SPECIAL NOTICE

A Special Legal Notice in Conformance with Proposition 218

Over 100 years of community, pride, progress and service.

ON SEPTEMBER 18, 2012 AT 6:00 P.M. IN THE CITY COUNCIL CHAMBERS AT 225 PARK STREET, LAKEPORT, CA, A JOINT MEETING WITH THE CITY OF LAKEPORT AND THE LAKEPORT MUNICIPAL SEWER DISTRICT (CLMSD) WILL HOLD A PUBLIC HEARING ON A WATER AND SEWER RATE INCREASE
Introduction The City of Lakeport and its Municipal Sewer District (CLMSD) is proposing to increase water and sewer rates to repair and upgrade the water and sewer systems needed for proper operations and regulatory compliance, and to meet operational and capital requirements. The rate increase, proposed to be phased in over the next five years is depicted in this notice for your reference. This Notice of Public Hearing provides information regarding the proposed rate adjustments to property owners served by the City of Lakeport pursuant to the requirements of Proposition 218. The proposed rate adjustments will be presented to the City Council for adoption on September 18, 2012, at 6:00 p.m. in the Council Chambers. This Notice also provides information on how rates are calculated, the reasons for the required rate adjustments, and how customers can file a protest against the proposed rate adjustments. The City hired an independent consulting firm (HDR) to provide a comprehensive rate analysis that provides sufficient revenue to meet operating and capital improvement needs for both the water and sewer utilities. An objective of the study was to look at funding capital projects identified in the 2008 water and sewer master plan, and to provide options that encourage water conservation. Background The Citys water and sewer systems are operated in conformance with Federal, State and Local regulations and permits. To meet current and anticipated regulatory requirements the Citys water and sewer infrastructure must be upgraded and funds established to replace or repair assets used in providing these essential services in a safe, healthy, and reliable manor. In 2008 an independent consultant completed master plans for the Citys water and sewer systems. These plans identified system improvements needed in the immediate, near, and long term. The City has also received new water and sewer permits from the State of California this past year that require infrastructure upgrades and repairs for continued compliance.

What are rates used for? Operation and Maintenance O&M costs like: power, treatment chemicals, equipment and vehicle maintenance, salaries and benefits, billing, customer service, engineering, water to city facilities and parks, and debt service. Capital Improvements Replacing, upgrading, rehabilitating, and improving system infrastructure including equipment, vehicles, land and structures.

Water and sewer rates are the primary source of revenue to operate the Citys water and sewer systems; reliance on General Fund subsidies is discouraged. These rates generate the revenue to operate the systems and invest in necessary upgrades, but current and past rates have not kept up with inflation and as a result capital investments and infrastructure have suffered. In an effort to address operational and regulatory requirements at the lowest possible cost, the City has applied for a loan that has long term financing with a low interest rate, and the potential for up to $2,000,000 in grant funding from the US Department of Agriculture Rural Development. To secure this opportunity, and avoid possible fines and regulatory actions in the future, a rate increase is needed.

USDA Capital Projects

The following are the projects the City applied to USDA for financing and potential grants:
Land acquisition to secure ownership of two groundwater wells needed to maintain capacity for domestic and fire suppression; updating of water and sewer automated controls system; Loop water main from South Main Street to Parallel for health and safety; replace water metering devices with lead free remote read meters; remove sludge from treatment pond; upsize sewer main between Clearlake Avenue and Sixth Street located on Main Street; replace Clear Lake Avenue Sewer Lift Station.

Proposal The Citys rate structure ensures the cost of providing water and sewer service is fairly and equitably recovered from all customer groups and is presented below.

WATER RESIDENTIAL Option 2 Meter Rate Option 2 3/4" 1"

PRESENT RATES

PROPOSED RATES Sept 18/2012 Jan 1/2014 Jan 1/2015 Jan 1/2016 Jan 1/2017

Allotments (CCF) See below See below $17.45 $34.87 $21.60 43.20 $26.05 52.10 $30.90 61.80 $34.85 69.70 $34.85 69.70

Outside Residential (60% of Residential metered rates) Option 2 3/4" See below 1" See below Consumption (per ccf) Option 2 Tier 1 Tier 2 Tier 3 Allotments (CCF) 3/4" Meter 1" Meter 0-6 0 - 12 7 - 12 13 - 24 Over 12 Over 24

$27.92 55.79

$34.55 69.10

$41.70 83.35

$49.45 98.90

$55.75 111.50

$55.75 111.50

N/A N/A N/A

$1.20 2.10 3.72

$1.44 2.52 4.46

$1.70 2.98 5.27

$1.92 3.36 5.94

$1.92 3.36 5.94

WATER DUPLEX and MOBILE HOME Meter Rate each unit Consumption (per ccf) Tier 1 each unit Tier 2 each unit APARTMENTS Meter Rate each unit Consumption (per ccf) Tier 1 each unit Tier 2 each unit

