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VICTOR VALLEY WASTEWATER RECLAMATION AUTHORITY Board Of Commissioners Staff Report |
| TO: | VVWRA Board of Commissioners |
| FROM: | Darron Poulsen, General Manager |
| SUBMITTED BY: | Xiwei Wang, Accounting Supervisor |
| DATE: | March 19, 2026 |
| SUBJECT: | Recommendation to approve Resolution 2026-03 adopting the 2026 Rate Study prepared by Water Resources Economics, LLC |
| Fiscal Impact | |
| Account Code: | |
| Funds Budgeted/ Approved: |
STAFF RECOMMENDATION
It is recommended that the Board of Commissioners Adopt Resolution 2026-03 adopting the 2026 rate study prepared by Water Resources Economics, LLC.
PREVIOUS ACTION(S)
NONE
BACKGROUND INFORMATION
The consideration of raising the user rates is an important part of the fiscal responsibility of a public agency. As the regional wastewater treatment authority VVWRA is committed to protecting the environment and providing an essential service to the public. VVWRA’s previous rate study, completed in fiscal year (FY) 2025, implemented a 15.0% rate increase for the second half of FY 2025 and an additional 15.0% increase for the entirety of FY 2026. While those adjustments addressed near term operational needs, they are not sufficient to support VVWRA’s long range capital program. From FY 2027 through FY 2031, the Capital Improvement Program (CIP) requires a total of $50.3 million in funding, and the current FY 2026 rate structure does not generate enough revenue to support these essential projects. As a result, a new rate study is completed by Water Resources Economics, LLC to evaluate VVWRA’s long term financial requirements and to establish a plan to adequately fund the upcoming capital projects.
The rate study provides a comprehensive five year financial plan that includes three years of proposed rate adjustments and two additional years of financial projections for the User Charge Fund and the Connection Fee Fund. For the User Charge Fund, the rate study proposes a 7.0% increase in FY 2027, followed by 5.0% increases in FY 2028 and FY 2029. The financial plan also incorporates approximately $15 million in external financing to smooth the rate impacts associated with major CIP expenditures and to avoid significant single year increases that would otherwise burden ratepayers. For the Connection Fee Fund, the rate study proposes three years of adjustments based on the published figure of the California Construction Cost Index (CCCI).
The rate study presentation has been accepted by both the Internal Finance Committee and the External Finance Committee. In addition, staff met with the Building Industry Association of Southern California (BIASC) representatives regarding the proposed Connection Fee adjustments and received their support for the recommended approach. A comprehensive presentation was presented to the Board on February 19, 2026, during which the Board agreed to the BIASC’s request that the maximum rate of increase for Connection Fee charges per EDU for each fiscal year be limited to 5.0%, with any excess percentage over 5.0% to carry over to the next fiscal year.
It is for these reasons that VVWRA staff is recommending that the Board of Commissioners adopt Resolution 2026-03 adopting the 2026 rate study prepared by Water Resources Economics, LLC.
The rate study provides a comprehensive five year financial plan that includes three years of proposed rate adjustments and two additional years of financial projections for the User Charge Fund and the Connection Fee Fund. For the User Charge Fund, the rate study proposes a 7.0% increase in FY 2027, followed by 5.0% increases in FY 2028 and FY 2029. The financial plan also incorporates approximately $15 million in external financing to smooth the rate impacts associated with major CIP expenditures and to avoid significant single year increases that would otherwise burden ratepayers. For the Connection Fee Fund, the rate study proposes three years of adjustments based on the published figure of the California Construction Cost Index (CCCI).
The rate study presentation has been accepted by both the Internal Finance Committee and the External Finance Committee. In addition, staff met with the Building Industry Association of Southern California (BIASC) representatives regarding the proposed Connection Fee adjustments and received their support for the recommended approach. A comprehensive presentation was presented to the Board on February 19, 2026, during which the Board agreed to the BIASC’s request that the maximum rate of increase for Connection Fee charges per EDU for each fiscal year be limited to 5.0%, with any excess percentage over 5.0% to carry over to the next fiscal year.
It is for these reasons that VVWRA staff is recommending that the Board of Commissioners adopt Resolution 2026-03 adopting the 2026 rate study prepared by Water Resources Economics, LLC.