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The Audit Report from the Office of the City Auditor assesses the sewer rate-setting process in San José. It identifies three main findings: the Environmental Services Department (ESD) should review assumptions in its rate model, develop formal reserve policies, and improve transparency in the rate-setting process. The report includes six recommendations aimed at enhancing the accuracy of rate calculations, establishing clear reserve policies, and improving communication with stakeholders regarding how rates are set. The report is intended for presentation at a City Council meeting on February 9, 2026.
Key points
The City of San José sets sewer rates to recover costs for sanitary sewer and wastewater treatment services.
The ESD's rate model is based on the volume and strength of wastewater, affecting how customers are billed.
Finding 1: ESD should review assumptions in its rate model, as past studies indicated discrepancies in wastewater strength assumptions.
Finding 2: ESD lacks formal reserve policies for its Sewer Service and Use Charge Fund, which is common among other utilities.
Finding 3: ESD can improve transparency by documenting procedures and enhancing online information about rate-setting.
The report includes six recommendations for improving the rate-setting process.
Limitations
The text indicates that field sampling related to wastewater strength has not yet occurred.
There are unresolved placeholders and incomplete sections in the text, such as the truncated ending.
Generated for convenience from extracted text using AI. Review the official source document before relying on this summary.
Extracted text preview · 62,221 chars
Office of the City Auditor Report to the City Council City of San José SEWER RATES: REVIEWING RATE MODEL ASSUMPTIONS AND DEVELOPING RESERVE POLICIES WOULD IMPROVE THE RATESETTING PROCESS Report 26-01 February 2026 This page was intentionally left blank Office of the City Auditor Joe Rois, City Auditor February 2, 2026 Honorable Mayor and Members Of the City Council 200 East Santa Clara Street San José, CA 95113 Sewer Rates: Reviewing Rate Model Assumptions and Developing Reserve Policies Would Improve the Rate-Setting Process The City of San José sets sewer rates to recover the costs of providing sanitary sewer and wastewater treatment services to residents and businesses. These rates fund the operation, maintenance, and capital improvements to the City’s sanitary sewer network and the City’s share of the San José–Santa Clara Regional Wastewater Facility (RWF). The Environmental Services Department (ESD) sets the rates based on the overall volume of a customer’s wastewater and the concentration of pollutants (i.e., strength) of the wastewater that require treatment. Though all customers pay the same unit rate for each wastewater component that ESD treats, how a customer is...
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The source text indicates this attachment appears to be a draft document.
The report from the City Auditor reviews the sewer rate-setting process and provides recommendations for improvement. It highlights the need for the Environmental Services Department (ESD) to review its rate model assumptions, develop formal reserve policies, and enhance transparency in the rate-setting process. The report includes six specific recommendations aimed at improving these areas.
Key points
The City sets sewer rates to recover costs for sanitary sewer and wastewater treatment services.
ESD sets rates based on the volume and concentration of pollutants in wastewater.
A 2015 consultant study indicated discrepancies between actual wastewater strength and rate model assumptions.
ESD lacks a formal policy defining the purpose and target levels for sewer fund reserves.
Improving transparency in the rate-setting process is necessary, including clearer communication on sampling procedures and rate calculations.
Limitations
The document appears to be a draft as it includes placeholder sections and lacks specific dates for recommendations.
Generated for convenience from extracted text using AI. Review the official source document before relying on this summary.
Extracted text preview · 3,142 chars
Sewer Rates: Reviewing Rate Model Assumptions and Developing Reserve Policies Would Improve the Rate-Setting Process A Report from the City Auditor Issued February 2026 http://www.sanjoseca.gov/auditor Presenters: Joe Rois, City Auditor Alison Pauly, Supervising Auditor Ebelechukwu Obi, Senior Program Performance Auditor Hiwad Haider, Program Performance Auditor II Transportation and Environment Committee Agenda Item (d) 4 1 Background • The City sets sewer rates to recover the costs of providing sanitary sewer and wastewater treatment services to residents and businesses. • ESD sets rates based on the volume of a customer’s wastewater and the concentration of pollutants within the wastewater. • All customers pay the same unit rate for each wastewater component. • How a customer is billed depends on the type of residence or business and the assumed or actual volume and strength of their wastewater. 2 Finding I: ESD Should Review Assumptions Within Its Rate Model • In 2014, the state determined that the City’s rate model complied with Clean Water State Revolving Fund requirements. Recommendations: To ensure its rate model assumptions reflect current conditions, ESD should: • A...