HomeMy WebLinkAbout06-18-2019 Item 10 - 2019 Water Rate Adoption
Department Name: Utilities
Cost Center: N/A
For Agenda of: June 18, 2019
Placement: Public Hearing
Estimated Time: 20 minutes
FROM: Aaron Floyd, Utilities Director
Prepared By: Jennifer Metz, Utilities Project Manager
SUBJECT: 2019 WATER RATE ADOPTION REVIEW
RECOMMENDATION
1. Approve Water Fund budget for FY 2019-20 as presented at the June 4, 2019 City Council
Meeting; and
2. Adopt a Resolution (Attachment A) establishing water rates for Fiscal Year 2019-20 and
2020-21.
DISCUSSION
The goal of the rate setting process is to provide sustainable funding to the City’s Water Fund for
operation, maintenance, and capital project needs. Rates must be developed that are equitable,
and cost-based in compliance with California Constitution Article XIII C and D, commonly
referred to as Proposition 218 (Prop 218).
The City implemented the new water rate structure and sewer rates for fiscal year 2018 -19 based
on the comprehensive Water and Wastewater Cost of Service Study (2018 Study). In January
2019, the City hired HDR to review revenue under the newly implemented rate structure and
rates to confirm Council’s goals were being met. Findings from that analysis (Attachment B)
include an increase in Water Fund revenue from fixed charges to achieve revenue and rate
stability and predictability. Prior to completing the water rate structure changes, 14 percent of
water fund revenue came from fixed charges and 86 percent came from variable charges. Under
the water rate structure that was implemented in July 2018, 25 percent of water fund revenue is
from fixed charges and 75 percent from variable charges. Although new capital costs were
identified during financial planning for the 2019-21 period, recommended water rate increases
are in line with the projected rates identified in the 2018 Study.
Based on the recommendations of the Water and Wastewater Rate Study Update, the City’s
proposed water rates for 2019-21 are provided in the attached Resolution (Attachment A). Water
rates are proposed to increase 5.5 percent in 2019-20 and 5.5 percent for 2020-21. Under the
proposed rate changes, a typical single-family home using six units of water per month can
expect the water portion of their monthly bill to increase from $56.98 to $60.09 in July 2019, and
to $63.39 in July 2020.
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Item 10
Average Monthly Residential Bill under
Current Water Rates
Average Monthly Residential
Bill under Proposed Water Rates
2019-20 Rates,
Effective July 1, 2019
2020-21 Rates,
Effective July 1, 2019
Water (base fee + six units) $56.98 $60.09 $63.39
NOTE: One unit equals 748 gallons.
Proposition 218
Under Proposition 218, property owners and/or customers
directly responsible for the payment of the fee subject to the
proposed rate increase may submit a written protest against
the proposed rate increases. The protest must be received by
the City Clerk at or before the public hearing on June 18,
2019, identify what is being protested, and contain the service
address. The party signing the protest must be listed on the
account as the person responsible for payment of the water
bill and/or the property owner. In the event that a protest is
submitted by the owner and by the tenant responsible for
payment of the bill, then one valid protest is counted for the
account.
If written protests are filed by a majority (50 percent plus
one), the proposed water rate may not be imposed. For the
proposed water rate, a majority of 15,318 customers is 7,659 plus one. As of June 6, 2019,
approximately 750 written protests have been received by the Office of the City Clerk. All
protests will need to be validated regarding property ownership and duplicate addresses. The
City Clerk will provide an updated summary of the protests received at the conclusion of the
Water Rate Review public hearing on June 18, 2019.
Public Outreach
The City is committed to helping the public understand
the recommended water rates. Online bill calculators and
Frequently Asked Questions were made available at the
Utilities Department’s website to assist customer’s
understanding the impacts of the proposed sewer rate
changes.
Staff has responded to questions in person at the Utilities
Department office, by phone, and via email on how
customers’ bills would be affected by the proposed
increases. Open houses were held on June 3rd and June
11th to answer public questions. Outreach efforts will
continue until final consideration of the rate structure and
rates on June 18, 2019.
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Item 10
CONCURRENCE
The City’s Finance Department concurs with the recommended action.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act does not apply to the recommended action, because
the action does not constitute a “Project” under CEQA Guidelines Sec. 15378.
