2021 Water and Sewer Rate Study - Draft Report — File 211857

City of Somerville, MA 2021 Water and Sewer Rate Study – Draft Report May 10, 2021

May 10, 2021 Mr. Alex G Marini Lessin Director of Finance & Administration City of Somerville Water & Sewer Department 17 Franey Rd Somerville, MA 02145 Re: 2021 Water and Sewer Rate Study – Draft Report Dear Mr. Lessin, Stantec Consulting is pleased to present this Draft Report of the 2021 Water and Sewer Rate Study that we performed for the City of Somerville, Massachusetts. We appreciate the fine assistance provided by you and all of the members of the City Staff who participated in the Study. If you or others at the City have any questions, please do not hesitate to call me at [phone removed] or email me at [email removed]. We appreciate the opportunity to be of service to the City and look forward to the possibility of doing so again in the near future. Sincerely, Kyle Stevens Project Manager Managing Consultant Enclosure

City of Somerville| Water and Sewer Rate Study Report TABLE OF CONTENTS Introduction …….. …… ................................................................................................................ 1 Background ...................................................................................................................... 1 Objectives ........................................................................................................................ 1 Financial Sustainability Analysis ............................................................................................... 2 Description ....................................................................................................................... 2 Source Data ..................................................................................................................... 3 2.2.1 Fund Balance ............................................................................................................ 3 2.2.2 Revenues .................................................................................................................. 3 2.2.3 Operating Expenditures ............................................................................................ 4 2.2.4 Capital Investment Plan ............................................................................................ 4 2.2.5 Existing Debt Service ................................................................................................ 4 Assumptions ..................................................................................................................... 5 2.3.1 Cost Escalation ......................................................................................................... 5 2.3.2 Interest Earnings on Invested Funds ........................................................................ 5 2.3.3 Minimum Reserve Policy .......................................................................................... 5 2.3.4 Future Borrowing & Capital Funding ........................................................................ 5 2.3.5 Debt Service and Coverage ...................................................................................... 6 Results ............................................................................................................................. 7 Conclusions & Recommendations ................................................................................... 9 Residential Bill Survey & Customer Impacts ............................................................................ 11 Affordability Analysis .................................................................................................................. 12 U.S. EPA Residential Indicator ........................................................................................ 12 Hours worked at minimum wage (HM) ............................................................................ 13 Weighted Average Residential Index (WARi®) ............................................................... 13 4.3.1 Assumptions and Data .............................................................................................. 14 4.3.2 WARi® Calculations ................................................................................................. 15 4.3.3 WARi® Thresholds ................................................................................................... 15 4.3.4 WARI® Findings – Actual Bills.................................................................................. 16 Customer Assistance Program ........................................................................................ 19 Conclusions and Recommendations ......................................................................................... 21 Appendix A: Water Fund Financial Sustainability Analysis Supporting Schedules................. 23 Appendix B: Sewer Fund Financial Sustainability Analysis Supporting Schedules ................ 35

1. Introduction City of Somerville| Water and Sewer Rate Study Report Stantec | 1 INTRODUCTION BACKGROUND Stantec Consulting Services Inc. (Stantec) has conducted a Rate Study (Study) for the Water and Sewer Funds (Fund or Utility) of the City of Somerville, Massachusetts (City). The following sections of the report describe in detail the assumptions, procedures, and results of the analysis, as well as the conclusions and recommendations developed during the analysis. The City of Somerville is a City of approximately 81,000 residents and is one of several communities that make up the greater Boston metro area. One of the many critical quality of life functions of the City Government is to provide water and sewer services to its citizens and businesses located within the City while ensuring compliance with applicable environmental regulations. The City’s water supply and wastewater treatment functions are provided by the Massachusetts Water Resources Authority (MWRA). At the end of 2020, there were approximately 15,000 water and sewer accounts receiving service within the City. The City has historically evaluated water and sewer rates on an annual basis as part of its budget process. Consistent with this practice, in 2021, the City retained Stantec to perform a comprehensive rate study which includes a number of objectives as described below. OBJECTIVES The principal objectives or components of the Study are as follows: Water and Sewer Financial Sustainability Analysis – Conduct an analysis that evaluates the current and projected financial condition of the City’s Water and Sewer Funds and identifies financial adjustments that will provide a sustainable future for the City utilities over a multi-year projection period. Affordability Analysis – Analyze current utility billing data and US census data for the service area to understand the extent of utility bill affordability challenges for residential customers currently and projected into the future. This analysis will consider traditional methods such as the EPA’s residential indicator as well as more sensitive and granular metrics including Stantec’s Weighted Average Residential Index (WARi) approach.

2. Financial Sustainability Analysis City of Somerville| Water and Sewer Rate Study Report Stantec | 2 FINANCIAL SUSTAINABILITY ANALYSIS The City retained the services of Stantec to evaluate the current and projected financial condition of the City’s Water and Sewer Fund and identify revenue enhancements and other financial adjustments that will provide a sustainable future for the City’s utilities over a multi-year projection period. This report describes in detail the approach taken to complete the study, as well as the results of the analysis, our concluding observations, and considerations for the future. DESCRIPTION This section presents the financial management plan developed during the Study. The first two sub- sections present a description of the base data, assumptions, and policies reflected in the Study. The last two sub-sections provide the results and conclusions of the Study, while Appendix A and Appendix B include detailed schedules supporting the financial management plan identified herein. Throughout the course of the Study, we conducted multiple interactive work sessions with City Staff. During these work sessions, we examined the impact of various alternatives upon key financial indicators by use of graphical representations from our interactive rate model. In this way, we developed revenue adjustment plans for each alternative financial management plan identified, including the recommended financial management plan presented in this report, which will allow the Utility to meet its projected requirements and financial performance goals and objectives throughout the projection period. It is important to note that the revenue adjustment plans defined throughout this report are fundamentally being driven by the need to make generational investments in infrastructure though the City’s capital investment plan. In order to initialize our analysis, we obtained the historical and budgeted financial information regarding the operation of the Utility. We discussed with City Staff any assumptions and policies that would affect the financial performance of the Utility such as additional expenses outside of the budget, required levels of operating and capital reserves, earnings on invested funds, escalation rates for operating costs, etc. All of this information was entered into our Financial Analysis and Management System (FAMS) interactive model. The FAMS model produced a ten-year projection of the sufficiency of the current revenues to meet all of the Utility’s current and projected financial requirements and determined the level of revenue increases necessary in each year of the projection period to provide sufficient revenues to fund all of the Utility’s cost requirements. FAMS utilizes all projected available and unrestricted funds in each year of the projection period to pay for capital projects. The model is set up to reflect the rules of cash application as defined and applied by the City in order to produce a detailed summary of the funding sources to be used for each project in the Capital Investment Plan (CIP).

2. Financial Sustainability Analysis City of Somerville| Water and Sewer Rate Study Report Stantec | 3 SOURCE DATA The analysis used both historical and projected information. The following presents the key source data utilized in the Financial Sustainability Analysis (FSA). 2.2.1 Fund Balance City Staff provided historical audited financial information as of July 1, 2020, which was used to establish the beginning fiscal year (FY) 2021 balances for the Water and Sewer Funds. Beginning balances were ultimately categorized into two “buckets”, the City’s Enterprise Fund and Stabilization Funds (Water & Sewer Stabilization Fund and Infiltration & Inflow Fund). The City’s Enterprise Fund consists of unrestricted cash balances that are available to the Utility for operations and ultimately represents the funds available for rate setting purposes.1 Any funds or proceeds reserved for specific capital projects are excluded from Enterprise Fund beginning balances, as they are accounted for separately within the City’s separate debt/project sub-funds. Additional information regarding the purpose of the City’s Enterprise Fund is defined in Section 2.3.3 of this report and specific details regarding the City’s beginning Enterprise Fund balance calculation as of July 1, 2020 is presented on Schedule 2 of Appendix A and B. 2.2.2 Revenues Revenue sources utilized in the Study consist of rate revenues, liens redeemed, other operating revenues from miscellaneous service charges, and interest earnings revenues. Rate revenues were projected in FY 2021 to reflect the continuation of impacts from the COVID-19 pandemic and observed demand trends. Each year thereafter, rate revenues reflect prior year revenue, adjusted for projected growth in equivalent residential units (ERUs) and billed volume. Annual lien revenues were estimated for FY 2021 to reflect administrative changes in the process and a rise in delinquent accounts due to the global pandemic. This is projected to result in a rise in revenues in FY 2022 and then a normalization of this revenue stream in FY 2023 and forward as the pandemic’s effects subside. As such, water and sewer liens redeemed were projected as a percent of rate revenues (approximately 2.5% for water and 2.3% for sewer) starting in FY 2023, based upon historical levels. Other operating revenue projections were projected based upon the FY 2021 Original Budget provided by City Staff and maintained at the same level for the entire projection period. Interest earnings were calculated annually based upon projected average fund balances and assumed annual interest earnings rates. Additionally, contributions to the City’s Water and Sewer Stabilization Fund were forecasted at the budgeted level of $2.2 million (M) for FY 2021 (split 32% water and 68% to sewer), and then for each year thereafter at an assumed amount of $2.0M (split 20% water and 80% sewer). 1 What the City refers to as its “Enterprise Fund” is commonly referred to as an “operating fund” or “revenue fund” by other municipal agencies.

2. Financial Sustainability Analysis City of Somerville| Water and Sewer Rate Study Report Stantec | 4 2.2.3 Operating Expenditures Operating expenses include personal services costs, operating and maintenance (O&M) costs, Massachusetts Water Resources Authority (MWRA) assessment costs, and minor capital outlays. All operating expenses in FY 2021 reflect the City’s FY 2021 Original Budget and were projected each year thereafter based upon assumed future cost escalation factors. It is important to note that in each year of the forecast, including the budget year FY 2021, an actual execution rate of 100% was assumed for all operating expenses, meaning that the full budget is expected to be expended each year. 2.2.4 Capital Investment Plan Capital improvement projects mostly represent the renewal and replacement of existing infrastructure and to a lesser extent new infrastructure. Under the auspice of the current rate study, Stantec worked with City Staff to develop a projection of capital spending for FY 2021 - FY 2031 and incorporate the capital investment plan (CIP) into the FAMS financial model. The total capital spending forecasted from FY 2021- FY 2031 in the model, in future day dollars2, is $116M for the Water Fund and $463M for the Sewer Fund. The capital plan as projected has been executed at 100%, functionally meaning that all capital is anticipated to be spent in the year projected at the amount projected. Importantly, funding rules for capital spending projections were not defined within the financial model, rather the City’s Finance Staff processed the expected CIP spending by year into a schedule of annual debt service requirements. In doing so the projection more accurately reflects the process by which the City utilizes short term debt, known as bond anticipation notes (BAN) for a typical 2-year term before securing long term financing. 2.2.5 Existing Debt Service This Study reflects the annual principal and interest requirements associated with the City’s outstanding water and sewer financing, which includes municipal use bonds, MWRA loans, and short-term BANS. Annual existing debt service levels in FY 2021 are approximately $1.4M for the Water Fund and $1.1M for the Sewer Fund. 2 The CIP that was provided by City Staff includes inflationary assumptions, and therefore capital spending projections reflect future dollars rather than current day dollars.

2. Financial Sustainability Analysis City of Somerville| Water and Sewer Rate Study Report Stantec | 5 ASSUMPTIONS The following presents the key assumptions utilized in the FSA. 2.3.1 Cost Escalation Annual cost escalation factors for the various types of operating expenses were discussed with City Staff and applied in each year of the projection period, beginning in FY 2022. The specific escalation factors assumed for each category of expense are presented in Appendix A & B of this report and reflect recent historical trends, current industry observations, and City Staff expectations. 2.3.2 Interest Earnings on Invested Funds The Study reflects assumed future annual interest-earning rates of 0.75% in each year of the forecast starting in FY 2021. 2.3.3 Minimum Reserve Policy Reserve balances for utility systems are funds set aside for a specific cash flow requirement, financial need, project, task, or legal covenant. These balances are maintained in order to meet short-term cash flow requirements, and at the same time, minimize the risk associated with meeting the financial obligations and continued operational and capital needs under adverse conditions. The level of reserves maintained by a utility is an important component and consideration of developing a utility system multi-year financial management plan. Many utilities, rating agencies, and the investment community as a whole place a significant emphasis on having sufficient reserves available for potentially adverse conditions. The rationale related to the maintenance of adequate reserves is twofold. First, it helps to assure that the utility will have adequate funds available to meet its financial obligations during unusual periods (e.g., when revenues are unusually low and/or expenditures are unusually high). Second, it provides funds for emergency repairs or replacements to the system, which may occur because of natural disasters or unanticipated system failures. The financial management plan presented in this report assumes the City will maintain a minimum Enterprise Fund (operating fund) balance or reserve equal to 30% of annual operating expenses, including personal services costs, operating and maintenance costs, and MWRA assessment costs. This level of reserves is consistent with our experience with other financially stable utility systems. 2.3.4 Future Borrowing & Capital Funding The analysis included herein assumes that future capital will be financed and result in new debt issuance, with the exception of vehicles and minor capital. As such Finance Staff has calculated future debt service schedules based on capital spending expectations and incorporates both short term and long-term financing facilities. This schedule has been relied upon in the analysis as the authoritative source for new annual debt service requirements and is included in appendix A & B, for water and sewer respectively.

2. Financial Sustainability Analysis City of Somerville| Water and Sewer Rate Study Report Stantec | 6 2.3.5 Debt Service and Coverage The utility has a stated finical policy of maintaining a debt to operating revenue ratio of 30% or lower. This key metric has been included in the forecast and calculated in each and every year using a conservative definition of revenues consisting of mainly rate revenues from charges for services. The metric will show notable deterioration as the utility is forecasted to take on meaningful additional debt over the forecast period. Of note the utility is expected to receive stabilization contributions which will pay for debt service but are not included in this ratio. The contributions are used only to offset debt service expenses and thus provide a significant boost in the resources available to manage ongoing debt cost. Alternatively, many utilities have a debt covenant to maintain net revenues (gross revenues minus operating expenses) that are at least 1.25 times greater than the annual debt service expense (i.e. the annual principal and interest payments) for senior lien debt and 1.15 times annual debt service expenses for subordinate debt. Stantec has included this calculation as well for the entire forecast period. Per recently published guidance from Fitch Ratings, the municipal ratings agency, utility systems with Midrange financial profiles maintain debt service coverage greater than 1.50 times net revenue and Stronger financial profiles maintain debt service coverage greater than 2.00 times net revenue. Per the financial management plan presented herein, projected annual debt service coverage ranges from 5.52 times net revenue to 1.31 times net revenue over the forecast period.

