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Sewer Service Rates for Fiscal Year 2016 Approved

July 2015

On July 13, 2015, USD's Board of Directors held a public hearing regarding the collection of sewer service charges on the property tax roll. The Board considered and approved sewer service rates for Fiscal Year 2016 (July 1, 2015 - June 30, 2016.) Links to Agenda items pertaining to sewer service rates are below:

  Agenda Item 9: Public Hearing
  Powerpoint presentation Information presented by USD's General Manager as a companion to Agenda Item 9
  Agenda Item 10: Considering Protests and Establishing Rates
  Agenda Item 11: Adoption of Ordinance No. 31.38: Staff Report and Ordinance
  July 13, 2015 Board meeting minutes: Reviewed and approved at the July 27, 2015 USD Board of Directors meeting


Notice of Public Hearing - Fiscal Year 2016 Sewer Service Charges

June 2015

NOTICE IS HEREBY GIVEN that pursuant to Sections 5471 and 5473, et seq. of the Health and Safety Code of the State of California and Union Sanitary District Ordinance No. 31, the Board of Directors of Union Sanitary District will consider adoption of Ordinance No. 31.38 which establishes Sewer Service Charges for the Fiscal Year ending June 30, 2016. The District has elected to collect its charges for sewer services on the tax roll, in the same manner as general taxes.

The District has filed a written report with the Secretary of the Board of Directors describing each parcel of real property subject to the charges and amount of the charges against that parcel for fiscal year 2016. The report is on file and available for inspection at the District's offices at 5072 Benson Road, Union City, California.

NOTICE IS FURTHER GIVEN that on Monday, the 13th day of July 2015, at the hour of 7:00 p.m., or as soon thereafter as the matter may be heard, at the Union Sanitary District Boardroom, 5072 Benson Road, Union City, California, in said District, the Board will hold a hearing on the collection of sewer service charges on the property tax roll. At the hearing, the Board of Directors will hear and consider all objections or protests, if any, to the District's report. Any questions regarding the charges may be directed to the Business Services Manager at (510) 477-7500.

Publish dates:

June 30, 2015

July 7, 2015

By order of the Board of Directors of Union Sanitary District

Link to notice with Board signature


Rate Increase FY 2016

August 2015

View this article as a pdf


Union Sanitary District (USD) is an award winning public agency providing wastewater service to the Tri-Cities (Fremont, Newark and Union City). USD held a public hearing in July 2015 to consider the third and final rate increase recommended by a 2013 rate study. In 2013, USD sent a Proposition 218 notice to all property owners in Fremont, Newark, and Union City regarding rates for Fiscal Years 2014, 2015, and 2016. Before the July 2015 hearing, USD published notices in two newspapers and on its website containing information regarding time, place, and format for public comment.

The District recognizes that no one enjoys a rate increase and continuously looks for ways to reduce costs while maintaining a high level of service. Only four agencies of 26 surveyed in the Bay Area have rates lower than USD. To meet increased expenses, and to allow for necessary and required maintenance and upgrades to the Districtís infrastructure, USD staff recommended the Board adopt a modest increase in sewer service charges for all customers. For single-family homeowners (the majority of USDís customers) the increase equates to $1.67 per month, bringing the annual total to $377 for Fiscal Year 2016.



USD strives to keep rates low and stable

Beginning in 2004, USD implemented a rate increase program for the purpose of funding capital improvements and keeping pace with increasing operation costs facing the agency. Prior to 2004, USD had not increased rates since 1997, and in fact decreased them in 1999, 2000, and 2002. During that time, the District used reserves to finance the majority of its capital projects, which significantly decreased this account. A modest rate increase program was therefore implemented to carry out the Boardís philosophy of keeping rates relatively stable over time and protecting ratepayers from large fluctuations or price spikes that can occur in a service delivery business. Under this program, USDís sewer service charges have increased an average of 5.5 percent each year since 2004. A graph illustrating the recent history of rates and capital expenditures is shown below.