FISCAL IMPACTS
Budgeted: Yes Budget Year: FY 19-20 and FY 20-21
Funding Identified: Yes
Fiscal Analysis:
If approved, the 2019-20 water rates go into effect July 1, 2019 and will apply to all water
consumption after that date. The first full billing cycle applying the new rates will be in August
2019.
ALTERNATIVES
Continue Consideration of the Proposed Water Rates. Council may elect to continue
consideration of the proposed water rates. The proposed water rates were identified to meet the
needs of the City’s Water Fund in providing for the water service for the community. The
proposed water rates were also prepared in compliance with Prop. 218. Staff believes that the
services, operating programs, and Capital Improvement Plan (CIP) components of the Water
Fund represented by the recommended rates are necessary, consistent with prior policy/program
direction of the City Council and required for compliance with state and federal laws. Therefore,
this alternative is not recommended.
Attachments:
a - Resolution Adopting Water Rates For 2019-20 and 2020-21
b - COUNCIL READING FILE - 2019 Water & Sewer Rate Study Update
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Item 10
R ______
RESOLUTION NO. _____ (2019 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, ESTABLISHING WATER RATES FOR FISCAL
YEAR 2019-20 AND 2020-21
WHEREAS, it is the policy of the City of San Luis Obispo to review enterprise fund rates
on an ongoing basis and to adjust them as required to ensure that they remain equitable and
adequate to fully cover the cost of providing services; and
WHEREAS, a comprehensive water rate study was completed in May 2018 by HDR
Engineering, Inc including analysis of Water Fund operating, capital, and debt service needs for
fiscal years 2018-19 through 2022-23; and
WHEREAS, a water rate study update was completed in May 2019 by HDR Engineering,
Inc. including analysis of Water Fund operating, capital, and debt service needs for fiscal years
2019-20 through 2023-24; and
WHEREAS, on June 4, 2019 the City Council reviewed the Water Fund and preliminary
water rates based on updated revenue and expenditure information and necessary to meet system
operating, capital, and debt service requirements; and
WHEREAS, a public hearing was properly noticed and held on June 18, 2019; and
WHEREAS, a majority protest, as contemplated by Article XIII D of the California
Constitution, was not received by the conclusion of the public hearing.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
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Item 10
Resolution No. _____ (2019 Series) Page 2
R ______
SECTION 1. The water rates and water system access charges are set forth in Exhibit “A”
are hereby adopted, establishing water rates and water system access charges effective July 1,
2019. Resolution No. 10909 (2018 Series) is hereby rescinded effective 11:59 p.m. June 30, 2019.
Upon motion of _______________________, seconded by _______________________, and on
the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2019.
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
_____________________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, this ______ day of ______________, 2019.
____________________________________
Teresa Purrington
City Clerk
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Item 10
Resolution No. _____ (2019 Series) Page 3
R ______
EXHIBIT A: 2019-20 and 2020-21 Water Rates
Residential:
Proposed 2019-20 Rates Proposed 2020-21 Rates
Monthly Base Fee $21.74 $22.94
Usage (per unit cost)1
Tier 1: 0 to 5 units $6.22 $6.56
Tier 2: 6 to 12 units $7.25 $7.65
Tier 3: 13+ units $13.28 $14.01
Multi-Family, Non-Residential, Irrigation:
Proposed 2019-20 Rates Proposed 2020-21 Rates
Base Fee by Water Meter Size
¾ inch or less $21.74 $22.94
1-inch meter $36.29 $38.29
1.5-inch meter $72.43 $76.41
2-inch meter $115.89 $122.26
3-inch meter $217.44 $229.40
4-inch meter $362.45 $382.38
6-inch meter $724.73 $764.59
8-inch meter $1,159.60 $1,223.38
Usage (per unit cost)1
Multi-Family – all use $7.10 $7.49
Non-Residential – all use $8.62 $9.09
Landscape Irrigation – all use $10.57 $11.15
Water System Access Charge2 $88.17 $93.02
NOTES:
1. One Unit = 748 Gallons
2. This charge applies where the City provides fire protection only to businesses that utilize a
private well for domestic purposes.
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Item 10
1010 Marsh St., San
(805) 546-8208 -1
PROOF OF PUBLICATION
(2015.5 C.C.P.)