2. Financial Sustainability Analysis City of Somerville| Water and Sewer Rate Study Report Stantec | 7 RESULTS Once all revenue requirements for the Water and Sewer Funds were included within the Financial Sustainability Analysis, a diagnostic model run was conducted. A diagnostic model run allows for an understanding of the trajectory for the Water and Sewer Funds without any revenue adjustments (water and sewer rate increases) over the projection period. Importantly this step does not assume that future rate revenue adjustments are needed, rather it sets a baseline if current revenue levels are maintained. Figures 1 and 2 display the end of year Enterprise Fund balances for the Water Fund and Sewer Fund, respectively. In both cases the diagnostic calculation of the model results in a depletion of fund balances below the policy minimum target by FY 2023, indicating that revenues are insufficient to fund cost requirements over the projection period. Figure 1 – Water Diagnostic Model Run (Enterprise Fund Balances) Figure 2 – Sewer Diagnostic Model Run (Enterprise Fund Balances) As demonstrated in Figures 1 and 2, the Water and Sewer Funds will require revenue adjustments throughout the projection period in order to provide sufficient revenues to fund the ongoing operations and maintenance costs, capital improvement projects, renewal & replacement costs, new debt service, and reserve requirements of the Enterprise Fund. -$100.0M -$50.0M $0.0M $50.0M 20 21 22 23 24 25 26 27 28 29 30 31 Fund Balance Target -$200.0M -$150.0M -$100.0M -$50.0M $0.0M $50.0M 20 21 22 23 24 25 26 27 28 29 30 31 Fund Balance Target

2. Financial Sustainability Analysis City of Somerville| Water and Sewer Rate Study Report Stantec | 8 The recommended financial management plan and corresponding plan of sustainable rate adjustments is based upon the source data and assumptions as described in the previous sections of this report. Appendix A and B include several detailed schedules presenting key aspects of the ten-year financial management plan, while the recommended rate adjustment plan for the immediate five-year planning period is presented on Tables 1 and 2. It is important to note that the rate adjustments presented herein are only applied to volumetric rates, with no adjustments applied to fixed charges. Additionally, the rate increases presented herein will have varying impacts on customer bills based upon user class and the respective level of water/sewer use. The sustainable rate adjustment plan has been shown first as “just-in-time” whereby increases are applied in the year they are required to maintain sustainability. Alternatively, in the “Level” plan adjustments provide a smoothed rate plan. The Level plan is the recommend plan for its predictability to customers and minimization of large increases in any given year. Table 1 – Water Recommended Level Rate Revenue Adjustments and Just-in-Time Calculations Fiscal Year 2022 2023 2024 2025 2026 Effective Date 7/1/2021 7/1/2022 7/1/2023 7/1/2024 7/1/2025 Water Volumetric Plan Just-in- Time 0.00% 22.44% 8.12% 9.06% 6.67% Water Volumetric Plan Level Adjustments 7.00% 10.00% 10.00% 10.00% 10.00% Table 2 – Sewer Recommended Level Rate Revenue Adjustments and Just-in-Time Calculations Fiscal Year 2022 2023 2024 2025 2026 Effective Date 7/1/2021 7/1/2022 7/1/2023 7/1/2024 7/1/2025 Sewer Volumetric Plan Just-in- Time 12.45% 11.98% 3.79% 10.56 12.76% Sewer Volumetric Plan Level Adjustments 10.50% 10.50% 10.50% 10.50% 10.50% The revenue adjustments as calculated are fundamentally being driven by the need to make generational investments in infrastructure though the capital investment plan. The City is in a very similar situation as peer New England utilities that have significant replacement needs due to aging infrastructure and modern environmental regulations. Importantly, the CIP as projected by magnitude and timing is constructed to avoid regulatory compliance issues in the future, which almost certainly would result in large rate revenue increases at that point in time. It is important to note that the projections of future conditions underlying this analysis are not intended to be predictions. Applicable to many utility systems, there are multiple factors beyond the City’s control, such as i) severe weather, ii) regulatory changes, iii) national, regional, and local economic conditions, iv) the rate of customer growth, v) operating and capital cost inflation, and vi) changes in the timing and composition of the Utility’s CIP, that may have material impacts on the future financial condition of the Utility. Furthermore, the projections in this Study rely upon data and guidance provided by the City during the

2. Financial Sustainability Analysis City of Somerville| Water and Sewer Rate Study Report Stantec | 9 development of the Study, and while the information utilized in this Study is believed to be reliable, detailed independent reviews or auditing of the data were not conducted. As a result, there will usually be differences between forecasted and actual results because events and circumstances frequently do not occur as expected, and those differences may be material. While Stantec has no responsibility to update this report for events and circumstances occurring after the date of this report, future management actions should be based upon and adjusted to reflect future results as they occur. These comments are provided to emphasize the importance of active management informed by the actual future results of Utility operations by the City. While the planning effort supported by this Study will serve to guide and inform the City in balancing future revenue and spending decisions, it is only through observation of future results, and the update of this analysis, that the City will be able to determine the actions required to ensure its financial and operational objectives are met over time. Appendix A & B includes detailed schedules presenting all components of the financial management plan developed for the Utility. CONCLUSIONS & RECOMMENDATIONS We have reached the following conclusions and recommendations regarding the sufficiency of the Utility’s current rates over the projection period: • Based upon the assumptions and base data described herein, the City’s current water and sewer rates will not generate sufficient revenue to satisfy the Utility’s annual operating expenses, capital improvement requirements, debt service, and operating reserve requirements over the five-year and ten-year planning horizon analyzed. • We recommend that the City adopt the sustainable “level” annual rate revenue adjustments for water and sewer outlined in Table 3 below to cover all the utility’s expenses, provide sufficient debt service coverage, and maintain an operating reserve equal to 30% of operating expenses. If the City wishes to maintain a greater level of operating reserves, a plan of higher rate increases will be required. Table 3 – Recommended Water and Sewer Revenue Adjustments Fiscal Year 2022 2023 2024 2025 2026 Effective Date 7/1/2021 7/1/2022 7/1/2023 7/1/2024 7/1/2025 Water Volumetric Adjustments 7.00% 10.00% 10.00% 10.00% 10.00% Sewer Volumetric Adjustments 10.50% 10.50% 10.50% 10.50% 10.50%

2. Financial Sustainability Analysis City of Somerville| Water and Sewer Rate Study Report Stantec | 10 • The recommended water and sewer rate revenue adjustment plans will result in impacts to customer bills in FY 2022 as reflected in Table 4. Table 4 – FY 2022 Customer Bill Impacts Based Upon Recommended Revenue Adjustments Total Units per Bill (in CCF)3 Current FY 2022 Annual Total Annual Total $ Change % Change 15 (average condo unit) $784 $840 $55.98 7% 18 (average single family home) $946 $1,017 $70.92 7% 30 (average two-family home) $1,597 $1,727 $130.68 8% 42 (average three-family home) $2,247 $2,437 $190.44 8% 110 (average 8-unit apartment building) $6,043 $6,583 $539.40 9% • In addition, the City should perform updates to this analysis on an annual basis to evaluate the adequacy of its revenues and plan of annual rate revenue increases. Doing so will allow for the incorporation of updated revenue and expense information and changes in economic conditions and demands so that any necessary adjustments to planned rate increases can be made to allow the Utilities to meet requirements during the projection period and minimize rate impacts from future events which occur differently than currently projected. 3 Average usage assumptions reflect 4 months of usage (tri-annual bill) per customer class, as derived from analysis of the City’s FY 2019 detailed billed data.

3. Residential Bill Survey & Customer Impacts City of Somerville| Water and Sewer Rate Study Report Stantec | 11 RESIDENTIAL BILL SURVEY & CUSTOMER IMPACTS Stantec also performed a comparative water and sewer monthly residential bill survey of the City’s surrounding geographic area. The survey presents the average annual water and sewer bill in effect for each community as of FY 2021 based on an assumed average annual usage of 54 CCF. Figure 3 – FY 2021 Annual Single Family 5/8" Water and Wastewater Bill Comparison The survey results indicate that the City charges water and sewer rates that are currently towards the middle/higher of the market range for the City’s surrounding geographic area. It should be noted though that no detailed review of other peer municipalities has been performed. Often times there are level of service differences, alternative funding arrangements and plans for future rate increases that are not evident in this type of comparison. It is important to note that there are several factors that contribute to differences in the cost of service observed between communities at a given point in time. Each entity in the bill comparisons provided herein have a unique combination of level of service, pricing objectives, supplemental funding sources, system characteristics, age of infrastructure, regulatory requirements, development activity, etc. These bill comparisons reflect the current cost of service in each community as of March 2021 and readers are advised to expect that many of the bills presented herein will increase in the future at varying levels. $ 764.25 $- $ 200 $ 400 $ 600 $ 800 $ 1,000 $ 1,200 $ 1,400 Water Wastewater Average

4. Affordability Analysis City of Somerville| Water and Sewer Rate Study Report Stantec | 12 AFFORDABILITY ANALYSIS This section of the report discusses the affordability characteristics in the City’s service area and the impacts of current and future water and sewer bills. These characteristics include the quantification of affordability and potential measures to be taken to improve affordability of water and sewer service for the City’s utility customers. Metrics used to measure affordability in the service area include the U.S. EPA’s Residential Indicator (RI), the Hours Worked at Minimum Wage (HM) as well as the Weighted Average Residential Index (WARi®). It is important to note that the affordability analysis documented in this section of the report was completed in 2021 and reflects the most current data available at that time. The methodology, analysis and results for each of the affordability metrics are outlined in the following sections of the report. U.S. EPA RESIDENTIAL INDICATOR The first approach is based on the guidance provided by the U.S. EPA within their financial capability assessment guidance. The U.S. EPA has historically used the Residential Indictor (RI) to assess the ability of a community to afford necessary capital improvements to meet regulatory requirements. The RI approach evaluates the combined water and sewer bill as a percentage of the median household income within the utility’s service area. Under this approach water and sewer service are deemed unaffordable or a high burden if the bill exceeds 4.5% of the median household income. This approach was applied within the City based on the current water and sewer bill and the median household income. As shown in Figure 3, when the average residential single family bill is divided into median household income the resulting burden is 0.77%, well under the 4.5% considered unaffordable. In fact, the bill would have to rise to $4,379 in order to reach the 4.5% level, indicating that bills could rise significantly before unaffordability is reached. Figure 3 – U.S. EPA Calculation While the RI calculation for the City demonstrates that bills are currently affordable and that rates would have to increase substantially before the service would be deemed unaffordable, the approach uses a very broad-brush approach. The use of median household income does not provide insight into how the bills impact utility customers that fall outside the median income. For these reasons alternative affordability metrics have been developed. $752 (Average Bill) $97,328 (MHI) = 0.77%

4. Affordability Analysis City of Somerville| Water and Sewer Rate Study Report Stantec | 13 HOURS WORKED AT MINIMUM WAGE (HM) The Hours Worked at Minimum Wage (HM) approach was developed by Dr. Manny Teodoro (2018. Measuring Household Affordability for Water and Sewer Utilities. Journal AWWA, 110:1:13). The approach evaluates the affordability of water and sewer bills in terms of the hours of work required at minimum wage to pay the monthly bill. While cautioning against comparing utilities’ HM results, Dr. Teodoro considers an HM of 8 hours or less (or one day of work per month) as a rule of thumb for what is an affordable level of spending on water and sewer bills. HM is calculated using the following formula: 𝐻𝑀= (W + S) A W & S are the average costs of essential water and sewer services; and A is the state or local minimum wage. The HM calculation provides the most direct measurement of household-level affordability for households at the lowest end of the income distribution. Figure 4 displays the calculation for the City’s service area, demonstrating that 5.84 hours are required at the statutory minimum wage in order to pay the average monthly cost of water and sewer utility services. As mentioned above, over 8 hours working at the minimum wage is considered to be burdensome and therefore the City’s HM falls below this threshold. Additionally, the minimum wage is expected to rise over the coming years to $15 per hour per state law. In the near term this increase in base pay will act to maintain this metrics findings even in light of increasing average bills, due to rate increases. Figure 4 – Hours Worked at Minimum Wage WEIGHTED AVERAGE RESIDENTIAL INDEX (WARI®) Stantec’s WARi® analysis provides detailed information on the total cost of water and sewer bills relative to household income for each census block in the City’s service area, both currently and as projected based on the rate increases discussed in preceding sections of the report. This detailed view of affordability not only provides information regarding the impact of the proposed changes in rates, but also helps the City $78.87 $13.50 = 5.84 Hours Unaffordable = 8+ Hours

4. Affordability Analysis City of Somerville| Water and Sewer Rate Study Report Stantec | 14 identify neighborhoods facing the greatest affordability challenges, quantify potential impacts of different forms of assistance, and target outreach and assistance to areas with the greatest need. The WARi® analysis is an improvement over the U.S. EPA’s Residential Indicator. In contrast to the simplified RI approach, WARi® accounts for income distribution and actual typical residential water and sewer bills at the census block level. This approach is different from the traditional calculation used by U.S. EPA which uses an average imputed water and sewer bill divided by a single median household income (MHI) value for the entire service area. WARi® has been specifically designed to leverage the data that modern utilities have about customer rates, and the highly granular demographic information available from the US Census Bureau through the American Community Survey. Given Somerville’s population density Census block were used as opposed to tracts, this provides a greater level of granularity in the analysis. The following sections explain the assumptions, sources of data, and calculations applied under the WARi® methodology. 4.3.1 Assumptions and Data The following assumptions and information are applied in the census blocks to evaluate affordability at the census block level: • Income and typical bills increase uniformly across census blocks when projecting affordability impacts in future years • Income increases at the rate of inflation but income distribution across income bins does not change over time when projecting affordability impacts • Household usage characteristics remain unchanged in affordability projection • Projected annual rate increases and changes to rate structures are applied to average consumption by census block to project affordability over time • Consumer price index (CPI) inflation estimate is 2.0% per year The following sources of data were used in determining the service area WARi®: • Somerville’s retail residential billing records for fiscal year 2019 • Projected retail residential rates for Somerville water and Sewer • American Community Survey (ACS) household and income data tables o 2019 ACS 5-year Median Household Income, Table B19013 o 2019 ACS 5-year Household Income Distribution, Table B19001 o 2019 ACS 5-year Selected Housing Characteristics, Table B25024 • United States Census Bureau’s Topologically Integrated Geographic Encoding and Referencing (TIGER) feature class to geolocate accounts

4. Affordability Analysis City of Somerville| Water and Sewer Rate Study Report Stantec | 15 4.3.2 WARi® Calculations Previously discussed assumptions and data sources are combined to evaluate the financial impact of changes to water and sewer rates in the Somerville service area. The following steps outline the WARi® calculation methodology. 1. Residential billing accounts were geolocated within the Somerville service area and associated with a particular census block; 2. Account and census block data were summarized to aggregate data by census block and validate data; 3. Typical bills were calculated for customers paying standard rates in each census block based on block-specific usage levels and applying the 2021 rates for Somerville; 4. Census data were gathered for MHI, income distribution, and housing characteristics within each census block; 5. A residential indicator (similar to EPA’s Residential Indicator) was calculated for each income bin by dividing the block-specific average annual bill (based on block-level usage and rate data) by the midpoint income level of each income bin; 6. A weighted average residential indicator was calculated for each block by averaging the residential indicator in each income bin, weighted by the number of households in each bin; 7. All calculations were repeated for each census block to determine a weighted average residential indicator for each census block; and 8. A single WARi® value for the service area was calculated as the weighted average residential indicator from each block, weighted by the number of households in each block. 4.3.3 WARi® Thresholds The City’s WARi® analysis requires benchmarking in order to put the service area and localized financial impacts into perspective. For this analysis, the WARi® results were benchmarked against thresholds for affordability as defined the U.S. EPA for Somerville, expressed as a typical indoor usage bill as a percent of median household income. For the service area a 10.60% WARI figure maps to the 4.5% U.S. EPA unaffordable bill threshold, meaning that all WARI scores above 10.60% are indicative of an unfordable census block. An affordability mapping and color schema have been defined in Table 5.

4. Affordability Analysis City of Somerville| Water and Sewer Rate Study Report Stantec | 16 Table 5 WARi® Financial Impact Thresholds Financial Impact EPA Affordability Index WARi® Shading Low <2.0% < 4.71% Low-Mid 2.0% - 3.0% 4.71% - 7.06% Mid 3.0% - 3.5% 7.06% - 8.24% Mid-High 3.5% - 4.5% 8.24% - 10.60% High >4.5% > 10.60% 4.3.4 WARI® Findings – Actual Bills The WARi® methodology allows for evaluation of affordability at the census block level. Maps were developed using this approach to illustrate localized bill and income impacts throughout the City’s service area. Bill impacts were calculated for each block as outlined in Section 4.1.5. A baseline assessment of affordability was developed based on typical usage levels in each block and the City’s rates in FY 2021. The FY 2021 WARi® value for the Somerville service area was calculated at 1.53%, well with in the low burden category from Table 5. Figure 5 presents the map of block-level WARi® results in FY2021 based on actual billing data.

4. Affordability Analysis City of Somerville| Water and Sewer Rate Study Report Stantec | 17 Figure 5 WARi® Map – 2021 Actual Bills Areas of concern can be identified when looking at regional impacts throughout the City’s service area. Specifically, the northwest region of the service area shows the greatest level of financial burden detected in the service area and is low-medium. Overall, the service area does not display widespread affordability issues when analyzed at the census block level, that is not to say that individual households are not affected by unaffordable bills. The affordability analysis considers household dynamics as part of the affordability program considerations in the next section. Bill impacts were then projected to 2030, the final year of interest in this current rate study. Typical bills were projected by applying changes to rate revenues as developed during the course of this study and discussed in section 2 of this report. The Somerville service area WARi® value in 2031 was calculated at 2.25%, placing the financial impact still in the low burden range, but higher than the baseline. Figure 6 presents projected block-level WARi® results in 2021, 2024, 2027, and 2030 based on actual typical usage levels.

