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Joe Crea, City Consultant (Vice President - Raftelis), joined the meeting via Zoom to present on the proposed water and sewer rate increases for FY 2024-2028. He explained that the City is nearing the end of the most recent five-year rate program to support the Integrated Wet Weather Improvement Program (IWWIP) and it is now time to plan for the next five years to continue to support that critical infrastructure. Mr. Crea provided an overview of the City’s recent financial performance and shared that the recommended water rate increases were lowered from 5.5% to 4% in 2022 and 2023 due to an increase in water revenue and an infusion of ARPA funding. He then discussed how the ARPA funding, coupled with the Impervious Surface fee introduced in 2022, allowed the City to also lower the proposed sewer rate increases from 10% to 4% (plus the $2/month impervious surface fee) for 2022 and 2023. He went into more detail about the impervious surface fee, explaining that it helps to increase revenue stability in the enterprise fund, and promotes equity since some customers in the system may not use a lot of water but they have a large influence on the amount of wet weather that runs off their property and impacts the system. Next, he reviewed the historical trends in operating expenses and then the projected operating expenses for the next five years. He said they are projecting an annual increase in operating expenses of 3.0-3.5% per year based off the historical trends and recent inflation pressure. He then discussed the City’s debt obligations, and the planned capital improvement needs for water and sewer over the course of the next five years. Mr. Crea stated that the recommended rate scenario for 2024-2028 maintains the original IWWIP path and covers inflationary pressure and capital project needs. In closing, Mr. Crea provided a comparison of typical customer water bills across neighboring communities, which showed that Lakewood’s rates are in the middle of the pack. He said that based on surveying hundreds of utilities the average rate increase over the past 20 years has been 5.0-5.5%, which means the forecasted rate increase for Lakewood are below the industry average. In response to a question from Councilmember Bullock, Mr. Crea replied that Lakewood has a conservation-oriented rate structure since the water and sewer rates are entirely volumetric, meaning that users can lower their bill by lowering their usage. He said that typically the goal is to have roughly 25 percent of the water fee be a fixed rate to maintain fund stability. In response to another question from Councilmember Bullock, Lou McMahon (City Consultant) explained that the IWWIP is entirely driven by wet weather events. He said all measures in the plan are being driven by complying with the wet weather requirements. Councilmember Kepple asked if there has been any consideration about changing the residential impermeable surface fee to be adjusted per the size of the lot as opposed to the current fixed rate. Mr. Crea replied that as of now they are working with the fixed rate since the majority of lots in Lakewood have a consistent size and footprint. He said there are certainly exceptions, but as you get into a tier structure it opens a lot of other issues that can increase the administrative cost of the initiative. 3