STATE OF CALIFORNIA,
County of San Luis Obispo,
I am a citizen of the United States and a
resident of the county aforesaid; I am over the
age of eighteen years, and not a party interested
in the above entitled matter. I am the principal
clerk of the printer of the New Times, a
newspaper of general circulation, printed and
published weekly in the City of San Luis
Obispo, County of San Luis Obispo, and which
has been adjudged a newspaper of general
circulation by the Superior Court of the County
of San Luis Obispo, State of California, under
the date of February 5, 1993, Case number
CV72789: that notice of which the annexed
is a printed copy (set in type not smaller than
nonpareil), has been published in each regular
and entire issue of said newspaper and not in
any supplement thereof on the following dates,
to -wit:
6
in the year 2019.
I certify (or declare) under the the penalty of
perjury that the foregoing is true and correct.
Dated at San 1,uis Obispo, California, this
daY_-&-of "SJ AC 2019,
Patricia Horton, New Times Legals
Admin & Personal •MA1G Admin'N1FNJG 0ffiWf3"1 lFSS1Publlc Notic !Rool of Pub
PP(;EIVE®
SAN LUIS OBISPO CITY COUNCIL
NOTICE OF PUBLIC HEARING
Titre San Luis Obispo City Council invites all interested
persons to attend a public hearing on Tuesday, June
18,2019, a16:00 p.m. in the City Hall Cnunril Chamber.
990 Palm Street. San Luis Obispo, Calilornia, relative
to the following:
•2019-20 AND 2020-21 WATER & SEWER RATE
STRUCTURE AND RATE ADOPTION
A public hearing to consider adopting:
1. A Resolution entitled "A Resolution of the City
Council of the City of San Luis Obispo, California,
Establishing Water Rates for Fiscal Year 2019-20 and
2020-21."
2. A Resolution entitled "A Resolution of the City
Council of the City of San Luis Obispo, California,
Establishing Sewer Rates for Fiscal Year 2019-20 and
2020-21."
On April 29, 2019, all property owners and customers
of record received a form to protest the proposed
water and sewer rate structure and the proposed
water and sewer rates, as required under Proposition
218. Signed protests must be received by the City
Clerk, 990 Palm Street. San Luis Obispo CA 93401, at or
before the time of the protest hearing ;June 18, 7.019).
For more Information please contact Jennifer Metz of
the City's Utilities Department at (805) 781-7239 or by
email at jmetz@slocity.org.
2019-20 SOLID WASTE RATE STRUCTURE AND RATE
ADOPTION
A public hearing to consider adopting:
1. A Resolution entitled "A Resolution of the City
Council of the City of San Luis Obispo, California,
establishing Integrated Solid WasteRates."
On May 4, 7.019, all property owners and customers of
rocord received a form to protest the proposed water
and sewer rate stri.icture and the proposed water
and sewer rates, as required under Proposition 218.
Signed protests must be received by the City Clerk,
990 Palm Street, San Luis Obispo CA 93401, at or
before the time of the protost hearing (June 18i2019).
For more information, please contact Mychal
Boorman of the City's Utilities Department at (805) 781-
7217 or by email at mboerman@slocity.org.
The City Council may also discuss other hearings or
business items before or after the items listed above.
If you challenge the proposed project in court, you
may be limited to raising only those issues you or
someona also raised at the public hearing described
in (his notice, or in written correspondence dalivored
to the City Council at, or priorto, the public hearing.
Reports for this meeting will be available for review
in the City Clerk's Office and online at www.slocity.
org on Wednesday, June 12, 2019. Please call the City
Clerk's Office at (805) 781-7100 for more information.
The City Council meeting will be televised live on
Charter Cable Channel 20 and live streaming on www.
slocity.org.
Teresa Purrington
City Clerk
City of San Luis Obispo
June 6, 2019
10 2019
(_TY CLERK
06‐18‐2019 Items 10 ‐ 11 Staff Presentation 6/18/2019
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2019-21 Water and Sewer Rates
City Council
June 18, 2019
Presentation Overview
1. Water and Sewer Rate Background
2. Proposed Water and Sewer Rates
3. Open Water Rate Public Hearing
4. Open Sewer Rate Public Hearing
Recommendations:
1. Adopt the 2019‐20 and 2020‐21
Water and Sewer rates.
2. Adopt the 2019‐20 Water and
Sewer Fund Budgets.