4. Affordability Analysis City of Somerville| Water and Sewer Rate Study Report Stantec | 18 Figure 6 WARi® Map – 2021-2030 Actual Bills The financial burden associated with paying water and sewer bills clearly increases from 2021 to 2030 as bills are projected to increase faster than household incomes. This is evident as an increasing number of blocks move into the mid-impact category with a block-level WARi® value of at least 4.72%. It should be noted though even with the increases applied for the next 10 years the overall service area still shows broad affordability. In addition to the WARI analysis, the data that underpinned the analysis was further investigated for the purpose of defining affordability at the household level. This step recognizes that affordability is a household by household dynamic and while averages are useful for determining the prevalence of unaffordability when it is concentrated, they can often overlook acute instances of unaffordability. In order to understand the scale of unaffordability at the household level the average bill by census block was divided into each household’s income in the block and for households where the bill exceeds a 10.60% burden they are considered unaffordable. Figure 7 displays the service area wide estimate of households with unaffordable bills and demonstrates a range of 2,180 - 3,460 households have unaffordable bills.

4. Affordability Analysis City of Somerville| Water and Sewer Rate Study Report Stantec | 19 Figure 7 – Household Unaffordable Bill Estimate CUSTOMER ASSISTANCE PROGRAM In recognition of affordability challenges faced by specific households in the service area, Stantec and City staff developed a framework by which to construct a direct assistance pilot program. Direct assistance programs assist with affordability of utility bills by providing a reduced bill for those properties that qualify the assistance. To help frame a customer assistance program several key factors should be taken into consideration including: Funding - Where will assistance funding come from and what is the amount of funding that will be dedicated to the assistance program? Eligibility - What level of income or other factors be considered when determining eligibility for the program? Level of Assistance - What level of assistance will be provided and will assistance vary based on income level or be uniform for all eligible participants? Each of these factors were considered in the development of the initial framework for a customer assistance program for the City’s utilities. With regards to funding of the program we recommend that any assistance program be funded from outside of the Utility. Since the majority of the Utility’s costs are fixed (e.g., debt service) funding an assistance programs from utility revenues will lead to a paradigm whereby decreasing one set of customer’s bills will lead to increases in others, potentially exacerbating the unaffordability of other customer’s bills. Funding from an outside source such as an appropriation from the stabilization reserve, will provide assistance without any knock-on effects to other customers. For this reason, it recommended that the City use an outside of the utility funding source.

4. Affordability Analysis City of Somerville| Water and Sewer Rate Study Report Stantec | 20 With regards to income and eligibility, the most commonly used metric is the federal poverty level. Specifically, 200% of the federal poverty level is often used as the maximum income for eligibility into affordability programs. We recommend that the City use this common industry threshold in designing a pilot affordability program. It should be noted that in Stantec’s experience there is often a gap in the number of households who are eligible and those who avail themselves of an assistance program. As such the pilot will assist in determining the level of demand in the community and providing a flexible framework that can evolve to best help customers in need. The amount of the discount provided by the customer assistance program is fundamentally a policy decision. One approach is to scale the benefits with either household size or declining income. Doing so allows the benefits of the program to be uniformly distributed recognizing that households often times have differing circumstances. Table 6 displays an example scaling of utility bill assistance based on declining household income as measured against the federal poverty line. Then Figure 8 displays the application of assistance to a 2 person household at different household income levels, highlighting the increasing assistance that scaling provides as income falls. Table 6 – Assistance Scaling by Income 100% of Federal Poverty Level 125% of Federal Poverty Level 150% of Federal Poverty Level 175% of Federal Poverty Level 200% of Federal Poverty Level Bill Assistance 45% 40% 35% 30% 25% Figure 8 – Assistance for an Average home (2 Person) $835 Annual W&S Bill $379 $337 $294 $252 $210 100% of Federal Poverty Level 125% of Federal Poverty Level 150% of Federal Poverty Level 175% of Federal Poverty Level 200% of Federal Poverty Level

5. Conclusions City of Somerville| Water and Sewer Rate Study Report Stantec | 21 CONCLUSIONS AND RECOMMENDATIONS Based upon the analysis presented herein and the results presented in the prior subsections, we have developed the following conclusions and recommendation for the City’s consideration: • The City’s current water and sewer rates will not be sufficient to fund its future expenses, should they occur as planned. As such a plan of rate revenue adjustments has been developed for both the water and sewer utility in order to ensure that fiscal sustainability can be achieved by balancing revenues with expected expenditures. The recommended water and sewer rate adjustments for FY2022 are presented below along with estimated future year adjustments. Recommended Water and Sewer Revenue Adjustments Fiscal Year 2022 2023 2024 2025 2026 Effective Date 7/1/2021 7/1/2022 7/1/2023 7/1/2024 7/1/2025 Water Volumetric Adjustments 7.00% 10.00% 10.00% 10.00% 10.00% Sewer Volumetric Adjustments 10.50% 10.50% 10.50% 10.50% 10.50% • The City’s current water and sewer bills are broadly affordable when viewed at the service level or census block group level. When affordability calculations are run at the household level there are an estimated 2,820 households that have an unaffordable utility bill. A such a direct assistance program targeted at these households is warranted and could provide relief, in light of rising utility bills. The City should continue to review the financial sustainability of the water and sewer fund on an annual basis. Doing so will allow for the recognition of revenues and expenses that may occur differently than forecasted in this Study, as well as changes to customer class characteristics and system costs. In doing so, the City may consider necessary adjustments to its rates in the future.

Disclaimer City of Somerville| Water and Sewer Rate Study Report Stantec | 22 Disclaimer This document was produced by Stantec Consulting Services, Inc. (“Stantec”) for the City of Somerville (“City”) and is based on a specific scope agreed upon by both parties. Stantec’s scope of work and services do not include serving as a “municipal advisor” for purposes of the registration requirements of the Dodd- Frank Wall Street Reform and Consumer Protection Act (2010) or the municipal advisor registration rules issued by the Securities and Exchange Commission. Stantec is not advising the City, or any municipal entity or other person or entity, regarding municipal financial products or the issuance of municipal securities, including advice with respect to the structure, terms, or other similar matters concerning such products or issuances. In preparing this report, Stantec utilized information and data obtained from the City or public and/or industry sources. Stantec has relied on the information and data without independent verification, except only to the extent such verification is expressly described in this document. Any projections of future conditions presented in the document are not intended as predictions, as there may be differences between forecasted and actual results, and those differences may be material. Additionally, the purpose of this document is to summarize Stantec’s analysis and findings related to this project, and it is not intended to address all aspects that may surround the subject area. Therefore, this document may have limitations, assumptions, or reliances on data that are not readily apparent on the face of it. Moreover, the reader should understand that Stantec was called on to provide judgments on a variety of critical factors which are incapable of precise measurement. As such, the use of this document and its findings by the City should only occur after consultation with Stantec, and any use of this document and findings by any other person is done so entirely at their own risk.

Appendix A: Water Fund Financial Sustainability Analysis Supporting Schedules City of Somerville| Water and Sewer Rate Study Report Stantec | 23 APPENDIX A: WATER FUND FINANCIAL SUSTAINABILITY ANALYSIS SUPPORTING SCHEDULES Schedule 1 Assumptions Schedule 2 FY 2021 Beginning Balances as of 7/1/2020 Schedule 3 Projection of Cash Inflows Schedule 4 Projection of Cash Outflows Schedule 5 Cost Escalation Factors Schedule 6 Capital Investment Plan (CIP) Schedule 7 FAMS - Control Panel Schedule 8 Pro Forma Schedule 9 Funding Summary by Fund

Appendix A: Water Fund Financial Sustainability Analysis Supporting Schedules Assumptions Schedule 1 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 Rate Increase Adoption Date 7/1/2020 7/1/2021 7/1/2022 7/1/2023 7/1/2024 7/1/2025 7/1/2026 7/1/2027 7/1/2028 7/1/2029 7/1/2030 Annual Growth Water System Ending # of ERUs (1) 17,335 17,405 17,475 17,545 17,615 17,685 17,755 17,825 17,895 17,965 18,035 ERU Growth 70 70 70 70 70 70 70 70 70 70 70 % Change in ERUs 0.41% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.39% 0.39% 0.39% 0.39% Usage per ERU 122.13 123.26 123.27 123.28 123.30 123.31 123.32 123.33 123.34 123.35 123.37 % Change in Usage per ERU (2) -0.69% 0.92% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% Usage (CCF) (3) 2,117,216 2,145,366 2,154,206 2,163,045 2,171,884 2,180,723 2,189,563 2,198,402 2,207,241 2,216,081 2,224,920 % Change in Usage -0.29% 1.33% 0.41% 0.41% 0.41% 0.41% 0.41% 0.40% 0.40% 0.40% 0.40% Revenue Weighted % Change in Usage (4) -0.38% 1.45% 0.41% 0.41% 0.41% 0.41% 0.41% 0.41% 0.40% 0.40% 0.40% Capital Spending Annual Capital Budget (Future Year Dollars) 4,770,000 $ 7,970,000 $ 12,380,000 $ 15,060,000 $ 11,160,000 $ 11,390,000 $ 10,010,000 $ 10,360,000 $ 10,740,000 $ 11,060,000 $ 11,400,000 $ Average Annual Interest Earnings Rate On Fund Balances 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% Operating Budget Reserve (5) Target (Number of Months of Reserve) 3.6 3.6 3.6 3.6 3.6 3.6 3.6 3.6 3.6 3.6 3.6 Operating Budget Execution Percentage Personal Services 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% MWRA Assessment 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Fixed Operations and Maintenance 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Capital Outlay 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% (1) Equivalent residential units (ERUs) are a unit of measurement based upon a standard single-family residential home (5/8" meter) used to establish rates, fees and charges, and volume capacity limits. (2) FY 2021 assumption of reduced volume per ERU driven by assumed reduction in commercial billed volumes due to continued COVID-19 impacts. The analysis reflects a normalizing adjustment in commercial billed volumes in FY 2022. (3) A CCF stands for "centum cubic feet" and reflects 100 cubic feet of water, sometimes referred to as an HCF (hundred cubic feet). One CCF is equivalent to approximately 748 gallons. (4) Considers the weighted impact of projected usage assumptions by customer class. For example, commercial customers do not have a conservation tier for billed usage and therefore a reduction in usage per customer would hold a greater impact. (5) Reflects reserve target of 30% of operating expenditures per discussions with City Staff. City of Somerville | Water and Sewer Rate Study Report Stantec | 24

Appendix A: Water Fund Financial Sustainability Analysis Supporting Schedules FY 2021 Beginning Balances as of 7/1/2020 (1) Schedule 2 Fund Number 6000 7400 Stantec Grouping of Funds in Model Enterprise Fund Stabilization Fund Current Unrestricted Assets Cash and Cash Equivalents (2) 1,910,456 $ 4,361,567 $ Receivables Net of Allowance for Uncollectible 4,705,415 $ - $ Total Assets 6,615,871 $ 4,361,567 $ Current Liabilities Warrants Payable (425,227) $ - $ Accrued Payroll (24,261) $ - $ Accrued Interest (26,483) $ - $ Compensated Absences (1,000) $ - $ Current Portion of Notes Payable (BAN) (3,415,710) $ - $ Current Portion of Bonds Payable (1,123,234) $ - $ Calculated Fund Balance (Current Assets - Current Liabilities) 1,599,956 $ 4,361,567 $ Unrestricted Fund Balance Adjustments Plus: Current Portion of Notes Payable (3) 3,415,710 $ - $ Plus: Current Portion of Bonds Payable (3) 1,123,234 $ - $ Less: FY 2021 Liens Redeemed (323,298) $ - $ Less: Reclass Water Capital Expense (4) - $ (2,101,014) $ Net Unrestricted Fund Balance for Rate Setting 5,815,602 $ 2,260,553 $ Available Fund Balance for Rate Setting 5,815,602 $ 2,260,553 $ Fund Summary Enterprise Fund 5,815,602 $ Stabilization Fund 2,260,553 $ Total Available Funds for Rate Setting (5) 8,076,155 $ (1) Figures as of 6/30/2020 presented herein are per the City's Audited FY 2020 Comprehensive Annual Financial Report (Audited Report) and detailed Audited Report workpapers provided by City Staff. (2) Sub-fund apportionment of cash and cash equivalents derived per the City's detailed Audited Report workpapers. Adjustments for the reclass of water capital expenses are reported separately (refer to footnote 4). (3) Current portion of notes payable and bonds payable is omitted from the available fund balance calculation as the debt service associated is reflected within the annual cash flows forecast. (4) The City's detailed Audited Report workpapers include a report journal entry (JE #47) to reclass water and sewer capital expenses, resulting in a $2.1 million reduction in available cash and cash equivalents as of 6/30/2020. (5) Note that operating encumbrances and use of retained earnings have not been removed from beginning "available funds for rate setting" presented herein, but are accounted for elsewhere in the analysis. City of Somerville | Water and Sewer Rate Study Report Stantec | 25

Appendix A: Water Fund Financial Sustainability Analysis Supporting Schedules Schedule 3 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Rate Revenue Growth Assumptions 2 Water 3 % Change in ERUs (Base Revenue) 0.41% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.39% 0.39% 0.39% 0.39% 4 % Change in Billed Volume (Usage Revenue) -0.38% 1.45% 0.41% 0.41% 0.41% 0.41% 0.41% 0.41% 0.40% 0.40% 0.40% 5 Assumed Rate Revenue Increases 6 Assumed Water Base Rate Increase 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 7 Assumed Water Usage Rate Increase 0.00% 7.00% 10.00% 10.00% 10.00% 10.00% 7.00% 5.00% 5.00% 5.00% 5.00% 8 Water Rate Revenue (1) 9 Base Rate Revenue 905,705 $ 932,004 $ 935,753 $ 939,501 $ 943,249 $ 946,998 $ 950,746 $ 954,494 $ 958,243 $ 961,991 $ 965,740 $ 10 Usage Rate Revenue 12,662,179 $ 14,084,114 $ 15,556,755 $ 17,183,084 $ 18,979,111 $ 20,962,512 $ 22,521,362 $ 23,743,479 $ 25,031,503 $ 26,388,972 $ 27,819,608 $ 11 Total Water Rate Revenue (1) 13,567,884 $ 15,016,118 $ 16,492,508 $ 18,122,585 $ 19,922,360 $ 21,909,510 $ 23,472,109 $ 24,697,973 $ 25,989,746 $ 27,350,963 $ 28,785,348 $ 12 Other Operating Revenue 13 Water Liens Redeemed (2) 323,298 $ 712,314 $ 381,494 $ 419,003 $ 460,416 $ 506,140 $ 556,625 $ 596,324 $ 627,468 $ 660,286 $ 694,869 $ 14 Misc Receipts 285,000 $ 285,000 $ 285,000 $ 285,000 $ 285,000 $ 285,000 $ 285,000 $ 285,000 $ 285,000 $ 285,000 $ 285,000 $ 15 Total Other Operating Revenue 608,298 $ 997,314 $ 666,494 $ 704,003 $ 745,416 $ 791,140 $ 841,625 $ 881,324 $ 912,468 $ 945,286 $ 979,869 $ 16 Interest Income 17 Unrestricted (3) 42,045 $ 40,137 $ 36,540 $ 31,007 $ 28,264 $ 29,669 $ 33,540 $ 37,282 $ 40,005 $ 42,544 $ 46,072 $ 18 Total Interest Income 42,045 $ 40,137 $ 36,540 $ 31,007 $ 28,264 $ 29,669 $ 33,540 $ 37,282 $ 40,005 $ 42,544 $ 46,072 $ 19 Stabilization Fund Contributions to Debt Service (4) 1,423,728 $ 955,080 $ 409,582 $ 407,536 $ 407,528 $ 583,035 $ 602,306 $ 562,433 $ 439,220 $ 533,000 $ 597,609 $ 20 Total Cash Inflows 15,641,955 $ 17,008,649 $ 17,605,124 $ 19,265,130 $ 21,103,568 $ 23,313,355 $ 24,949,580 $ 26,179,013 $ 27,381,439 $ 28,871,793 $ 30,408,898 $ (3) Calculated based upon assumed interest earnings percentage (refer to Schedule 1) that is applied to average annual projected fund balances (refer to Schedule 9). Projection of Cash Inflows (1) Note that in addition to the growth assumptions and rate increases presented herein, the rate revenue projection for FY 2022 also includes an adjustment to "normalize" the City's assumed level of bill collections. Starting in FY 2023, rate revenues are projected based upon a higher level of collected rate revenues; consequently, the water liens redeemed assumption is reduced going forward (refer to footnote 2 of this Schedule or refer to the Pro Forma on Schedule 8). (2) The City's water liens redeemed have averaged at approximately 2.5% of annual rate revenues over the past 3 years (FY 2018 - FY 2020). Per discussions with City Staff, the financial projection assumes that water liens are collected within 1 year of their original bill date, with exception for FY 2020. Due to the impacts of COVID-19, the analysis assumes that uncollected water liens (in excess of 1 year) from FY 2020 will be recovered in FY 2022. The financial projection assumes water liens redeemed at 2.5% of rate revenue in each year thereafter. (4) Reflects contribution of available Water Stabilization Fund balances to offset annual projected debt service. Additional information related to the Water Stabilization Fund (including assumed contributions from the General Fund) is presented on Schedule 9. City of Somerville | Water and Sewer Rate Study Report Stantec | 26

