The City provides wastewater service to various properties located outside the City limits. Payment for these services is received through property tax assessments. In accordance with legal requirements for the collection of fees on the property tax roll, the City Council set a public hearing on proposed charges for wastewater services provided by the City of Sunnyvale to properties located outside the City limits. A report addressing the hearing and the proposed FY 2002/2003 assessments was filed with the City Clerk.

On May 14, 2002, the City Council adopted Resolution No. 177-02, setting June 11, 2002 as the date for the public hearing on proposed assessments for 1,867 properties located outside of the City which are served by the City’s wastewater utility. As shown on Attachment D, the areas serviced are bounded by Stevens Creek Blvd., Lawrence Expressway, Blaney Ave., and Bollinger Road in the City of Cupertino, and by Bollinger Road, Lawrence Expressway, Johnson Avenue and Castle Glen Avenue in the City of San Jose. A report containing each parcel number receiving wastewater services from the City was filed with the City Clerk and was made available for public inspection on May 16, 2002.

The City Council approved a 4.0% increase to wastewater revenue requirements for the coming year during its April 30, 2002 meeting. The assessments proposed for these properties are equivalent to the rates charged to similar customers inside the City limits.

Wastewater rates are based entirely on the City’s cost for operating and maintaining its wastewater facilities and services. The Wastewater Management Fund is experiencing an increase in infrastructure costs for the wastewater collection and treatment system due to the normal deterioration of facilities with age. In order to address this issue the staff has taken a two-pronged approach.

On December 19^th, 2001, the Sunnyvale Financing Authority sold its Water and Wastewater Revenue Bonds Series 2001. The total amount of the transaction was $34,319,858. The project refunded the Authority’s 1992 Utility Revenue Bonds and provided an additional $12.5 million for new wastewater projects.

The bond money is being used to fund the cost of the most pressing infrastructure projects at the plant and throughout the city’s collection system. These projects include sewer and storm main replacements (including the Borregas Sanitary Sewer Trunk Replacement), Water Pollution Control Plant improvements, work on the Power Generation Facility, rehabilitation of the treatment ponds, rehabilitation of pump stations #1 and #2, and many other smaller projects identified in recent years. Additionally, for FY 2002/2003, the capital projects budget reflected an increase of approximately $500,000 due to an unexpected increase in the costs associated with the Chlorinating/De-chlorinating Equipment replacement project. The project is designed to replace obsolete chlorinating and de-chlorinating equipment in the recycled water production system.

Staff is also identifying projects for the future. Public Works staff is working to isolate the cost and life span of various pieces of infrastructure, and schedule those into the long term infrastructure replacement plan. Staff anticipates using funding sources such as grants, low interest loans, and debt financing in the future to help minimize the impact of infrastructure renovation and replacement on rate payers.

The Wastewater Management fund was also affected by a large decrease in connection fee revenues due to the downturn in the economy. Staff estimates connection fee revenues will be $1 million less than projected for FY 2001/2002. Our projections have been revised to reflect this decrease throughout the Long Term Financial Plan.

There are 1,864 single family residential properties, two multi family properties, and one commercial property for a total of 1,867 total properties located outside the City limits that are serviced by the City’s wastewater collection and treatment system. Four of these single family properties are currently undeveloped and will receive no assessment. Charges for single family residential customers are simply the City’s yearly flat rate charges. Multi family customers pay a yearly, per unit, flat rate. The commercial property is charged based on the customer’s water usage over the past fiscal year.