While the District plans 10 years in advance for capital projects and needs, these capital expenditures are evaluated on an annual basis. Capital expenditures for FY 2015 are anticipated to total $15.3 million. Currently, capital expenditure projected totals for Fiscal Years 2016, 2017, and 2018 are $16.75, $23.25, and $26.2 million respectively.

USD rates in perspective

USD conducts an annual rate comparison survey of 26 Bay Area wastewater agencies. The Districtís goal is to remain in the lower 1/3 of agencies surveyed, meaning USDís rates would be lower than 2/3 of neighboring agencies. Today, only four districts have lower rates.


USD's rate comparison history

The graph below shows USDís rate percentiles since the District began surveying 26 Bay Area wastewater agencies annually in 2002. USD's rates are currently in the 15th percentile.



Compared to other utilities and services, USDís rates are the lowest

A typical household in USDís service area pays considerably more for services like those below:

Sewer Rate shown is USD's FY 2015 single-family residential rate (July 1, 2014 - June 30, 2015)


Other monthly utility rates are based on a typical residential household and were obtained from service providers in August 2014. Cell phone monthly bill is based on a typical calling plan for a family of four.


USDís Capital Improvement Program Is A Large Driver For Increased Rates

USD maintains a large number of facilities and equipment, including more than 811 miles of sewer lines, seven pump stations, the treatment plant and other infrastructure Ė much of it built in the late 1970s. Responsible, timely upkeep of these facilities has allowed the District to avoid catastrophic failures, interruptions to service, major spills, and sinkholes that often plague other utilities and agencies.

Since 2004, the primary focus of the Districtís Capital Improvement Program has been on rehabilitation, replacement and repair of its pump stations and treatment plant equipment. For Fiscal Years 2004 - 2014, USD spent more than $151 million on capital projects. The plant operates 24/7/365 to process an average of 23 million gallons of untreated sewage every day, and operates and maintains more than 50 major treatment process units and buildings. A large portion of District facilities are now over 35 years old.


USD's Rate Increase Compared To Inflation

The Consumer Price Index, typically referred to as inflation, for the San Francisco Bay Area has averaged approximately 3% annually (between 1996 and 2014). The proposed rate increase does exceed inflation as it takes operational and capital increases into consideration, which are not the types of expenses included in CPI computations. Capital expenses, or the cost of projects required to maintain the integrity of the Districtís infrastructure, are based upon a prioritized need and life cycle of the infrastructure. Limiting rate increases to accommodate inflation only would result in a short-fall in funds necessary to safely and responsibly operate the District and maintain/rehabilitate infrastructure. The difference in revenues between 5.7% and 3% over the next four years would equate to approximately 14.5 million dollars in lost revenue.


Without this revenue, District staff would have to be significantly reduced and/or capital projects would be postponed or not completed. All of the projects proposed in the Districtís CIP program are necessary; thus, delaying projects raises the likelihood of failure, increases project costs, and leads to possibly even larger future rate increases. Approximately 15 critical projects in the current CIP budget would need to be deferred to a later date if revenues were decreased.


Deferring and deleting planned CIP projects increases the risk of failure. Repair and replacement costs increase when infrastructure fails due to the emergency nature of this work. These additional costs include but are not limited to uncompetitive bids, clean-up, claims for damage, traffic delays, material and labor premiums and environmental impacts that can lead to permit violations and fines. A planned repair and replacement program is significantly more cost effective and efficient. The deferment of projects does not secure a reduced rate as these projects will need to be completed at some point.


If the rate increase were reduced to 3%, utilizing the CIP budget currently recommended by staff, the Structural Renewal & Replacement Fund balances would be negative. Under this scenario negative fund balances would begin in FY 2018 and extend five consecutive years, with the largest negative balance of $16.2 million in FY 2020. This would not only violate the Districtís adopted Reserve Fund Policy, but also significantly weaken its financial stability. In accordance with generally accepted government accounting standards, the District's policy states that, at a minimum, the fund should remain positive throughout a ten year planning period.