Appendix A: Water Fund Financial Sustainability Analysis Supporting Schedules Projection of Cash Outflows Schedule 4 Expense Line Item Escalation Factor FY 2021 (1) FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 600051 - WATER PERSONAL SERVICE 2 SALARIES Salaries & Wages 535,455 $ 551,519 $ 568,064 $ 585,106 $ 602,659 $ 620,739 $ 639,361 $ 658,542 $ 678,298 $ 698,647 $ 719,607 $ 3 SALARIES CONTINGENCY Salaries & Wages 71,681 $ 73,831 $ 76,046 $ 78,328 $ 80,678 $ 83,098 $ 85,591 $ 88,159 $ 90,803 $ 93,527 $ 96,333 $ 4 WAGES Salaries & Wages 619,142 $ 637,716 $ 656,848 $ 676,553 $ 696,850 $ 717,755 $ 739,288 $ 761,467 $ 784,311 $ 807,840 $ 832,075 $ 5 OVERTIME Salaries & Wages 7,360 $ 7,581 $ 7,808 $ 8,042 $ 8,284 $ 8,532 $ 8,788 $ 9,052 $ 9,323 $ 9,603 $ 9,891 $ 6 OVERTIME - LABOR Salaries & Wages 110,000 $ 113,300 $ 116,699 $ 120,200 $ 123,806 $ 127,520 $ 131,346 $ 135,286 $ 139,345 $ 143,525 $ 147,831 $ 7 LONGEVITY Salaries & Wages 1,760 $ 1,813 $ 1,867 $ 1,923 $ 1,981 $ 2,040 $ 2,102 $ 2,165 $ 2,230 $ 2,296 $ 2,365 $ 8 OUT OF GRADE-LABOR Salaries & Wages 5,000 $ 5,150 $ 5,305 $ 5,464 $ 5,628 $ 5,796 $ 5,970 $ 6,149 $ 6,334 $ 6,524 $ 6,720 $ 9 LONGEVITY-LABOR Salaries & Wages 2,400 $ 2,472 $ 2,546 $ 2,623 $ 2,701 $ 2,782 $ 2,866 $ 2,952 $ 3,040 $ 3,131 $ 3,225 $ 10 OTHER DIFFERENTIALS Salaries & Wages 32,609 $ 33,587 $ 34,595 $ 35,633 $ 36,702 $ 37,803 $ 38,937 $ 40,105 $ 41,308 $ 42,547 $ 43,824 $ 11 HOLIDAYS NON-UNION Salaries & Wages 1,574 $ 1,621 $ 1,670 $ 1,720 $ 1,772 $ 1,825 $ 1,879 $ 1,936 $ 1,994 $ 2,054 $ 2,115 $ 12 UNIFORM ALLOWANCE Salaries & Wages 5,565 $ 5,732 $ 5,904 $ 6,081 $ 6,263 $ 6,451 $ 6,645 $ 6,844 $ 7,050 $ 7,261 $ 7,479 $ 13 OTHER LUMP SUM PAYMENTS Salaries & Wages 50,000 $ 51,500 $ 53,045 $ 54,636 $ 56,275 $ 57,964 $ 59,703 $ 61,494 $ 63,339 $ 65,239 $ 67,196 $ 14 STIPENDS OTHER Salaries & Wages 17,664 $ 18,194 $ 18,740 $ 19,302 $ 19,881 $ 20,477 $ 21,092 $ 21,724 $ 22,376 $ 23,048 $ 23,739 $ 15 NEW IAM ENGINEERING STAFF Salaries & Wages - $ 63,201 $ 65,097 $ 67,050 $ 69,061 $ 71,133 $ 73,267 $ 75,465 $ 77,729 $ 80,061 $ 82,463 $ 16 NEW W&S OPS STAFF Salaries & Wages - $ 87,332 $ 89,952 $ 92,651 $ 95,430 $ 98,293 $ 101,242 $ 104,279 $ 107,407 $ 110,630 $ 113,948 $ 17 600052 - WATER ORDINARY MAINTENANCE 18 REPAIRS-VEHICLES Repair & Maintenance 5,000 $ 5,125 $ 5,253 $ 5,384 $ 5,519 $ 5,657 $ 5,798 $ 5,943 $ 6,092 $ 6,244 $ 6,400 $ 19 REPAIRS-TOOLS & EQUIPMENT Repair & Maintenance 10,000 $ 10,250 $ 10,506 $ 10,769 $ 11,038 $ 11,314 $ 11,597 $ 11,887 $ 12,184 $ 12,489 $ 12,801 $ 20 MAINT CONTRACT-OFFC EQUIP O&M General 6,000 $ 6,180 $ 6,365 $ 6,556 $ 6,753 $ 6,956 $ 7,164 $ 7,379 $ 7,601 $ 7,829 $ 8,063 $ 21 LEASE - PHOTOCOPIES O&M General 320 $ 330 $ 339 $ 350 $ 360 $ 371 $ 382 $ 394 $ 405 $ 418 $ 430 $ 22 RENTAL-WATER COOLER O&M General 200 $ 206 $ 212 $ 219 $ 225 $ 232 $ 239 $ 246 $ 253 $ 261 $ 269 $ 23 RUBBISH REMOVAL Professional Services 35,000 $ 36,050 $ 37,132 $ 38,245 $ 39,393 $ 40,575 $ 41,792 $ 43,046 $ 44,337 $ 45,667 $ 47,037 $ 24 PROFESSIONL & TECHNCL SVC Professional Services 235,900 $ 242,977 $ 250,266 $ 257,774 $ 265,508 $ 273,473 $ 281,677 $ 290,127 $ 298,831 $ 307,796 $ 317,030 $ 25 EMPLOYEE TRAINING COURSES O&M General 5,000 $ 5,150 $ 5,305 $ 5,464 $ 5,628 $ 5,796 $ 5,970 $ 6,149 $ 6,334 $ 6,524 $ 6,720 $ 26 ADVERTISING O&M General 250 $ 258 $ 265 $ 273 $ 281 $ 290 $ 299 $ 307 $ 317 $ 326 $ 336 $ 27 POLICE DETAIL O&M General 100,000 $ 103,000 $ 106,090 $ 109,273 $ 112,551 $ 115,927 $ 119,405 $ 122,987 $ 126,677 $ 130,477 $ 134,392 $ 28 BANK CHARGES O&M General 1,200 $ 1,236 $ 1,273 $ 1,311 $ 1,351 $ 1,391 $ 1,433 $ 1,476 $ 1,520 $ 1,566 $ 1,613 $ 29 WEB SITE COSTS O&M General 10,500 $ 10,815 $ 11,139 $ 11,474 $ 11,818 $ 12,172 $ 12,538 $ 12,914 $ 13,301 $ 13,700 $ 14,111 $ 30 OFFICE SUPPLIES O&M General 2,800 $ 2,884 $ 2,971 $ 3,060 $ 3,151 $ 3,246 $ 3,343 $ 3,444 $ 3,547 $ 3,653 $ 3,763 $ 31 PRINTING & STATIONERY O&M General 27,520 $ 28,346 $ 29,196 $ 30,072 $ 30,974 $ 31,903 $ 32,860 $ 33,846 $ 34,862 $ 35,907 $ 36,985 $ 32 COMPUTER EQUIPMENT NOT CAPITAL O&M General 3,000 $ 3,090 $ 3,183 $ 3,278 $ 3,377 $ 3,478 $ 3,582 $ 3,690 $ 3,800 $ 3,914 $ 4,032 $ 33 PLUMBING SUPPLIES O&M General 400 $ 412 $ 424 $ 437 $ 450 $ 464 $ 478 $ 492 $ 507 $ 522 $ 538 $ 34 TOOLS O&M General 3,000 $ 3,090 $ 3,183 $ 3,278 $ 3,377 $ 3,478 $ 3,582 $ 3,690 $ 3,800 $ 3,914 $ 4,032 $ 35 PAINT O&M General 7,000 $ 7,210 $ 7,426 $ 7,649 $ 7,879 $ 8,115 $ 8,358 $ 8,609 $ 8,867 $ 9,133 $ 9,407 $ 36 HARDWARE & SMALL TOOLS O&M General 7,500 $ 7,725 $ 7,957 $ 8,195 $ 8,441 $ 8,695 $ 8,955 $ 9,224 $ 9,501 $ 9,786 $ 10,079 $ 37 SUNDRY MAINT SUPPLIES O&M General 2,500 $ 2,575 $ 2,652 $ 2,732 $ 2,814 $ 2,898 $ 2,985 $ 3,075 $ 3,167 $ 3,262 $ 3,360 $ 38 SAND, GRAVEL, & Fuel, Utilities, Chemicals 750 $ 788 $ 827 $ 868 $ 912 $ 957 $ 1,005 $ 1,055 $ 1,108 $ 1,163 $ 1,222 $ 39 MOTOR GAS AND OIL Fuel, Utilities, Chemicals 37,950 $ 39,848 $ 41,840 $ 43,932 $ 46,128 $ 48,435 $ 50,857 $ 53,399 $ 56,069 $ 58,873 $ 61,817 $ 40 TIRES AND TUBES O&M General 3,000 $ 3,090 $ 3,183 $ 3,278 $ 3,377 $ 3,478 $ 3,582 $ 3,690 $ 3,800 $ 3,914 $ 4,032 $ 41 MOTOR PARTS & ACCESSORIES O&M General 2,500 $ 2,575 $ 2,652 $ 2,732 $ 2,814 $ 2,898 $ 2,985 $ 3,075 $ 3,167 $ 3,262 $ 3,360 $ 42 BOOKS O&M General 898 $ 925 $ 953 $ 981 $ 1,011 $ 1,041 $ 1,072 $ 1,104 $ 1,138 $ 1,172 $ 1,207 $ 43 SIGNS AND CONES O&M General 5,000 $ 5,150 $ 5,305 $ 5,464 $ 5,628 $ 5,796 $ 5,970 $ 6,149 $ 6,334 $ 6,524 $ 6,720 $ 44 BITUMINOUS SUPPLIES O&M General 25,000 $ 25,750 $ 26,523 $ 27,318 $ 28,138 $ 28,982 $ 29,851 $ 30,747 $ 31,669 $ 32,619 $ 33,598 $ 45 READY MIX CONCRETE O&M General 12,500 $ 12,875 $ 13,261 $ 13,659 $ 14,069 $ 14,491 $ 14,926 $ 15,373 $ 15,835 $ 16,310 $ 16,799 $ 46 LUMBER & WOOD PRODUCTS O&M General 2,000 $ 2,060 $ 2,122 $ 2,185 $ 2,251 $ 2,319 $ 2,388 $ 2,460 $ 2,534 $ 2,610 $ 2,688 $ 47 FOUNDRY PRODUCTS O&M General 5,000 $ 5,150 $ 5,305 $ 5,464 $ 5,628 $ 5,796 $ 5,970 $ 6,149 $ 6,334 $ 6,524 $ 6,720 $ 48 UNIFORMS O&M General 1,000 $ 1,030 $ 1,061 $ 1,093 $ 1,126 $ 1,159 $ 1,194 $ 1,230 $ 1,267 $ 1,305 $ 1,344 $ 49 PAYMENTS TO COMMONWEALTH Water ERUs Growth 40,000 $ 40,162 $ 40,323 $ 40,485 $ 40,646 $ 40,808 $ 40,969 $ 41,131 $ 41,292 $ 41,454 $ 41,615 $ 50 IN STATE TRAVEL O&M General 100 $ 103 $ 106 $ 109 $ 113 $ 116 $ 119 $ 123 $ 127 $ 130 $ 134 $ 51 DUES AND MEMBERSHIPS O&M General 1,500 $ 1,545 $ 1,591 $ 1,639 $ 1,688 $ 1,739 $ 1,791 $ 1,845 $ 1,900 $ 1,957 $ 2,016 $ 52 REIMB OF LICENSES O&M General 1,000 $ 1,030 $ 1,061 $ 1,093 $ 1,126 $ 1,159 $ 1,194 $ 1,230 $ 1,267 $ 1,305 $ 1,344 $ 53 600058 - WATER CAPITAL OUTLAY 54 ENGINEERING / ARCHITECTURE W&S Maintenance Series - 335,000 $ 349,737 $ 365,122 $ 381,184 $ 397,953 $ 415,459 $ 433,736 $ 452,816 $ 472,736 $ 493,532 $ 515,243 $ 55 WATER METERS & PARTS W&S Maintenance Series - 240,000 $ 250,558 $ 261,580 $ 273,087 $ 285,101 $ 297,642 $ 310,736 $ 324,406 $ 338,676 $ 353,575 $ 369,129 $ 56 HYDRANTS W&S Maintenance Series - 50,000 $ 52,200 $ 54,496 $ 56,893 $ 59,396 $ 62,009 $ 64,737 $ 67,584 $ 70,558 $ 73,661 $ 76,902 $ 57 LEAK DETECTION PROGRAM W&S Maintenance Series - 21,500 $ 22,446 $ 23,433 $ 24,464 $ 25,540 $ 26,664 $ 27,837 $ 29,061 $ 30,340 $ 31,674 $ 33,068 $ 58 PIPE FITTINGS W&S Maintenance Series - 5,000 $ 5,220 $ 5,450 $ 5,689 $ 5,940 $ 6,201 $ 6,474 $ 6,758 $ 7,056 $ 7,366 $ 7,690 $ 59 WATER SERVICE REPLACEMENT W&S Maintenance Series - 1,500,000 $ 1,565,986 $ 1,634,876 $ 1,706,795 $ 1,781,879 $ 1,860,265 $ 1,942,100 $ 2,027,535 $ 2,116,728 $ 2,209,845 $ 2,307,058 $ 60 WATER RECONSTRUCTION/RPAR W&S Maintenance Series - 1,000,000 $ 1,043,991 $ 1,089,917 $ 1,137,864 $ 1,187,919 $ 1,240,177 $ 1,294,733 $ 1,351,690 $ 1,411,152 $ 1,473,230 $ 1,538,039 $ City of Somerville | Water and Sewer Rate Study Report Stantec | 27