PRESENT RATES

PROPOSED RATES Sept 18/2012 Jan 1/2014 Jan 1/2015 Jan 1/2016 Jan 1/2017

Allotments (CCF) 0-8 Current 0-8 >8 Proposed 0-5 >5

$13.08

$16.20

$19.55

$23.15

$26.15

$26.15

$1.20 2.98

$1.40 3.47

$1.68 4.17

$1.98 4.91

$2.23 5.54

$2.23 5.54

Allotments (CCF) 0-6 Current 0-6 >6 Proposed 0-3 >3

$10.47 $1.20 2.98

$12.95 $1.40 3.47

$15.65 $1.68 4.17

$18.55 $1.98 4.91

$20.90 $2.23 5.54

$20.90 $2.23 5.54

MOTEL and BED & BREAKFAST Meter Rate Allotments (CCF; each unit) Current Proposed per room w.o kitchen (5ccf) 0-5 0-3 per room w kitchen (6ccf) 0-6 0-4 Consumption (per ccf) Current Proposed Tier 1 0-5 0-3 Tier 2 > 5 > 3 (with kitchen up to 4 ccf Tier 1; >4 ccf for Tier 2) COMMERCIAL & IRRIGATION Meter Rate Allotments (CCF; each unit) Current Proposed 3/4" 0 - 10 0-6 1" 0 - 20 0 - 12 1.5" 0 - 40 0 - 24 2" 0 - 60 0 - 36 3" 0 - 120 0 - 72 4" 0 - 200 0 - 120 6" 0 - 385 0 - 230 Consumption (per ccf) Tier 1 Tier 2 See above; by meter size See above; by meter size

$8.73 $10.47 $1.20 2.98

$10.80 $12.95 $1.40 3.47

$13.05 $15.65 $1.68 4.17

$15.45 $18.55 $1.98 4.91

$17.45 $20.90 $2.23 5.54

$17.45 $20.90 $2.23 5.54

$17.45 34.87 72.64 104.60 209.31 348.86 671.47 $1.20 2.98

$21.60 43.20 89.90 129.50 259.10 431.85 831.15 $1.40 3.47

$26.05 52.10 108.45 156.15 312.45 520.80 1,002.40 $1.68 4.17

$30.90 61.80 128.65 185.20 370.65 617.75 1,189.00 $1.98 4.91

$34.85 69.70 145.10 208.90 418.10 696.80 1,341.20 $2.23 5.54

$34.85 69.70 145.10 208.90 418.10 696.80 1,341.20 $2.23 5.54

SEWER RESIDENTIAL Meter Rate Meter Size North Customers* South Customers APARTMENTS Meter Rate Meter Size North Customers* South Customers COMMERCIAL Meter Rate Meter Size North Customers* South Customers Consumption (per ccf) 0 - 8 CCF Above 8 CCF

PRESENT RATES Sept. 18, 2012

PROPOSED RATES Jan. 1, 2014 Jan. 1, 2015 Jan. 1, 2016

Jan. 1, 2017

Mo. Rate $35.41 $46.79

$53.25 $55.60

$62.52 $65.00

$70.07 $70.07

$74.25 $74.25

$74.25 $74.25

Mo. Rate $26.57 $36.05

$42.40 $42.70

$49.30 $49.80

$54.00 $54.00

$57.25 $57.25

$57.25 $57.25

Mo. Rate $35.41 $46.79 $0.00 5.36

$53.25 $55.60 $0.00 6.43

$62.52 $65.00 $0.00 7.59

$70.07 $70.07 $0.00 8.31

$74.25 $74.25 $0.00 8.81

$74.25 $74.25 $0.00 8.81

*Includes $9.50/month payment for Basin 2000.

Action In compliance with Proposition 218, the City of Lakeport is hereby notifying all affected property owners and customers of the proposed water and sewer rate increase effective September 18, 2012, as follows: Affected property owners and other customers are notified by mail about the proposed rate increase. This notice outlines the public protest process (see below) and publishes the public hearing date and time. If written protests are presented by a majority of affected property owners prior to the close of the public hearing, the proposed rate increase will be rejected. This notice provides information relating to the proposed rate increase.

Process If you wish to oppose the proposed sewer rate increase, your protest must be submitted in writing to be considered, even if you plan to attend the public hearing. If written protests are submitted by a majority of affected property owners, the proposed sewer rate increase will not be imposed. Written protest can be submitted to the City Council prior to the close of the public hearing. Written protests must contain a description of the property, including the parcel number. Please indicate which rate (or both) you are protesting and send your written protest to: City Clerk, City of Lakeport, 225 Park Street, Lakeport, CA 95453. More information concerning water and sewer operations and rates is available at www.cityoflakeport.com. Please note that the City of Lakeport requires that rate increase protests be submitted in writing, and that email protests will not be accepted.

You Can Lower Your Water Bill with Conservation What you can do: Check your toilet for leaks. Use a broom to clean driveways, sidewalks and steps. Do not use your toilet as a wastebasket. Install water saving showerheads Wash only full loads of clothing. Do not run the water while washing your car, brushing your teeth, washing dishes etc. Water your lawn only when needed and during the cool parts of the day.

If you have any questions about this notice, please call Mark Brannigan, Public Works Director, City of Lakeport at 707-263-3578.