The graph below shows the Districtís fund balances under a 3% increase scenario:



Additional Costs

In addition to funding USDís capital improvement program, rate increases have been implemented in part to address other rising costs. Approximately 42% of the Districtís total budget is dedicated to personnel expenses, which is within range of other service providers in this industry. Every business has faced steeply rising employee costs; USD is no different. To help offset these rising costs, all USD employees pay a portion of their health care and pension benefits. By March of 2016, employees of USD will be paying approximately 30% of the overall pension costs. In addition, USD is subject to pension reforms enacted by the State. These reforms reduce the retirement benefit and raise the retirement age for new USD employees that have not participated in the previous retirement program. Currently, approximately 10% of USDís workforce participate in the new program.


Chemicals, electricity, and fuel also account for a significant portion of the Districtís budget - those costs have similarly increased substantially over the last 10 years. Chemical costs alone were over $1.8 million in FY 2014. USDís electricity bill in FY 2014 was over $2.1 million. While USD uses renewable energy wherever possible and works toward energy-independence, the District must still purchase power from outside sources, generally at rising costs every year. Moreover, the cost of complying with state and local regulations, including annual permit fees, also continues to rise.



One of the many factors keeping USDís rates low is efficient service and use of technology. By implementing technology to streamline permitting, plant operations, maintenance management and engineering services, the District has been able to maintain conservative staffing levels, helping to control costs. USD also teams with neighboring agencies to purchase chemicals and equipment at discounted prices. Careful financial planning allows USD to finance capital improvements at very low, below-market rates.


Award Winning Service/Agency

USD is proud of its award winning service. Since 2004, nearly every team or workgroup at USD has received awards. A partial list of those awards includes:

  • Peak Performance Platinum Award from the National Association of Clean Water Agencies for five years of 100% compliance at the Districtís Treatment Plant. USD's Plant has been recognized for 21 consecutive years by NACWA (and its predecessor, AMSA) for outstanding performance
  • Engineering Achievement Award for 2014 from the California Water Environment Association (CWEA)
  • CWEA Collection System Worker of the Year Ė 2013
  • CWEA Al Ditman Professional Development Award - 2013
  • CWEA Safety Program of the Year Ė Statewide Award 2010
  • CWEA Treatment Plant of the Year for the State of California - 2009
  • CWEA Collection System Maintenance Program of the Year - 2005, 2009, 2010, 2012
  • US EPA Pretreatment Program of the Year (National Award) 2008
  • Distinguished Project Award, 2007 - American Public Works Association
  • Training Magazine International Top 125 Training Programs (private and public sector businesses) Ė 2011 (USD was one of only 3 public sector agencies of the 125 companies)

For more information, please take a look at USDís newsletters, which can be found here.


USD Budget and Expenses Overview

June 2015

View this article as a pdf

USD is proud to provide award-winning, cost-effective service that protects human health and San Francisco Bay. The District operates on an annual budget of approximately $56.7 million, and raises revenue from two primary sources: sewer service charges paid by residential customers, businesses, and other users of the system; and capacity fees paid by developers and others who connect to USDís system. A small portion of annual revenue comes from interest income and other administrative sources.

The Districtís goal is to keep its sewer service charge rates in the lowest third of 27 Bay Area agencies that provide sanitary sewer service. These agencies are surveyed on an annual basis. Currently, USDís rates are in the lowest 15% of surveyed agencies.