Appendix A: Water Fund Financial Sustainability Analysis Supporting Schedules Projection of Cash Outflows Schedule 4 Expense Line Item Escalation Factor FY 2021 (1) FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 61 600060 - WATER SPECIAL ITEMS 62 MWRA ASSESSMENT MWRA Assessment 8,711,112 $ 9,012,516 $ 9,451,515 $ 9,829,576 $ 10,222,759 $ 10,631,669 $ 11,056,936 $ 11,499,213 $ 11,959,182 $ 12,437,549 $ 12,935,051 $ 63 INDIRECT COST SUBSIDY Indirect Cost Subsidy 713,220 $ 734,617 $ 756,655 $ 779,355 $ 802,735 $ 826,817 $ 851,622 $ 877,171 $ 903,486 $ 930,590 $ 958,508 $ 64 Transfers Out 65 Transfer Earnings to Rate Stabilization Fund (2) - $ - $ - $ - $ - $ 175,507 $ 194,778 $ 154,905 $ 31,692 $ 125,472 $ 190,081 $ 66 Total Transfers Out - $ - $ - $ - $ - $ 175,507 $ 194,778 $ 154,905 $ 31,692 $ 125,472 $ 190,081 $ 67 Debt Service 68 Existing MWRA Notes 69 June 6 2016 MWRA Water 27,600 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 70 June 11 2012 MWRA Water 133,600 $ 133,600 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 71 June 3 2013 MWRA Water 124,234 $ 124,234 $ 124,234 $ - $ - $ - $ - $ - $ - $ - $ - $ 72 September 8 2014 MWRA Water 87,500 $ 87,500 $ 87,500 $ 87,500 $ 87,500 $ - $ - $ - $ - $ - $ - $ 73 March 20 2107 MWRA Water 166,000 $ 166,000 $ 166,000 $ 166,000 $ 166,000 $ 166,000 $ 166,000 $ - $ - $ - $ - $ 74 August 27, 2018 MWRA Water 254,300 $ 254,300 $ 254,300 $ 254,300 $ 254,300 $ 254,300 $ 254,300 $ 254,300 $ 254,300 $ - $ - $ 75 December 2, 2019 MWRA Water 90,000 $ 90,000 $ 90,000 $ 90,000 $ 90,000 $ 90,000 $ 90,000 $ 90,000 $ 90,000 $ 90,000 $ - $ 76 Existing Municipal Purpose 77 April 1 2010- Water Mains 27,250 $ 26,250 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 78 December 7 2017 - Adv Ref Feb 15 10 Water 111,981 $ 110,908 $ 100,186 $ 95,614 $ 93,842 $ 90,642 $ 87,442 $ 84,002 $ 103,200 $ 96,069 $ - $ 79 June 7 2018 Series B- Cedar St Water Repairs 26,556 $ 26,156 $ 30,756 $ 30,306 $ 29,706 $ 29,106 $ 28,506 $ 27,906 $ 27,306 $ 26,706 $ 26,106 $ 80 June 6 2019 - CEDAR ST WATER REPAIRS 39,500 $ 38,750 $ 38,000 $ 37,250 $ 36,500 $ 40,750 $ 39,750 $ 38,750 $ 37,750 $ 36,950 $ 41,150 $ 81 June 6 2019 - WATER MAIN REHAB & REPLACEMENT 138,150 $ 140,650 $ 137,900 $ 140,150 $ 137,150 $ 139,150 $ 140,900 $ 137,400 $ 138,900 $ 140,900 $ 137,700 $ 82 June 4 2020 - Cedar St Water Repairs 36,916 $ 41,350 $ 40,350 $ 39,350 $ 38,350 $ 37,350 $ 41,350 $ 40,100 $ 38,850 $ 37,600 $ 36,350 $ 83 June 4 2020 - Water Main Rehabilitation & Replacement 93,060 $ 96,506 $ 94,256 $ 92,006 $ 94,756 $ 92,256 $ 94,756 $ 97,006 $ 94,006 $ 96,006 $ 92,756 $ 84 Future Long-Term Projects 85 Pitman St. - Water Improvements (3) - $ - $ - $ - $ 58,987 $ 58,987 $ 58,987 $ 58,987 $ 58,987 $ 58,987 $ 58,987 $ 86 Water Meter Replacement - $ - $ 426,165 $ 857,683 $ 857,683 $ 857,683 $ 857,683 $ 857,683 $ 857,683 $ 857,683 $ 857,683 $ 87 Water Vehicles - $ 51,843 $ 51,843 $ 51,843 $ 51,843 $ 51,843 $ 51,843 $ 51,843 $ 51,843 $ 51,843 $ 51,843 $ 88 Lead Line Replacement Program - $ 101,616 $ 175,282 $ 312,394 $ 453,994 $ 600,218 $ 748,966 $ 899,989 $ 1,053,539 $ 1,209,617 $ 1,368,222 $ 89 BAN Projects & Associated Long-Term Debt Service (4) 89 Unspecified FY 2021 (per Budget) 67,081 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 90 Somerville Ave. Utility & Streetscape Improvements - Water - $ 46,125 $ 49,725 $ 7,650 $ 8,100 $ 8,500 $ 4,000 $ - $ - $ - $ - $ 91 Long-Term - $ - $ - $ 170,191 $ 170,191 $ 170,191 $ 182,330 $ 193,120 $ 193,120 $ 193,120 $ 193,120 $ 92 Water Improvements - $ 1,743 $ 160,020 $ 324,495 $ 335,475 $ 354,475 $ 369,975 $ 419,250 $ 436,250 $ 452,500 $ 467,500 $ 93 Long-Term - $ - $ 6,576 $ 6,576 $ 445,777 $ 910,114 $ 1,392,872 $ 1,895,322 $ 2,417,463 $ 2,960,566 $ 3,525,901 $ 94 Spring Hill Sewer Separation - Project Area 1 Water Line Improvements - $ - $ 67,066 $ 141,626 $ 132,551 $ 64,434 $ - $ - $ - $ - $ - $ 95 Long-Term - $ - $ - $ - $ 184,073 $ 394,566 $ 558,283 $ 558,283 $ 558,283 $ 558,283 $ 558,283 $ 96 Spring Hill Sewer Separation - Highland Ave Water Line Improvements - $ - $ - $ - $ 49,329 $ 70,180 $ 15,371 $ - $ - $ - $ - $ 97 Long-Term - $ - $ - $ - $ - $ - $ 139,262 $ 178,317 $ 178,317 $ 178,317 $ 178,317 $ 98 Spring Hill Sewer Separation - Project Area 2B Water Line Improvements (5) - $ - $ - $ - $ - $ 32,345 $ 76,769 $ 44,424 $ - $ - $ - $ 99 Long-Term - $ - $ - $ - $ - $ - $ - $ 82,184 $ 195,059 $ 195,059 $ 195,059 $ 100 Total Debt Service 1,423,728 $ 1,537,531 $ 2,100,159 $ 2,904,934 $ 3,776,107 $ 4,513,090 $ 5,399,345 $ 6,008,867 $ 6,784,857 $ 7,240,206 $ 7,788,978 $ 101 Total Expenses by Category 102 Personal Services 1,460,210 $ 1,654,549 $ 1,704,186 $ 1,755,311 $ 1,807,971 $ 1,862,210 $ 1,918,076 $ 1,975,618 $ 2,034,887 $ 2,095,933 $ 2,158,811 $ 103 MWRA Assessment 8,711,112 $ 9,012,516 $ 9,451,515 $ 9,829,576 $ 10,222,759 $ 10,631,669 $ 11,056,936 $ 11,499,213 $ 11,959,182 $ 12,437,549 $ 12,935,051 $ 104 Operations & Maintenance 1,314,508 $ 1,353,604 $ 1,393,904 $ 1,435,448 $ 1,478,274 $ 1,522,422 $ 1,567,935 $ 1,614,856 $ 1,663,229 $ 1,713,101 $ 1,764,519 $ 105 Capital Outlay 3,151,500 $ 3,290,137 $ 3,434,874 $ 3,585,977 $ 3,743,727 $ 3,908,417 $ 4,080,352 $ 4,259,851 $ 4,447,246 $ 4,642,884 $ 4,847,129 $ 106 Transfers Out - $ - $ - $ - $ - $ 175,507 $ 194,778 $ 154,905 $ 31,692 $ 125,472 $ 190,081 $ 107 Debt Service 1,423,728 $ 1,537,531 $ 2,100,159 $ 2,904,934 $ 3,776,107 $ 4,513,090 $ 5,399,345 $ 6,008,867 $ 6,784,857 $ 7,240,206 $ 7,788,978 $ 108 Total Expenses 16,061,058 $ 16,848,338 $ 18,084,638 $ 19,511,246 $ 21,028,837 $ 22,613,315 $ 24,217,422 $ 25,513,310 $ 26,921,091 $ 28,255,145 $ 29,684,569 $ City of Somerville | Water and Sewer Rate Study Report Stantec | 28

Appendix A: Water Fund Financial Sustainability Analysis Supporting Schedules Projection of Cash Outflows Schedule 4 Expense Line Item Escalation Factor FY 2021 (1) FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 109 Expense Execution Factors 110 Personal Services 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 111 MWRA Assessment 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 112 Operations & Maintenance 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 113 Capital Outlay 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 114 Transfers Out 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 115 Debt Service 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 116 Expenses at Execution 117 Personal Services 1,460,210 $ 1,654,549 $ 1,704,186 $ 1,755,311 $ 1,807,971 $ 1,862,210 $ 1,918,076 $ 1,975,618 $ 2,034,887 $ 2,095,933 $ 2,158,811 $ 118 MWRA Assessment 8,711,112 $ 9,012,516 $ 9,451,515 $ 9,829,576 $ 10,222,759 $ 10,631,669 $ 11,056,936 $ 11,499,213 $ 11,959,182 $ 12,437,549 $ 12,935,051 $ 119 Operations & Maintenance 1,314,508 $ 1,353,604 $ 1,393,904 $ 1,435,448 $ 1,478,274 $ 1,522,422 $ 1,567,935 $ 1,614,856 $ 1,663,229 $ 1,713,101 $ 1,764,519 $ 120 Capital Outlay 3,151,500 $ 3,290,137 $ 3,434,874 $ 3,585,977 $ 3,743,727 $ 3,908,417 $ 4,080,352 $ 4,259,851 $ 4,447,246 $ 4,642,884 $ 4,847,129 $ 121 Transfers Out - $ - $ - $ - $ - $ 175,507 $ 194,778 $ 154,905 $ 31,692 $ 125,472 $ 190,081 $ 122 Debt Service 1,423,728 $ 1,537,531 $ 2,100,159 $ 2,904,934 $ 3,776,107 $ 4,513,090 $ 5,399,345 $ 6,008,867 $ 6,784,857 $ 7,240,206 $ 7,788,978 $ 123 Total Expenses 16,061,058 $ 16,848,338 $ 18,084,638 $ 19,511,246 $ 21,028,837 $ 22,613,315 $ 24,217,422 $ 25,513,310 $ 26,921,091 $ 28,255,145 $ 29,684,569 $ 124 Projects Designated To Be Funded with Cash (6) - $ 250,000 $ 390,000 $ 360,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 125 Total Cash Outflows 16,061,058 $ 17,098,338 $ 18,474,638 $ 19,871,246 $ 21,228,837 $ 22,813,315 $ 24,417,422 $ 25,713,310 $ 27,121,091 $ 28,455,145 $ 29,884,569 $ (1) FY 2021 operating expenses reflect the City's FY 2021 Revised Budget, after which all future operating costs escalate based upon assumed escalation factors presented on Schedule 5. (3) Projected debt schedules moved out one year to FY 2025 per discussions with City Staff. (4) Reflects the City's projected Bond Anticipation Note (BAN) annual interest payments (ranging from 2-5 years per project), as well as the associated long-term debt service payments for each project. (5) Projected debt schedules moved forward one year to FY 2026 per discussions with City Staff. (6) Reflects cash funding of vehicles and Yard 3 CIP, as directed by City Staff. (2) Reflects transfer out of the City's Operating Fund (Fund 6000) to the City's Rate Stabilization Fund. Note that the transfer to the Rate Stabilization Fund is calculated at 60% of positive net cash flow in any given year (net cash flows before any contributions from the Rate Stabilization Fund for debt service). City of Somerville | Water and Sewer Rate Study Report Stantec | 29

Appendix A: Water Fund Financial Sustainability Analysis Supporting Schedules Cost Escalation Factors Schedule 5 Inflation Factor FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Repair & Maintenance 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% Fuel, Utilities, Chemicals 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Professional Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% O&M General 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Indirect Cost Subsidy 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% MWRA Assessment (1) 3.46% 4.87% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% W&S Maintenance Series - 10 Year 4.40% 4.40% 4.40% 4.40% 4.40% 4.40% 4.40% 4.40% 4.40% 4.40% Default Inflation Factor 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% (1) Annual MWRA Assessment cost escalation factor in FY 2022 reflects resulting factor based upon preliminary MWRA estimates. The FY 2023 escalation factor reflects an estimated assessment increase provided by City Staff. MWRA Assessments in FY 2024 through the remainder of the projection are projected to increase at 4.00% annually based upon a 5 year history of the assessment change. City of Somerville | Water and Sewer Rate Study Report Stantec | 30

Appendix A: Water Fund Financial Sustainability Analysis Supporting Schedules Capital Investment Plan (CIP) Schedule 6 Project Description FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 Total Cost Debt Funded Projects (1) 1 Somerville Ave. Utility & Streetscape Improvements - Water $ 180,000 $ 160,000 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 340,000 2 Water Improvements $ - $ 200,000 $ 7,110,000 $ 7,310,000 $ 7,600,000 $ 7,910,000 $ 8,220,000 $ 8,550,000 $ 8,900,000 $ 9,200,000 $ 9,500,000 $ 74,500,000 3 Lead Line Replacement Program $ 1,060,000 $ 850,000 $ 1,470,000 $ 1,510,000 $ 1,540,000 $ 1,500,000 $ 1,590,000 $ 1,610,000 $ 1,640,000 $ 1,660,000 $ 1,700,000 $ 16,130,000 4 Pitman St. - Water Improvements (2) $ - $ - $ - $ 1,020,000 $ - $ - $ - $ - $ - $ - $ - $ 1,020,000 5 Water Meter Replacement $ 3,500,000 $ 3,500,000 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 7,000,000 6 Spring Hill Sewer Separation - Project Area 1 Water Line Improvements $ 30,000 $ 2,950,000 $ 3,310,000 $ 2,580,000 $ - $ - $ - $ - $ - $ - $ - $ 8,870,000 7 Spring Hill Sewer Separation - Highland Ave Water Line Improvements $ - $ 60,000 $ 100,000 $ 2,190,000 $ 610,000 $ - $ - $ - $ - $ - $ - $ 2,960,000 8 Spring Hill Sewer Separation - Project Area 2B Water Line Improvements (3) $ - $ - $ - $ 90,000 $ 1,210,000 $ 1,780,000 $ - $ - $ - $ - $ - $ 3,080,000 9 Cash Funded Projects 10 Water Vehicles $ - $ 150,000 $ 290,000 $ 260,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 1,400,000 11 Yard 3 Annual PAYGO $ - $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 1,000,000 12 Total CIP Budget (in Future Dollars) (4) $ 4,770,000 $ 7,970,000 $ 12,380,000 $ 15,060,000 $ 11,160,000 $ 11,390,000 $ 10,010,000 $ 10,360,000 $ 10,740,000 $ 11,060,000 $ 11,400,000 $ 116,300,000 13 Cumulative Projected Cost Escalation (4) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 14 Resulting CIP Funding Level $ 4,770,000 $ 7,970,000 $ 12,380,000 $ 15,060,000 $ 11,160,000 $ 11,390,000 $ 10,010,000 $ 10,360,000 $ 10,740,000 $ 11,060,000 $ 11,400,000 $ 116,300,000 (1) Project amounts and timing presented herein reflects adjustments made during meetings with City Staff. FY 2031 project values were calculated based upon debt service schedules provided by City Staff. (2) Project and associated debt schedules moved out one year to FY 2025 per discussions with City Staff. (3) Project and associated debt schedules moved forward one year to FY 2026 per discussions with City Staff. (4) CIP already includes inflationary assumptions as provided by City Staff. City of Somerville | Water and Sewer Rate Study Report Stantec | 31