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06‐18‐2019 Items 10 ‐ 11 Staff Presentation 6/18/2019
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Rate Structure Review
Background
Began work in June 2017
Review and prioritization of the City
Council’s goals
Goal to develop a rate structure to
stabilize revenue
Adopted new rate structure June
2018, effective July 2018
Rate Structure Goal Prioritization
1 Revenue Stability and Predictability
2 Discourage Wasteful Use
(Water Fund Only)
3 Stability and Predictability of Rates
4 Fair Allocation of Total Cost of
Service Among Customer Classes
5 Reflect all Present and Future Costs
Rate Structure Review ‐ Water
A greater percent of revenue collected through base fee
Base fee based on water meter size for multi‐family and non‐residential
customers
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06‐18‐2019 Items 10 ‐ 11 Staff Presentation 6/18/2019
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Rate Structure Review ‐ Sewer
A greater percent of revenue collected through base fee
Base fee based on water meter size for multi‐family and non‐residential
customers
Comprehensive Rate Study
Water & Wastewater Rate Study was
completed by HDR
Recommended adjustments to meet
operating and capital costs of providing
service
Proposed adjustments maintain City’s
financial health and provide long‐term
sustainable funding levels
Study looked out five years, term of
proposed rate increase is two years
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06‐18‐2019 Items 10 ‐ 11 Staff Presentation 6/18/2019
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Recommended Water Rate Increases
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2019-20 2020-21
Water Base Fee 5.5% 5.5%
Volume Charges 5.5% 5.5%
Average Monthly Residential Bill
under Current Water Rates
Average Monthly Residential
Bill under Proposed Water Rates
2019-20 Rates,
Effective July 1, 2019
2020-21 Rates,
Effective July 1, 2019
Water (base fee + six units) $56.98 $60.09 $63.39
Recommended Sewer Rate Increases
8
2019-20 2020-21
Sewer Base Fee 5.5% 5.0%
Volume Charges 5.5% 5.0%
Average Monthly Residential Bill
under Current Sewer Rates
Average Monthly Residential Bill
under Proposed Sewer Rates
2019-20 Rates,
Effective July 1, 2019
2020-21 Rates,
Effective July 1, 2019
Sewer (base fee + four units) $50.09 $52.84 $55.47
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06‐18‐2019 Items 10 ‐ 11 Staff Presentation 6/18/2019
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Public Outreach
Website: Hot Topic
Held Open Houses on
June 3 and June 12
Public Outreach
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06‐18‐2019 Items 10 ‐ 11 Staff Presentation 6/18/2019
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Public Outreach
Notice of Public Hearing
Legal notification 45 days prior to
public hearing
June 18 hearing date, official
notification date of May 4
April 26 the City mailed over 16,200
notices
Notices are provided to property
owners and account holders
The form identified two potential
protest items:
1) Water Rate
2) Sewer Rate
Proposition 218 Notification
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06‐18‐2019 Items 10 ‐ 11 Staff Presentation 6/18/2019
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Protest Validation ‐ Water
15,318 active water accounts
7,660 protests to establish a successful
protest (50% +1)
A protest is valid when received from a
property owner or an account holder
responsible for water service charges
One protest is valid per service address
for the Water Rate
Proposition 218 Notification
Protest Validation ‐ Sewer
14,813 active sewer accounts
7,408 protests to establish a successful
protest (50% +1)
A protest is valid when received from a
property owner or an account holder
responsible for sewer service charges
One protest is valid per service address
for the Sewer Rate
Proposition 218 Notification
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06‐18‐2019 Items 10 ‐ 11 Staff Presentation 6/18/2019
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Questions?
Recommendation:
Adopt a Resolution entitled, “A Resolution of the City Council of
the City of San Luis Obispo, California, establishing Water Rates
for Fiscal Year 2019-20 and 2020-21,” and approve the Water
Fund budget for Fiscal Year 2019-20.
Water Fund Budget and Rates
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06‐18‐2019 Items 10 ‐ 11 Staff Presentation 6/18/2019
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Proposition 218
Official Protest Count – Water Rates
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Mayor
•Open the Public Hearing
•Call for any written protests from the public
•Receive public comments
•Close the Public Hearing
City Clerk
•Confirm number of written protests received
•Confirm total number of valid protests
Council may not adopt the proposed rates if 7,660 valid protests (50%
plus 1) are filed.
Recommendation:
Adopt a Resolution entitled, “A Resolution of the City Council of
the City of San Luis Obispo, California, establishing Sewer Rates
for Fiscal Year 2019-20 and 2020-21,” and approve the Sewer
Fund budget for Fiscal Year 2019-20.