District Expenses:

USDís Operating and Capital budgets are projected to increase in Fiscal Year 2016. Like other agencies or businesses, the District has expenses, such as labor, energy, chemicals and parts required for preventative maintenance, which commonly increase annually and have direct influence on sewer service charges. These include but are not limited to:

  • Infrastructure Ė USD is responsible for operating, maintaining and replacing assets worth more than $643.7 million. The District must ensure it has adequate resources for projects such as seismic retrofitting of aging facilities, rehabilitation of the collection system, and repair and replacement of mechanical equipment. On average, the District spends $18.45 million each year on Capital projects to refurbish, replace and rehabilitate aging infrastructure. Costs for these projects are subject to increases.
  • Salary and benefits Ė Through a negotiated multi-year labor contract, the District pays increases in health care costs and annual salary increases for employees. The District and employees share in retirement costs. For FY 2016, our total salary and benefits expenses are expected to increase by 1.2 percent.
  • Biosolids removal Ė The District is entering a new five-year contract that increases costs for hauling of biosolids discharged into the collection system and treated at USDís plant.
  • Chemicals Ė The drought has increased the degree of root intrusion into pipes in the Districtís collection system, and more chemicals are needed to control this. The cost of these chemicals, as well as chemicals needed for treatment processes, has increased. USD participates with other agencies in a chemical consortium to increase buying power and keep costs at a minimum.
  • Power Ė Wastewater treatment is an energy-intensive process. While USD uses renewable energy wherever possible and works toward energy-independence, the District must still purchase power from outside sources, and those costs generally rise every year.

The District projects that over the next 10 years, these and other factors will result in an average annual increase of 4 percent in operating expenses. For the purposes of long-term planning for increases in operating expenses and capital expenditures, the District projects an average annual increase of 5 percent in the sewer service charge.

Long-term projections are estimates, based upon a variety of assumptions that are subject to changes over time. However, the District must plan for the long term to anticipate normal increases in its recurring costs, the costs of maintaining and replacing an aging infrastructure, and the costs of complying with changing regulatory requirements. This planning helps the District fulfill its fiduciary responsibility to ensure it has revenues needed to remain financially sound and keep rates as stable and predictable as possible.

The District evaluates rates every year and makes adjustments according to near term and long term needs. Rate changes are subject to a prescribed public process.


Sewer Service Charges and Ordinances

Revenues to operate the District are collected yearly from residents and businesses that are connected to the sanitary sewer system. The following information will explain how yearly Sewer Service Charges are calculated and what steps businesses can take to minimize the charges.

Annual Sewer Service Charges are placed on your Alameda County property tax statement. The charges appear on the tax statement as a line item next to our phone number 477-7500 and are listed as "Union Sewer Svc." Sewer Service Charges are not a property tax and are not related to the assessed value of a property. They represent a charge for a service provided, similar to your phone and P.G. & E. bills. We simply include the yearly charges on the property tax statement to save the administrative cost of generating and mailing our own invoices. More details on how the charges are calculated are provided below.

Residential Customers are charged at a flat rate.

Charges for residential customers are based on a flat rate per dwelling unit. The current rate (2015-2016) per dwelling unit is $377.00 per year. This is the charge for a single family home. A property with multiple housing units such as an apartment complex is charged $326.00 for each dwelling unit on the property. For example, a ten unit apartment complex would be charged $326.00 x 10 or $3,260.00 per year. This rate is effective July 28, 2015.

How water use is determined for Commercial & Industrial Charges

Charges for commercial and industrial customers are based on the volume and pollutant strength of the wastewater being treated. The volume of wastewater is determined from water meter records obtained from the Alameda County Water District. Credit is given for water used that is not discharged to the sanitary sewer, such as landscape irrigation. Due to the lead time involved to get yearly charges placed on the County property tax statements, the Sewer Service Charges on the current year's tax statement reflect services already provided. Water use for purposes of computing the service charge is measured from March through February of the previous year. The Sewer Service Charge for this period is then placed on the property tax statement that is mailed out in October, with the first installment due December 10th. The Sewer Service Charge Timing Chart below, illustrates when charges are collected.


Timeline for Commercial & Industrial Users

How pollutant strength is determined for Commercial and Industrial Charges

Pollutant strength is measured in samples of wastewater for two components: chemical oxygen demand (COD), and suspended solids (SS). Wastewater with high strength costs the District more to treat. For example, wastewater with high levels of suspended solids produces more sludge (a by-product of treatment). Sludge is treated and then disposed of at an agricultural site. If more sludge is produced, our hauling and disposal costs are higher. Therefore, rates are structured so that customers are charged based on the volume of solids they contribute to the system.