Appendix A: Water Fund Financial Sustainability Analysis Supporting Schedules FAMS - Control Panel Schedule 7 WATER ENTERPRISE FUND FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2026 FY 2031 Water Usage Rate Plan 0.00% 7.00% 10.00% 10.00% 10.00% 10.00% 7.00% 5.00% 5.00% 5.00% 5.00% 56.43% 103.57% Debt Service Coverage (1.25 Target) 1.92 2.62 2.21 2.01 1.90 1.93 1.82 1.75 1.66 1.67 1.66 Stab. Fund Debt Service Debt Service / Revenue 10.0% 9.6% 12.2% 15.4% 18.3% 19.9% 22.2% 23.5% 25.2% 25.6% 26.2% Growth Normal Tri-Annual Single-Family Bill @ 18 CCF $110.70 $117.02 $126.72 $137.34 $149.06 $162.01 $171.94 $179.49 $187.45 $195.82 $204.60 Check - Combined Tri-Annual W&S Single-Family Bill $315.49 $339.13 $367.97 $399.70 $434.76 $473.51 $511.98 $551.07 $588.93 $629.84 $674.08 Annual W&S Bill as % of MHI 1.0% 1.0% 1.1% 1.2% 1.3% 1.5% 1.6% 1.7% 1.8% 1.9% 2.1% Net Cash Flow ($ M) -$0.42 -$0.09 -$0.87 -$0.61 -$0.13 $0.50 $0.53 $0.47 $0.26 $0.42 $0.52 $0.0M $5.0M $10.0M $15.0M $20.0M 21 22 23 24 25 26 27 28 29 30 31 Operating/Cash Debt $0.0M $1.0M $2.0M $3.0M $4.0M $5.0M $6.0M $7.0M 20 21 22 23 24 25 26 27 28 29 30 31 Current Plan Target $0.0M $5.0M $10.0M $15.0M $20.0M 21 22 23 24 25 26 27 28 29 30 31 Current Plan $0.0M $5.0M $10.0M $15.0M $20.0M $25.0M $30.0M $35.0M 21 22 23 24 25 26 27 28 29 30 31 O&M Cash In Cash Out $0.0M $5.0M $10.0M $15.0M $20.0M 21 22 23 24 25 26 27 28 29 30 31 Current Plan Operating Fund CIP Spending Revenues vs. Expenses CIP Funding Borrowing CALC SAVE CTRL LAST OVR $0.0M $0.5M $1.0M $1.5M $2.0M $2.5M 20 21 22 23 24 25 26 27 28 29 30 31 Current Plan Target Stabilization Fund City of Somerville | Water and Sewer Rate Study Report Stantec | 32

Appendix A: Water Fund Financial Sustainability Analysis Supporting Schedules Pro Forma Schedule 8 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Operating Revenue 2 Water Rate Revenue 13,567,884 $ 13,567,884 $ 15,016,118 $ 16,492,508 $ 18,122,585 $ 19,922,360 $ 21,909,510 $ 23,472,109 $ 24,697,973 $ 25,989,746 $ 27,350,963 $ 3 Change in Revenue From Growth - $ 187,646 $ 62,139 $ 67,978 $ 74,401 $ 81,467 $ 89,239 $ 95,223 $ 99,797 $ 104,599 $ 109,642 $ 4 Other Revenue Adjustments (1) - 339,197 - - - - - - - - - 5 Subtotal 13,567,884 $ 14,094,727 $ 15,078,257 $ 16,560,486 $ 18,196,986 $ 20,003,827 $ 21,998,748 $ 23,567,331 $ 24,797,770 $ 26,094,345 $ 27,460,605 $ 6 Weighted Average Rate Increase 0.00% 6.54% 9.38% 9.43% 9.48% 9.53% 6.70% 4.80% 4.81% 4.82% 4.82% 7 Additional Rate Revenue From Rate Increase - $ 921,391 $ 1,414,250 $ 1,562,099 $ 1,725,374 $ 1,905,683 $ 1,473,360 $ 1,130,642 $ 1,191,976 $ 1,256,618 $ 1,324,743 $ 8 Total Rate Revenue 13,567,884 $ 15,016,118 $ 16,492,508 $ 18,122,585 $ 19,922,360 $ 21,909,510 $ 23,472,109 $ 24,697,973 $ 25,989,746 $ 27,350,963 $ 28,785,348 $ 9 Plus: Other Operating Revenue 608,298 $ 997,314 $ 666,494 $ 704,003 $ 745,416 $ 791,140 $ 841,625 $ 881,324 $ 912,468 $ 945,286 $ 979,869 $ 10 Equals: Total Operating Revenue 14,176,182 $ 16,013,432 $ 17,159,002 $ 18,826,588 $ 20,667,776 $ 22,700,650 $ 24,313,734 $ 25,579,297 $ 26,902,214 $ 28,296,249 $ 29,765,217 $ 11 Less: Operating Expenses 12 Personal Services (1,460,210) $ (1,654,549) $ (1,704,186) $ (1,755,311) $ (1,807,971) $ (1,862,210) $ (1,918,076) $ (1,975,618) $ (2,034,887) $ (2,095,933) $ (2,158,811) $ 13 MWRA Assessment (8,711,112) $ (9,012,516) $ (9,451,515) $ (9,829,576) $ (10,222,759) $ (10,631,669) $ (11,056,936) $ (11,499,213) $ (11,959,182) $ (12,437,549) $ (12,935,051) $ 14 Operations & Maintenance Costs (1,314,508) $ (1,353,604) $ (1,393,904) $ (1,435,448) $ (1,478,274) $ (1,522,422) $ (1,567,935) $ (1,614,856) $ (1,663,229) $ (1,713,101) $ (1,764,519) $ 15 Equals: Net Operating Income 2,690,352 $ 3,992,763 $ 4,609,397 $ 5,806,253 $ 7,158,773 $ 8,684,349 $ 9,770,787 $ 10,489,610 $ 11,244,917 $ 12,049,666 $ 12,906,836 $ 16 Plus: Non-Operating Income/(Expense) 17 Interest Income 42,045 $ 40,137 $ 36,540 $ 31,007 $ 28,264 $ 29,669 $ 33,540 $ 37,282 $ 40,005 $ 42,544 $ 46,072 $ 18 Stabilization Fund Contributions to Debt Service 1,423,728 $ 955,080 $ 409,582 $ 407,536 $ 407,528 $ 583,035 $ 602,306 $ 562,433 $ 439,220 $ 533,000 $ 597,609 $ 19 Equals: Net Income 4,156,125 $ 4,987,980 $ 5,055,519 $ 6,244,796 $ 7,594,566 $ 9,297,054 $ 10,406,633 $ 11,089,326 $ 11,724,142 $ 12,625,210 $ 13,550,517 $ 20 Less: Revenues Excluded From Coverage Test 21 Stabilization Fund Contributions to Debt Service (1,423,728) $ (955,080) $ (409,582) $ (407,536) $ (407,528) $ (583,035) $ (602,306) $ (562,433) $ (439,220) $ (533,000) $ (597,609) $ 22 Equals: Net Income Available For Debt Service 2,732,397 $ 4,032,900 $ 4,645,937 $ 5,837,260 $ 7,187,037 $ 8,714,019 $ 9,804,327 $ 10,526,892 $ 11,284,922 $ 12,092,210 $ 12,952,908 $ 23 Total All-In Debt Service Coverage Test 24 Net Income Available for Debt Service 2,732,397 $ 4,032,900 $ 4,645,937 $ 5,837,260 $ 7,187,037 $ 8,714,019 $ 9,804,327 $ 10,526,892 $ 11,284,922 $ 12,092,210 $ 12,952,908 $ 25 Total Short-Term Debt Service (BAN) 67,081 $ 47,868 $ 276,811 $ 473,771 $ 525,455 $ 529,934 $ 466,115 $ 463,674 $ 436,250 $ 452,500 $ 467,500 $ 26 Total Long-Term Debt Service 1,356,647 $ 1,489,664 $ 1,823,348 $ 2,431,163 $ 3,250,652 $ 3,983,156 $ 4,933,230 $ 5,545,193 $ 6,348,607 $ 6,787,706 $ 7,321,478 $ 27 Total Annual Debt Service Targ. 1,423,728 $ 1,537,531 $ 2,100,159 $ 2,904,934 $ 3,776,107 $ 4,513,090 $ 5,399,345 $ 6,008,867 $ 6,784,857 $ 7,240,206 $ 7,788,978 $ 28 Calculated All-In Debt Service Coverage 1.25 1.92 2.62 2.21 2.01 1.90 1.93 1.82 1.75 1.66 1.67 1.66 29 Cash Flow Test 30 Net Income Available For Debt Service 2,732,397 $ 4,032,900 $ 4,645,937 $ 5,837,260 $ 7,187,037 $ 8,714,019 $ 9,804,327 $ 10,526,892 $ 11,284,922 $ 12,092,210 $ 12,952,908 $ 31 Less: Non-Operating Expenditures 32 Net Interfund Transfers (In - Out) - $ - $ - $ - $ - $ (175,507) $ (194,778) $ (154,905) $ (31,692) $ (125,472) $ (190,081) $ 33 Net Debt Service Payment (Net of Stabilization Fund Contributions) - $ (582,451) $ (1,690,577) $ (2,497,398) $ (3,368,579) $ (3,930,055) $ (4,797,039) $ (5,446,433) $ (6,345,637) $ (6,707,206) $ (7,191,368) $ 34 Capital Outlay (3,151,500) $ (3,290,137) $ (3,434,874) $ (3,585,977) $ (3,743,727) $ (3,908,417) $ (4,080,352) $ (4,259,851) $ (4,447,246) $ (4,642,884) $ (4,847,129) $ 35 Cash Flow Surplus/(Deficit) (419,103) $ 160,312 $ (479,514) $ (246,115) $ 74,731 $ 700,040 $ 732,158 $ 665,703 $ 460,348 $ 616,648 $ 724,330 $ 36 Unrestricted Reserve Fund Test 37 Balance At Beginning Of Fiscal Year 5,815,602 $ 5,396,499 $ 5,306,811 $ 4,437,297 $ 3,831,182 $ 3,705,913 $ 4,205,953 $ 4,738,111 $ 5,203,814 $ 5,464,162 $ 5,880,810 $ 38 Cash Flow Surplus/(Deficit) (419,103) $ 160,312 $ (479,514) $ (246,115) $ 74,731 $ 700,040 $ 732,158 $ 665,703 $ 460,348 $ 616,648 $ 724,330 $ 39 Projects Designated To Be Paid With Cash - $ (250,000) $ (390,000) $ (360,000) $ (200,000) $ (200,000) $ (200,000) $ (200,000) $ (200,000) $ (200,000) $ (200,000) $ 40 Balance At End Of Fiscal Year 5,396,499 $ 5,306,811 $ 4,437,297 $ 3,831,182 $ 3,705,913 $ 4,205,953 $ 4,738,111 $ 5,203,814 $ 5,464,162 $ 5,880,810 $ 6,405,139 $ 41 Minimum Working Capital Reserve Target 3,445,749 $ 3,606,201 $ 3,764,882 $ 3,906,100 $ 4,052,701 $ 4,204,890 $ 4,362,884 $ 4,526,906 $ 4,697,189 $ 4,873,975 $ 5,057,514 $ 42 Excess/(Deficiency) Of Working Capital To Target 1,950,750 $ 1,700,611 $ 672,416 $ (74,918) $ (346,788) $ 1,063 $ 375,227 $ 676,908 $ 766,973 $ 1,006,835 $ 1,347,625 $ (1) Assumption of higher rate revenue collections starting in FY 2022, which serves as basis for future rate revenue projections. Water liens redeemed (within other operating revenue) are projected at 2.50% of rate revenues starting after FY 2022. City of Somerville | Water and Sewer Rate Study Report Stantec | 33

Appendix A: Water Fund Financial Sustainability Analysis Supporting Schedules Funding Summary by Fund Schedule 9 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 Stabilization Fund Balance At Beginning Of Fiscal Year 2,260,553 $ 1,555,080 $ 1,009,582 $ 1,007,536 $ 1,007,528 $ 1,007,528 $ 1,007,528 $ 1,007,528 $ 1,007,528 $ 1,007,528 $ 1,007,528 $ Annual Revenues (1) 704,000 $ 400,000 $ 400,000 $ 400,000 $ 400,000 $ 575,507 $ 594,778 $ 554,905 $ 431,692 $ 525,472 $ 590,081 $ Less: Payment Of Debt Service (1,423,728) $ (955,080) $ (409,582) $ (407,536) $ (407,528) $ (583,035) $ (602,306) $ (562,433) $ (439,220) $ (533,000) $ (597,609) $ Subtotal 1,540,825 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ Less: Restricted Funds (2) (1,000,000) $ (1,000,000) $ (1,000,000) $ (1,000,000) $ (1,000,000) $ (1,000,000) $ (1,000,000) $ (1,000,000) $ (1,000,000) $ (1,000,000) $ (1,000,000) $ Total Amount Available For Projects 540,825 $ - $ - $ - $ - $ - $ - $ - $ 0 $ - $ 0 $ Amount Paid For Projects - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ Subtotal 540,825 $ - $ - $ - $ - $ - $ - $ - $ 0 $ - $ 0 $ Add Back: Restricted Funds (2) 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ Plus: Interest Earnings (3) 14,255 $ 9,582 $ 7,536 $ 7,528 $ 7,528 $ 7,528 $ 7,528 $ 7,528 $ 7,528 $ 7,528 $ 7,528 $ Less: Interest Allocated To Cash Flow - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ Balance At End Of Fiscal Year 1,555,080 $ 1,009,582 $ 1,007,536 $ 1,007,528 $ 1,007,528 $ 1,007,528 $ 1,007,528 $ 1,007,528 $ 1,007,528 $ 1,007,528 $ 1,007,528 $ Enterprise Fund Balance At Beginning Of Fiscal Year 5,815,602 $ 5,396,499 $ 5,306,811 $ 4,437,297 $ 3,831,182 $ 3,705,913 $ 4,205,953 $ 4,738,111 $ 5,203,814 $ 5,464,162 $ 5,880,810 $ Cash Flow Surplus/(Deficit) (419,103) $ 160,312 $ (479,514) $ (246,115) $ 74,731 $ 700,040 $ 732,158 $ 665,703 $ 460,348 $ 616,648 $ 724,330 $ Less: Cash-Funded Capital Projects - $ (250,000) $ (390,000) $ (360,000) $ (200,000) $ (200,000) $ (200,000) $ (200,000) $ (200,000) $ (200,000) $ (200,000) $ Subtotal 5,396,499 $ 5,306,811 $ 4,437,297 $ 3,831,182 $ 3,705,913 $ 4,205,953 $ 4,738,111 $ 5,203,814 $ 5,464,162 $ 5,880,810 $ 6,405,139 $ Plus: Interest Earnings 42,045 $ 40,137 $ 36,540 $ 31,007 $ 28,264 $ 29,669 $ 33,540 $ 37,282 $ 40,005 $ 42,544 $ 46,072 $ Less: Interest Allocated To Cash Flow (42,045) $ (40,137) $ (36,540) $ (31,007) $ (28,264) $ (29,669) $ (33,540) $ (37,282) $ (40,005) $ (42,544) $ (46,072) $ Balance At End Of Fiscal Year 5,396,499 $ 5,306,811 $ 4,437,297 $ 3,831,182 $ 3,705,913 $ 4,205,953 $ 4,738,111 $ 5,203,814 $ 5,464,162 $ 5,880,810 $ 6,405,139 $ (2) Per discussions with City Staff, a minimum reserve target of $1 Million has been targeted for the Water Stabilization Fund. (3) Interest earned on Stabilization Fund balances will be retained in the Stabilization Funds as interpreted from the City's financial policies. (1) Annual revenues reflect assumed contributions from the City's General Fund (assumptions provided by City Staff) and transfers in from the Water Enterprise operating fund in order to pay for future debt service. A transfer in from the General Fund of $2.2 million is included in FY 2021, allocated 68% to sewer and 32% to water based upon current Stabilization Fund allocation methodology. An additional $2 million of cash infusions from the City's General Fund is assumed for the remainder of the projection period, allocated 80% to sewer and 20% to water based upon the future capital needs of the two systems and per discussions with City Staff. City of Somerville | Water and Sewer Rate Study Report Stantec | 34

Appendix B: Sewer Fund Financial Sustainability Analysis Supporting Schedules City of Somerville| Water and Sewer Rate Study Report Stantec | 35 APPENDIX B: SEWER FUND FINANCIAL SUSTAINABILITY ANALYSIS SUPPORTING SCHEDULES Schedule 1 Assumptions Schedule 2 FY 2021 Beginning Balances as of 7/1/2020 Schedule 3 Projection of Cash Inflows Schedule 4 Projection of Cash Outflows Schedule 5 Cost Escalation Factors Schedule 6 Capital Investment Plan (CIP) Schedule 7 FAMS - Control Panel Schedule 8 Pro Forma Schedule 9 Funding Summary by Fund

