria, I don't think we have a slide.

$50. Is there a slide that shows what you get? I don't think all on one slide. I think she thinks she talked about it.

Oh, oh, yeah, this slide. Slide 34. For counsel on slide 34, this is from the February 7th February 17th hearing that we had. You can see scenario one, two, and three. So council, the difference in year one is less than a $4. It was a little bit less than a $4 increase from scenario three to scenario one. So that's the 28%, whatever the other percentage is, and then the 32%. in year one, a $4 increase from $28 or 28% to the 32%. I don't know if that's helpful or not, but just to show you kind of what it looks like when you roll it out in dollars. I think that was one of the factors that council considered, considering what you can get in terms of catching up from scenario three to scenario one.

And was scenario one based on the 35 or 32? 35, right? So that's even going to go down

It goes from $71.04 to $69.00. Right. So we're talking two bucks, basically.

Okay. Okay. All I can ask for other than that is more options, but I don't know if staff's prepared for any other options.

So if we go, yes, please, consultant.

So if I, you know, add a little bit more flavor on this, on, say, year one, where we're looking at an overall 32% revenue increase needed to be able to meet and make all of those numbers. If that was a, given the current model, if that was a 28%, then over five years, because it has that cumulative effect, that would be a reduction in revenue of about $5.2 million, just going from that 32 down to a 28. And that represents on average $1.90 to $2 per month on an average bill.

So I think what we need clarification on is what we heard was that scenario three was the way that it was the bare minimum to keep us going as we are. So I think... No one wants water rates to go up, but we also don't want to be in default and we don't want our infrastructure to fail. So I think that's where we're at. So if we were to go lower than 28, would we be in default?