Wastewater strength for commercial and industrial customers is determined by one of three primary methods: General Assignment, Specific Assignment, and Direct Sampling.

General Assignment
: Most commercial and industrial customers, or properties that include several different types of businesses, are calculated by the General Assignment method. With this method, customers are assigned a general strength of strong, moderate or weak. The three rate components, VOLUME, COD, and SS are combined into one rate per 1,000 gallons of wastewater discharged. The current rates for Fiscal Year 2016 (as of July 28, 2015) are shown below:

  • Strong $7.90 per 1,000 gallons per year

  • Moderate $4.26 per 1,000 gallons per year

  • Weak $3.73 per 1,000 gallons per year

Specific Assignment: Strength values are based on studies of wastewater from similar types of businesses and represent an "average" for that group. The total charges under this method are the sum of three components - volume, COD, and SS. USD's current rates for restaurants are listed below:

  • Fast Food Restaurants $7.55 per 1,000 gallons per year

  • Full Service Restaurants $9.65 per 1,000 gallons per year

Direct Sampling: This method applies only to industrial customers with industrial discharge permits. Under this method, samples of wastewater are collected and sent to a laboratory for analysis. Both COD and SS are measured and then averaged with other samples taken that year to determine an average strength for use in calculating Sewer Service Charges. The sum of three components determines the total charge. The current rates for each component are:

  • Volume (Flow) = $2.37 per 1,000 gallons per year

  • COD = $240.51 per 1,000 pounds per year

  • SS = $440.95 per 1,000 pounds per year

For more details on how annual charges are calculated, see the sample rate calculations for all three methods.

Sample Rate Calculations

How Sewer Service Rates Are Established

Union Sanitary District is governed by a five-member Board of Directors which is elected by the residents of the service area. Rates are reviewed each year based on financial plans for the District and are subject to approval by the Board. Before rates are set, a notice is published in the Argus newspaper. If a rate increase is proposed, the District also complies with Proposition 218 "Right to vote on Taxes" notification requirements. The annual public hearing is normally scheduled in June of each year with rates becoming effective in July. Customers are encouraged to participate in the public hearings and can send written comments on items before the Board to the attention of the General Manager.

How Sewer Service Charges Can Be Minimized

For commercial and industrial customers that are under the Specific or General Assignment methods, the most effective way of minimizing charges is water conservation. Charges are directly tied to the volume of water used; therefore, saving-water will reduce the Sewer Service Charge as well as charges for water. There is a wide variety of water-saving fixtures on the market. Low-flow toilets, shower heads and faucet aerators are among the most cost effective. For industrial customers under the Direct Sampling method, water conservation and any reductions in pollutant loadings will minimize service charges. One of the most effective ways to reduce loadings is to minimize the amount of waste being discharged to the sanitary sewer system. The District sponsors a Pollution Prevention Program to assist customers in reducing their waste streams. Call in the District's Commercial/Residential Customer Team at (510) 477-7500 for more information. More specific information on water conservation can be obtained from the Alameda County Water District at (510) 659-1970.

Renting or Leasing

Due to the lag in billing, commercial or industrial customers who rent or lease their property should carefully consider how Sewer Service Charges are addressed in the lease or rental agreement. Changes in tenants with different demands for water or that have different wastewater strengths will affect the yearly service charge. A landlord may not become aware of potential changes in service charges until well after tenant changes have occurred. All Sewer Service Charges are billed to the property owner. Property owners are responsible for paying the charges whether or not they are able to collect from their tenants.


Sewer Service Charge Ordinance Ordinance 31.37 An ordinance providing for the establishment of sewer service charges for fiscal years 2014, 2015 and 2016.  Effective through July 28, 2015.

Sewer Service Charge Ordinance Ordinance 31.38 An ordinance providing for the establishment of sewer service charges for fiscal years 2014, 2015 and 2016.  Effective date July 29, 2015.