Appendix B: Sewer Fund Financial Sustainability Analysis Supporting Schedules Assumptions Schedule 1 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 Rate Increase Adoption Date 7/1/2020 7/1/2021 7/1/2022 7/1/2023 7/1/2024 7/1/2025 7/1/2026 7/1/2027 7/1/2028 7/1/2029 7/1/2030 Annual Growth Sewer System Ending # of ERUs (1) 17,330 17,400 17,470 17,540 17,610 17,680 17,750 17,820 17,890 17,960 18,030 ERU Growth 70 70 70 70 70 70 70 70 70 70 70 % Change in ERUs 0.41% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.39% 0.39% 0.39% 0.39% Billed Volume per ERU 114.21 115.42 115.43 115.44 115.44 115.45 115.45 115.46 115.47 115.47 115.48 % Change in Billed Volume per ERU (2) -0.54% 1.06% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% Billed Volume (CCF) (3) 1,979,243 2,008,345 2,016,537 2,024,730 2,032,922 2,041,114 2,049,307 2,057,499 2,065,692 2,073,884 2,082,076 % Change in Billed Volume -0.13% 1.47% 0.41% 0.41% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% Revenue Weighted % Change in Billed Volume (4) -0.19% 1.59% 0.41% 0.41% 0.41% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% Capital Spending Annual Capital Budget (Future Year Dollars) 10,040,000 $ 29,040,000 $ 34,832,500 $ 56,895,000 $ 71,177,500 $ 71,860,000 $ 47,650,000 $ 37,960,000 $ 31,880,000 $ 40,240,000 $ 31,010,000 $ Average Annual Interest Earnings Rate On Fund Balances 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% Operating Budget Execution Percentage (5) Target (Number of Months of Reserve) 3.6 3.6 3.6 3.6 3.6 3.6 3.6 3.6 3.6 3.6 3.6 Operating Budget Execution Percentage Personal Services 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% MWRA Assessment 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Fixed Operations and Maintenance 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Capital Outlay 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% (1) Equivalent residential units (ERUs) are a unit of measurement based upon a standard single-family residential home (5/8" meter) used to establish rates, fees and charges, and volume capacity limits. (2) FY 2021 assumption of reduced volume per ERU driven by assumed reduction in commercial billed volumes due to continued COVID-19 impacts. The analysis reflects a normalizing adjustments in commercial billed volumes in FY 2022. (3) A CCF stands for "centum cubic feet" and reflects 100 cubic feet of water, sometimes referred to as an HCF (hundred cubic feet). One CCF is equivalent to approximately 748 gallons. (4) Considers the weighted impact of projected usage assumptions by customer class. For example, commercial customers do not have a conservation volume tier and therefore a reduction in billed volume per customer would hold a greater impact. (5) Reflects reserve target of 30% of operating expenditures per discussions with City Staff. City of Somerville| Water and Sewer Rate Study Report Stantec | 36

Appendix B: Sewer Fund Financial Sustainability Analysis Supporting Schedules FY 2021 Beginning Balances as of 7/1/2020 (1) Schedule 2 Fund Number 6400 7400 7401 Stantec Grouping of Funds in Model Enterprise Fund Stabilization Fund Infiltration & Inflow (2) Current Unrestricted Assets Cash and Cash Equivalents (3) 4,920,935 $ 7,133,721 $ 1,034,793 $ Receivables Net of Allowance for Uncollectibles 8,587,463 $ - $ - $ $ Total Assets 13,508,398 $ 7,133,721 $ 1,034,793 $ Current Liabilities Warrants Payable (2,961,096) $ - $ - $ Accrued Payroll (34,239) $ - $ - $ Accrued Interest (30,101) $ - $ - $ Compensated Absences (1,600) $ - $ - $ Current Portion of Notes Payable (BAN) (16,837,060) $ - $ - $ Current Portion of Bonds Payable (MWRA) (499,048) $ - $ - $ Calculated Fund Balance (Assets - Liabilities) (6,854,746) $ 7,133,721 $ 1,034,793 $ Plus: Deferred Revenue - $ - $ - $ Plus: Current Portion of Notes Payable (4) 16,837,060 $ - $ - $ Plus: Current Portion of Bonds Payable (4) 499,048 $ - $ - $ Less: FY 2021 Liens Redeemed (521,100) $ - $ - $ Less: Reclass Sewer Capital Expense (5) - $ (3,355,377) $ - $ Net Unrestricted Fund Balance for Rate Setting 9,960,262 $ 3,778,344 $ 1,034,793 $ Available Fund Balance for Rate Setting 9,960,262 $ 3,778,344 $ 1,034,793 $ Fund Summary Enterprise Fund 9,960,262 $ Stabilization Fund 3,778,344 $ Infiltration & Inflow 1,034,793 $ Total Available Funds for Rate Setting (6) 14,773,399 $ (6) Note that operating encumbrances and use of retained earnings have not been removed from beginning "available funds for rate setting" presented herein, but are accounted for elsewhere in the analysis. (1) Figures as of 6/30/2020 presented herein are per the City's Audited FY 2020 Comprehensive Annual Financial Report (Audited Report) and detailed Audited Report workpapers provided by City Staff. (2) Infiltration & Inflow (I/I) Fund balances as of 6/30/2020 is as provided by City Staff and is not derived per the City's FY 2020 Audited Report. (3) Sub-fund apportionment of cash and cash equivalents derived per the City's detailed Audited Report workpapers (with exception for the existing I/I Fund Balance). Adjustments for the reclass of sewer capital expenses are reported separately (refer to footnote 4). (4) Current portion of notes payable and bonds payable is omitted from the available fund balance calculation as the debt service associated is reflected within the annual cash flows forecast. (5) The City's detailed Aduited Report workpapers include a report journal entry (JE #47) to reclass water and sewer capital expenses, resulting in a $3.4 million reduction in available cash and cash equivalents as of 6/30/2020. City of Somerville| Water and Sewer Rate Study Report Stantec | 37

Appendix B: Sewer Fund Financial Sustainability Analysis Supporting Schedules Schedule 3 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Rate Revenue Growth Assumptions 2 Sewer 3 % Change in ERUs (Base Revenue) N/A 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.39% 0.39% 0.39% 0.39% 4 % Change in Billed Volume (Usage Revenue) N/A 1.47% 0.41% 0.41% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 5 Assumed Rate Revenue Increases 6 Assumed Sewer Base Rate Increase N/A 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 7 Assumed Sewer Usage Rate Increase N/A 10.50% 10.50% 10.50% 10.50% 10.50% 10.50% 10.50% 9.00% 9.00% 9.00% 8 Sewer Rate Revenue (1) 9 Base Rate Revenue 1,821,045 $ 1,873,927 $ 1,881,465 $ 1,889,004 $ 1,896,543 $ 1,904,082 $ 1,911,621 $ 1,919,160 $ 1,926,698 $ 1,934,237 $ 1,941,776 $ 10 Usage Rate Revenue 21,063,595 $ 24,227,023 $ 26,880,514 $ 29,824,135 $ 33,089,558 $ 36,711,910 $ 40,730,143 $ 45,187,456 $ 49,451,234 $ 54,116,473 $ 59,220,900 $ 11 Total Sewer Rate Revenue (1) 22,884,640 $ 26,100,950 $ 28,761,979 $ 31,713,139 $ 34,986,102 $ 38,615,992 $ 42,641,764 $ 47,106,616 $ 51,377,932 $ 56,050,710 $ 61,162,676 $ 12 Other Operating Revenue 13 Sewer Liens Redeemed (2) 521,100 $ 1,201,444 $ 607,120 $ 669,017 $ 737,662 $ 813,793 $ 898,225 $ 991,867 $ 1,095,721 $ 1,195,074 $ 1,303,765 $ 14 Total Other Operating Revenue 521,100 $ 1,201,444 $ 607,120 $ 669,017 $ 737,662 $ 813,793 $ 898,225 $ 991,867 $ 1,095,721 $ 1,195,074 $ 1,303,765 $ 15 Interest Income 16 Unrestricted (3) 63,134 $ 47,956 $ 42,989 $ 45,983 $ 55,049 $ 62,219 $ 66,175 $ 68,400 $ 67,110 $ 62,621 $ 61,785 $ 17 Total Interest Income 63,134 $ 47,956 $ 42,989 $ 45,983 $ 55,049 $ 62,219 $ 66,175 $ 68,400 $ 67,110 $ 62,621 $ 61,785 $ 18 Stabilization Fund Contributions to Debt Service (4) 1,128,414 $ 1,125,418 $ 1,600,246 $ 3,318,203 $ 1,628,943 $ 1,622,609 $ 1,622,585 $ 1,622,585 $ 1,622,585 $ 1,622,585 $ 1,622,585 $ 19 I/I Fund Contributions to Debt Service (4) - $ - $ - $ 51,608 $ 1,017,546 $ 219,553 $ 207,573 $ 207,528 $ 207,528 $ 207,528 $ 207,528 $ 20 Total Cash Inflows 24,597,289 $ 28,475,767 $ 31,012,334 $ 35,797,950 $ 38,425,302 $ 41,334,165 $ 45,436,322 $ 49,996,995 $ 54,370,877 $ 59,138,518 $ 64,358,340 $ (3) Calculated based upon assumed interest earnings percentage (refer to Schedule 1) that is applied to average annual projected fund balances (refer to Schedule 9). Projection of Cash Inflows (1) Note that in addition to the growth assumptions and rate increases presented herein, the rate revenue projection for FY 2022 also includes an adjustment to "normalize" the City's assumed level of bill collections. Starting in FY 2023, rate revenues are projected based upon a higher level of collected rate revenues; consequently, the sewer liens redeemed assumption is reduced going forward (refer to footnote 2 of this Schedule or refer to the Pro Forma on Schedule 8). (2) The City's sewer liens redeemed have averaged at approximately 2.3% of annual rate revenues over the past 3 years (FY 2018 - FY 2020). Per discussions with City Staff, the financial projection assumes that sewer liens are collected within 1 year of their original bill date, with exception for FY 2020. Due to the impacts of COVID-19, the analysis assumes that uncollected sewer liens (in excess of 1 year) from FY 2020 will be recovered in FY 2022. The financial projection assumes sewer liens redeemed at 2.3% of rate revenue in each year thereafter. (4) Reflects contribution of available Sewer Stabilization Fund and I/I Fund balances to offset annual projected debt service. Additional information related to the Sewer Stabilization Fund and I/I Fund (including assumed contributions from the General Fund) is presented on Schedule 9. City of Somerville| Water and Sewer Rate Study Report Stantec | 38