Sewer Fund Budget and Rates
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06‐18‐2019 Items 10 ‐ 11 Staff Presentation 6/18/2019
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Proposition 218
Official Protest Count – Sewer Rates
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Mayor
•Open the Public Hearing
•Call for any written protests from the public
•Receive public comments
•Close the Public Hearing
City Clerk
•Confirm number of written protests received
•Confirm total number of valid protests
Council may not adopt the proposed rates if 7,408 valid protests (50%
plus 1) are filed.
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06‐18‐2019 Items 10 ‐ 11 Staff Presentation 6/18/2019
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Recommended Water Rate Increases
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2019-20 2020-21
Water Base Fee 5.5% 5.5%
Volume Charges 5.5% 5.5%
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2019-20 2020-21 2021-22 2022-23 2023-24
To/From Reserves $(1,168,553.00) $118,145.00 $115,061.00 $134,686.00 $973,771.00
Projected Rate Increase 5.5% 5.5% 5.5% 3.0% 3.0%
$(1,500,000.00)
$(1,000,000.00)
$(500,000.00)
$-
$500,000.00
$1,000,000.00
$1,500,000.00
To/From Reserves Projected Rate Increase
Proposition 218 Notification
Year Valid Protest Count
2009 – 11 141
2011 – 13 Data not available
2013 – 15 181
2015 – 17 729
2017 ‐ 18 553
2018 ‐ 19 638
2019 ‐ 21 732
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06‐18‐2019 Items 10 ‐ 11 Staff Presentation 6/18/2019
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Recommended Water Rates
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Current Rates Proposed 2019‐20 Rates Proposed 2020‐21 Rates
Monthly Base Fee $20.61 $21.74 $22.94
Usage (per unit cost)
Tier 1: 0 to 5 units $5.90 $6.22 $6.56
Tier 2: 6 to 12 units $6.87 $7.25 $7.65
Tier 3: 13+ units $12.59 $13.28 $14.01
Current Rates Proposed 2019‐20 Rates Proposed 2020‐21 Rates
Base Fee by Water Meter Size Monthly Base Fee
¾ inch or less $20.61 $21.74 $22.94
1‐inch meter $34.40 $36.29 $38.29
1.5‐inch meter $68.65 $72.43 $76.41
2‐inch meter $109.85 $115.89 $122.26
3‐inch meter $206.10 $217.44 $229.40
4‐inch meter $343.55 $362.45 $382.38
6‐inch meter $686.95 $724.73 $764.59
8‐inch meter $1,099.15 $1,159.60 $1,223.38
Usage (per unit cost)
2 Per Unit Cost
Multi‐Family– all use $6.73 $7.10 $7.49
Non‐Residential– all use $8.17 $8.62 $9.09
LandscapeIrrigation– all use $10.02 $10.57 $11.15
Water System AccessCharge
3 $83.57 $88.17 $93.02
Sewer Rates
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USAGE Current Rates1 Proposed
2019‐20 Rates
Proposed
2020‐21 Rates
Single‐Family and Multi‐Family Residential
Per Unit Cost (Up to Sewer Cap)
2 $7.85 $8.28 $8.69
Non‐Residential
Per Unit Cost (for All Water Consumption)2 $7.85 $8.28 $8.69
MONTHLY BASE FEE Current Rates1 Proposed
2019‐20 Rates
Proposed
2020‐21 Rates
Single‐Family Residential $18.69 $19.72 $20.71
Multi‐Family and Non‐Residential
By Water Meter Size:
¾ inch or less $18.69 $19.72 $20.71
1‐inch meter $31.21 $32.93 $34.58
1.5‐inch meter $62.24 $65.66 $68.94
2‐inch meter $99.62 $105.10 $110.36
3‐inch meter $186.90 $197.18 $207.04
4‐inch meter $311.56 $328.70 $345.14
6‐inch meter $622.93 $657.19 $690.05
8‐inch meter $996.72 $1,051.54 $1,104.12
10‐inch meter $1,432.94 $1,511.75 $1,587.34
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Water and Wastewater Low-
Income Assistance
15% Discount
• Temporary Assistance for Needy Families
(CalWORKS)
• Cal Fresh (Food Stamps)
• Supplemental Social Security Income
• Veteran Survivor Pension Benefits
Proposed Statewide Low-Income Water Rate
Assistance Program
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