NOTICE OF SECOND PUBLIC HEARING

JULY 19, 2023 AT 2:00 PM OR AS SOON THEREAFTER AS THE MATTER MAY BE HEARD

THE BOARD OF DIRECTORS OF THE SALTON COMMUNITY SERVICES DISTRICT ("SCSD) WILL HOLD A SECOND PUBLIC HEARING ON JULY 19TH, 2023, AT 2:00 PM OR AS SOON THEREAFTER AS THE MATTER MAY BE HEARD AT THE SCSD OFFICE, 1209 VAN BUREN AVE, SUITE 1, SALTON CITY, CA 92274 TO CONSIDER INCREASES TO THE WASTEWATER/SEWER RATES ("RATES"). THIS PUBLIC HEARING IS IN ADDITION TO PUBLIC HEARING ON MAY 17TH, 2023. IF YOU ALREADY SUBMITTED A VALID PROTEST BALLOT IT WILL BE COUNTED AND YOU ARE NOT REQUIRED TO SUBMIT A SECOND PROTEST BALLOT.

WHY ARE YOU RECEIVING THIS NOTICE?

This notice is being furnished to you by the Salton Community Services District ("SCSD") pursuant to the California Constitution Article XIII Section D (also known as "Proposition 218"). Under the terms of Proposition 218, the District is required to notify property owners of proposed changes to property-related fees such as sewer services. This letter serves as notice that the SCSD will hold a public hearing to consider increases to its current wastewater/sewer rates ("Rates") and that you have the right to protest the increases as detailed below.

WHAT DO SEWER RATES FUND?

Sewer treatment rates are based on water consumption using engineering factors for conversion into equivalent dwelling units ("EDU(s)"). The SCSD provides wastewater/sewer services ("Services") to about 3,018 EDUs and including approximately 59 commercial accounts. These services must be financially self-sufficient.

Annual Rates paid by users of the sewer and wastewater treatment system ("System") are the SCSD's primary sources of revenue All revenue generated from Rates is used to maintain and operate the System and not any other SCSD operation. These revenues must meet all the costs of providing the Services including, but not limited to, electricity, chemicals, maintenance, licensing, fees, salaries of staff, professional fees, repairs, replacements, administrative costs and build up reserves for emergency repairs and future replacement of the System when it is time to be replaced

WHY ARE RATE CHANGES REQUIRED

A complete budget review and analysis of the Rates was performed by an independent consultant. This rate study was funded by a grant from the State of California. This analysis examined the cost to provide the Services with the objective of striking a better balance between operating and non operating revenues while continuing to promote a fair and equitable rate structure for all customers. Rates need to be adequate to recover SCSD's expenses for providing the Services while ensuring that costs are equitably allocated so that Rates are fair and in proportion to the Services received by each user.

The SCSD also recently completed an analysis of the capital replacement requirements for the System. All the capital assets of the System were reviewed and an estimated replacement timeframe and cost were assigned. These replacements will be funded in part with the proposed rate increases and may also be funded based on grants and other funding sources.

The last rate increase for Services by the SCSD was adopted in 2016 with periodic cost of living increases the last of which was made effective by SCSD in fiscal year 2020-2021. Despite these increases the System operating costs and reserves are not adequately funded at this time.

HOW ARE RATES CALCULATED?

SCSD uses one annual base rate of $640.74 for all residential customers, regardless of wastewater connection size. Commercial connections are charged the greater of $7.70 per hundred cubic feet ("CC") of water usage or the residential rate of $640.74.The two Schools connected to SCSD are charged per student at a rate of $15.53 for SC Elementary School and $46.53 per student for SC High School. As shown on the table below, the District's wastewater enterprise's primary source of revenues consists of annual wastewater base fees and flow charges.