Appendix B: Sewer Fund Financial Sustainability Analysis Supporting Schedules Projection of Cash Outflows Schedule 4 Expense Line Item Escalation Factor FY 2021 (1) FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 640051 - SEWER PERSONAL SERVICE 2 SALARIES Salaries & Wages 971,170 $ 1,000,305 $ 1,030,314 $ 1,061,224 $ 1,093,060 $ 1,125,852 $ 1,159,628 $ 1,194,417 $ 1,230,249 $ 1,267,157 $ 1,305,171 $ 3 SALARY CONTINGENCY Salaries & Wages 83,748 $ 86,260 $ 88,848 $ 91,514 $ 94,259 $ 97,087 $ 99,999 $ 102,999 $ 106,089 $ 109,272 $ 112,550 $ 4 WAGES Salaries & Wages 497,864 $ 512,800 $ 528,184 $ 544,029 $ 560,350 $ 577,161 $ 594,476 $ 612,310 $ 630,679 $ 649,600 $ 669,088 $ 5 OVERTIME Salaries & Wages 15,640 $ 16,109 $ 16,592 $ 17,090 $ 17,603 $ 18,131 $ 18,675 $ 19,235 $ 19,812 $ 20,407 $ 21,019 $ 6 OVERTIME - LABOR Salaries & Wages 55,000 $ 56,650 $ 58,350 $ 60,100 $ 61,903 $ 63,760 $ 65,673 $ 67,643 $ 69,672 $ 71,763 $ 73,915 $ 7 LONGEVITY Salaries & Wages 3,740 $ 3,852 $ 3,968 $ 4,087 $ 4,209 $ 4,336 $ 4,466 $ 4,600 $ 4,738 $ 4,880 $ 5,026 $ 8 OUT OF GRADE-LABOR Salaries & Wages 5,000 $ 5,150 $ 5,305 $ 5,464 $ 5,628 $ 5,796 $ 5,970 $ 6,149 $ 6,334 $ 6,524 $ 6,720 $ 9 LONGEVITY-LABOR Salaries & Wages 3,750 $ 3,863 $ 3,978 $ 4,098 $ 4,221 $ 4,347 $ 4,478 $ 4,612 $ 4,750 $ 4,893 $ 5,040 $ 10 OTHER DIFFERENTIALS Salaries & Wages 29,250 $ 30,128 $ 31,031 $ 31,962 $ 32,921 $ 33,909 $ 34,926 $ 35,974 $ 37,053 $ 38,165 $ 39,310 $ 11 HOLDAYS NON-UNION Salaries & Wages 2,808 $ 2,892 $ 2,979 $ 3,068 $ 3,160 $ 3,255 $ 3,353 $ 3,453 $ 3,557 $ 3,664 $ 3,774 $ 12 UNIFORM ALLOWANCE Salaries & Wages 5,145 $ 5,299 $ 5,458 $ 5,622 $ 5,791 $ 5,964 $ 6,143 $ 6,328 $ 6,518 $ 6,713 $ 6,914 $ 13 OTHER LUMP SUM PAYMENTS Salaries & Wages 3,368 $ 3,469 $ 3,573 $ 3,680 $ 3,791 $ 3,904 $ 4,022 $ 4,142 $ 4,266 $ 4,394 $ 4,526 $ 14 STIPENDS-OTHER Salaries & Wages 18,736 $ 19,298 $ 19,877 $ 20,473 $ 21,088 $ 21,720 $ 22,372 $ 23,043 $ 23,734 $ 24,446 $ 25,180 $ 15 ADDITIONAL STAFFING - POPLAR PUMP STATION Salaries & Wages - $ - $ 150,000 $ 300,000 $ 309,000 $ 318,270 $ 327,818 $ 337,653 $ 347,782 $ 358,216 $ 368,962 $ 16 NEW IAM ENGINEERING STAFF Salaries & Wages - $ 63,201 $ 65,097 $ 67,050 $ 69,061 $ 71,133 $ 73,267 $ 75,465 $ 77,729 $ 80,061 $ 82,463 $ 17 NEW W&S OPS STAFF Salaries & Wages - $ 185,580 $ 191,148 $ 196,882 $ 202,789 $ 208,872 $ 215,139 $ 221,593 $ 228,241 $ 235,088 $ 242,140 $ 18 640052 - SEWER ORDINARY MAINTENANCE 19 REPAIRS-VEHICLES Repair & Maintenance 40,000 $ 41,000 $ 42,025 $ 43,076 $ 44,153 $ 45,256 $ 46,388 $ 47,547 $ 48,736 $ 49,955 $ 51,203 $ 20 REPAIRS-TOOLS & EQUIPMENT Repair & Maintenance 500 $ 513 $ 525 $ 538 $ 552 $ 566 $ 580 $ 594 $ 609 $ 624 $ 640 $ 21 RENTALS EQUIPMENT O&M General 150,000 $ 154,500 $ 159,135 $ 163,909 $ 168,826 $ 173,891 $ 179,108 $ 184,481 $ 190,016 $ 195,716 $ 201,587 $ 22 LEASE - PHOTOCPIER EQUIPMENT O&M General 4,361 $ 4,492 $ 4,627 $ 4,765 $ 4,908 $ 5,056 $ 5,207 $ 5,363 $ 5,524 $ 5,690 $ 5,861 $ 23 RUBBISH REMOVAL Professional Services 25,000 $ 25,750 $ 26,523 $ 27,318 $ 28,138 $ 28,982 $ 29,851 $ 30,747 $ 31,669 $ 32,619 $ 33,598 $ 24 DISPOSAL C BASIN SPOILS Fuel, Utilities, Chemicals 300,000 $ 400,000 $ 420,000 $ 441,000 $ 463,050 $ 486,203 $ 510,513 $ 536,038 $ 562,840 $ 590,982 $ 620,531 $ 25 PROFESSIONL & TECHNCL SVC Professional Services 85,000 $ 87,550 $ 90,177 $ 92,882 $ 95,668 $ 98,538 $ 101,494 $ 104,539 $ 107,675 $ 110,906 $ 114,233 $ 26 EMPLOYEE TRAINING COURSES O&M General 2,500 $ 2,575 $ 2,652 $ 2,732 $ 2,814 $ 2,898 $ 2,985 $ 3,075 $ 3,167 $ 3,262 $ 3,360 $ 27 ADVERTISING O&M General 200 $ 206 $ 212 $ 219 $ 225 $ 232 $ 239 $ 246 $ 253 $ 261 $ 269 $ 28 POLICE DETAIL O&M General 145,000 $ 149,350 $ 153,831 $ 158,445 $ 163,199 $ 168,095 $ 173,138 $ 178,332 $ 183,682 $ 189,192 $ 194,868 $ 29 BANK CHARGES O&M General 2,000 $ 2,060 $ 2,122 $ 2,185 $ 2,251 $ 2,319 $ 2,388 $ 2,460 $ 2,534 $ 2,610 $ 2,688 $ 30 SOFTWARE O&M General 34,000 $ 35,020 $ 36,071 $ 37,153 $ 38,267 $ 39,415 $ 40,598 $ 41,816 $ 43,070 $ 44,362 $ 45,693 $ 31 EXPRESS / FREIGHT O&M General 1,000 $ 1,030 $ 1,061 $ 1,093 $ 1,126 $ 1,159 $ 1,194 $ 1,230 $ 1,267 $ 1,305 $ 1,344 $ 32 OFFICE SUPPLIES O&M General 500 $ 515 $ 530 $ 546 $ 563 $ 580 $ 597 $ 615 $ 633 $ 652 $ 672 $ 33 PRINTING & STATIONERY O&M General 58,480 $ 60,234 $ 62,041 $ 63,903 $ 65,820 $ 67,794 $ 69,828 $ 71,923 $ 74,081 $ 76,303 $ 78,592 $ 34 COMPUTER EQUIPMENT NOT CAPITAL O&M General 2,500 $ 2,575 $ 2,652 $ 2,732 $ 2,814 $ 2,898 $ 2,985 $ 3,075 $ 3,167 $ 3,262 $ 3,360 $ 35 TELECOM EQUIPMENT O&M General 80,000 $ 82,400 $ 84,872 $ 87,418 $ 90,041 $ 92,742 $ 95,524 $ 98,390 $ 101,342 $ 104,382 $ 107,513 $ 36 TOOLS O&M General 2,000 $ 2,060 $ 2,122 $ 2,185 $ 2,251 $ 2,319 $ 2,388 $ 2,460 $ 2,534 $ 2,610 $ 2,688 $ 37 PAINT O&M General 1,000 $ 1,030 $ 1,061 $ 1,093 $ 1,126 $ 1,159 $ 1,194 $ 1,230 $ 1,267 $ 1,305 $ 1,344 $ 38 HARDWARE & SMALL TOOLS O&M General 7,000 $ 7,210 $ 7,426 $ 7,649 $ 7,879 $ 8,115 $ 8,358 $ 8,609 $ 8,867 $ 9,133 $ 9,407 $ 39 MOTOR GAS AND OIL Fuel, Utilities, Chemicals 37,950 $ 39,848 $ 41,840 $ 43,932 $ 46,128 $ 48,435 $ 50,857 $ 53,399 $ 56,069 $ 58,873 $ 61,817 $ 40 MOTOR PARTS & ACCESSORIES O&M General 31,300 $ 32,239 $ 33,206 $ 34,202 $ 35,228 $ 36,285 $ 37,374 $ 38,495 $ 39,650 $ 40,839 $ 42,065 $ 41 SIGNS AND CONES O&M General 5,000 $ 5,150 $ 5,305 $ 5,464 $ 5,628 $ 5,796 $ 5,970 $ 6,149 $ 6,334 $ 6,524 $ 6,720 $ 42 BITUMINOUS SUPPLIES O&M General 30,688 $ 31,609 $ 32,557 $ 33,534 $ 34,540 $ 35,576 $ 36,643 $ 37,742 $ 38,875 $ 40,041 $ 41,242 $ 43 READY MIX CONCRETE O&M General 15,000 $ 15,450 $ 15,914 $ 16,391 $ 16,883 $ 17,389 $ 17,911 $ 18,448 $ 19,002 $ 19,572 $ 20,159 $ 44 PIPE FITTINGS O&M General 23,000 $ 23,690 $ 24,401 $ 25,133 $ 25,887 $ 26,663 $ 27,463 $ 28,287 $ 29,136 $ 30,010 $ 30,910 $ 45 MASONRY SUPPLIES O&M General 25,000 $ 25,750 $ 26,523 $ 27,318 $ 28,138 $ 28,982 $ 29,851 $ 30,747 $ 31,669 $ 32,619 $ 33,598 $ 46 FOUNDRY PRODUCTS O&M General 10,000 $ 10,300 $ 10,609 $ 10,927 $ 11,255 $ 11,593 $ 11,941 $ 12,299 $ 12,668 $ 13,048 $ 13,439 $ 47 UNIFORMS O&M General 3,000 $ 3,090 $ 3,183 $ 3,278 $ 3,377 $ 3,478 $ 3,582 $ 3,690 $ 3,800 $ 3,914 $ 4,032 $ 48 REIMB OF LICENSES O&M General 600 $ 618 $ 637 $ 656 $ 675 $ 696 $ 716 $ 738 $ 760 $ 783 $ 806 $ 49 640058 - SEWER CAPITAL OUTLAY 50 VEHICLES W&S Maintenance Series 100,000 $ 104,399 $ 108,992 $ 113,786 $ 118,792 $ 124,018 $ 129,473 $ 135,169 $ 141,115 $ 147,323 $ 153,804 $ 51 SEWER CLEANING/REPAIRS (2) W&S Maintenance Series 3,200,000 $ 3,340,771 $ 3,487,735 $ 3,641,163 $ 3,801,341 $ 3,968,566 $ 4,143,147 $ 4,325,408 $ 4,515,687 $ 4,714,336 $ 4,921,724 $ 52 ENGINEERING / ARCHITECTURE W&S Maintenance Series 1,960,000 $ 2,046,222 $ 2,136,237 $ 2,230,213 $ 2,328,322 $ 2,430,747 $ 2,537,678 $ 2,649,312 $ 2,765,858 $ 2,887,531 $ 3,014,556 $ 53 EQUIPMENT W&S Maintenance Series 500,000 $ 521,995 $ 544,959 $ 568,932 $ 593,960 $ 620,088 $ 647,367 $ 675,845 $ 705,576 $ 736,615 $ 769,019 $ 54 WATER METER & PAR W&S Maintenance Series 420,000 $ 438,476 $ 457,765 $ 477,903 $ 498,926 $ 520,874 $ 543,788 $ 567,710 $ 592,684 $ 618,757 $ 645,976 $ 55 640060 - SEWER SPECIAL ITEMS 56 MWRA ASSESSMENT MWRA Assessment 16,822,763 $ 17,143,800 $ 18,521,717 $ 19,077,369 $ 19,649,690 $ 20,239,181 $ 20,846,356 $ 21,471,747 $ 22,115,899 $ 22,779,376 $ 23,462,757 $ 57 INDIRECT COST SUBSIDY Indirect Cost Subsidy 732,980 $ 754,969 $ 777,618 $ 800,947 $ 824,975 $ 849,725 $ 875,216 $ 901,473 $ 928,517 $ 956,373 $ 985,064 $ 58 Debt Service 59 Existing MWRA Notes 60 April 8 2019 MWRA SEWER 49,978 $ 49,978 $ 49,978 $ 49,978 $ 49,978 $ 49,978 $ 49,978 $ 49,978 $ 49,978 $ - $ - $ 61 Existing Municipal Purpose 62 April 1 2010- Sewer 43,600 $ 42,000 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 63 December 7 2017- Cur Ref Aug 15 06- Sewer Construction 1 78,384 $ 72,942 $ 63,500 $ 61,300 $ 68,900 $ 36,900 $ 30,600 $ - $ - $ - $ - $ 64 December 7 2017- Cur Ref Aug 15 06- Sewer Construction 2 48,448 $ 41,948 $ 40,548 $ 35,424 $ 33,000 $ 31,800 $ 30,600 $ - $ - $ - $ - $ 65 June 7 2018 Series B- Nunziation Field Stormwater Project 62,400 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 66 June 7 2018 Series B- Cedar St Sewer Repairs 26,556 $ 26,156 $ 30,756 $ 30,306 $ 29,706 $ 29,106 $ 28,506 $ 27,906 $ 27,306 $ 26,706 $ 26,106 $ 67 June 6 2019 - CEDAR ST SEWER REPAIRS 138,150 $ 140,650 $ 137,900 $ 140,150 $ 137,150 $ 139,150 $ 140,900 $ 137,400 $ 138,900 $ 140,900 $ 137,700 $ 68 June 6 2019 - NUNZIATIO FIELD STORMWATER PROJ 88,250 $ 89,250 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 69 June 6 2019 - SEWER MAIN REHAB & REPLACEMENT 82,850 $ 81,350 $ 84,850 $ 83,100 $ 81,350 $ 84,600 $ 82,600 $ 85,600 $ 83,350 $ 81,550 $ 84,750 $ City of Somerville| Water and Sewer Rate Study Report Stantec | 39

Appendix B: Sewer Fund Financial Sustainability Analysis Supporting Schedules Projection of Cash Outflows Schedule 4 Expense Line Item Escalation Factor FY 2021 (1) FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 70 June 4 2020 - Cedar St Sewer Repairs 111,728 $ 110,731 $ 113,231 $ 110,481 $ 112,731 $ 109,731 $ 111,731 $ 113,481 $ 109,981 $ 111,481 $ 112,731 $ 71 June 4 2020 - Sewer Main Rehabiliation & Replacement 56,157 $ 55,169 $ 53,919 $ 57,669 $ 56,169 $ 54,669 $ 53,169 $ 56,669 $ 54,919 $ 53,169 $ 56,419 $ 72 Future Long-Term Projects 73 Manhole Sealing - $ - $ 56,376 $ 56,376 $ 56,376 $ 56,376 $ 56,376 $ 56,376 $ 56,376 $ 56,376 $ 56,376 $ 74 Sewer Clear Vehicle - $ 49,431 $ 49,431 $ 49,431 $ 49,431 $ 49,431 $ 49,431 $ 49,431 $ 49,431 $ 49,431 $ 49,431 $ 75 BAN Projects & Associated Long-Term Debt Service (3) 76 Unspecified FY 2021 (per Budget) 330,664 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 77 Somerville Ave. Utility & Streetscape Improvements - Sewer - $ 295,612 $ 383,530 $ 383,530 $ 398,870 $ 426,145 $ 272,745 $ - $ - $ - $ - $ 78 Long-Term - $ - $ - $ 818,917 $ 818,917 $ 823,685 $ 1,216,462 $ 1,914,819 $ 1,914,819 $ 1,914,819 $ 1,914,819 $ 79 Poplar St. Stormwater Pump Station (4) - $ 13,263 $ 47,250 $ 128,906 $ 337,329 $ 491,052 $ 491,052 $ 491,052 $ 391,250 $ 117,250 $ - $ 80 Long-Term - $ - $ - $ - $ 130,897 $ 130,897 $ 130,897 $ 130,897 $ 369,385 $ 1,108,517 $ 1,424,806 $ 81 Spring Hill Sewer Separation: Project Area 1- Sewer (4) - $ 21,087 $ 107,282 $ 162,149 $ 233,216 $ 258,107 $ 258,107 $ 157,000 $ 68,750 $ - $ - $ 82 Long-Term - $ - $ - $ 101,159 $ 101,159 $ 101,159 $ 101,159 $ 342,767 $ 580,827 $ 766,284 $ 766,284 $ 83 Nunziato Stormwater Storage (4) - $ - $ - $ 190,125 $ 337,050 $ 415,250 $ 415,250 $ 415,250 $ 204,000 $ 40,750 $ - $ 84 Long-Term - $ - $ - $ - $ - $ - $ - $ - $ 569,860 $ 1,010,237 $ 1,120,163 $ 85 Sewer Improvements (5) - $ - $ 48,884 $ 185,850 $ 193,500 $ 201,375 $ 232,750 $ 242,250 $ 252,000 $ 262,000 $ 272,000 $ 86 Long-Term - $ - $ - $ - $ 243,053 $ 503,041 $ 781,897 $ 1,071,552 $ 1,373,276 $ 1,687,069 $ 2,013,566 $ 87 Somerville Marginal Interceptor Rehabilitation - $ 18,851 $ 49,926 $ 55,473 $ - $ - $ - $ - $ - $ - $ - $ 88 Long-Term - $ 4,850 $ 82,554 $ 82,554 $ 215,719 $ 215,719 $ 215,719 $ 215,719 $ 215,719 $ 215,719 $ 215,719 $ 89 SSES & I/I Assessment - $ 900 $ 36,000 $ 74,925 $ 79,425 $ 55,750 $ 31,000 $ 32,250 $ 33,500 $ 34,750 $ 36,250 $ 90 Long-Term - $ - $ 89,740 $ 189,786 $ 395,871 $ 543,211 $ 689,165 $ 768,431 $ 850,195 $ 935,707 $ 978,901 $ 91 Willow to Grove Sewer Replacement - $ - $ 4,950 $ 21,450 $ 49,350 $ 32,850 $ - $ - $ - $ - $ - $ 92 Long-Term - $ - $ - $ - $ 13,586 $ 98,069 $ 190,809 $ 190,809 $ 190,809 $ 190,809 $ 190,809 $ 93 Flint St. Sewer Replacement - $ - $ 4,950 $ 42,750 $ 78,750 $ 40,950 $ - $ - $ - $ - $ - $ 94 Long-Term - $ - $ - $ - $ 13,586 $ 120,301 $ 235,909 $ 235,909 $ 235,909 $ 235,909 $ 235,909 $ 95 Sewer Separation Project 1 - $ - $ - $ 57,825 $ 271,125 $ 708,800 $ 991,000 $ 495,500 $ - $ - $ - $ 96 Long-Term - $ - $ - $ - $ - $ 163,248 $ 765,425 $ 2,024,407 $ 3,283,389 $ 3,283,389 $ 3,283,389 $ 97 Sewer Separation Project 2 - $ - $ - $ 57,825 $ 271,125 $ 708,800 $ 991,000 $ 495,500 $ - $ - $ - $ 98 Long-Term - $ - $ - $ - $ - $ 163,248 $ 765,425 $ 2,024,407 $ 3,283,389 $ 3,283,389 $ 3,283,389 $ 99 Sewer Separation Project 3 (6) - $ - $ - $ - $ - $ 62,544 $ 293,249 $ 766,638 $ 1,071,866 $ 535,933 $ - $ 100 Long-Term - $ - $ - $ - $ - $ - $ - $ 176,569 $ 827,884 $ 2,189,599 $ 3,551,314 $ 101 Sewer Separation Project 4 - $ - $ - $ - $ - $ - $ - $ 72,197 $ 332,322 $ 1,380,122 $ 1,119,997 $ 102 Long-Term - $ - $ - $ - $ - $ - $ - $ - $ - $ 183,440 $ 844,374 $ 103 Sewer Separation Project 5 - $ - $ - $ - $ - $ - $ - $ - $ - $ 72,197 $ 332,322 $ 104 Sewer Separation Project 6 (7) - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 105 Spring Hill Sewer Separation: Highland Avenue - Sewer - $ - $ 3,150 $ 8,775 $ 112,725 $ 157,125 $ 157,750 $ 154,250 $ 148,000 $ 32,500 $ - $ 106 Long-Term - $ - $ - $ - $ - $ - $ - $ 9,441 $ 26,301 $ 337,869 $ 425,540 $ 107 Spring Hill Sewer Separation: Project Area 2B- Sewer (8) - $ - $ - $ - $ - $ 5,250 $ 66,000 $ 155,000 $ 155,000 $ 155,000 $ 149,750 $ 108 Long-Term - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 14,162 $ 109 Boynton Yards - Pump Station (9) - $ - $ - $ 10,800 $ 32,400 $ 241,313 $ 476,250 $ 684,375 $ 672,375 $ 648,375 $ 416,250 $ 110 Long-Term - $ - $ - $ - $ - $ - $ - $ - $ 32,371 $ 97,112 $ 723,284 $ 111 Boynton Yards - Infrastructure (9) - $ - $ - $ 7,256 $ 21,769 $ 160,650 $ 316,875 $ 455,250 $ 447,188 $ 431,063 $ 276,750 $ 112 Long-Term - $ - $ - $ - $ - $ - $ - $ - $ 21,749 $ 65,240 $ 481,508 $ 113 Clarendon Hill - $ - $ 24,750 $ 78,750 $ 110,250 $ 113,000 $ 119,000 $ 95,000 $ 35,000 $ - $ - $ 114 Long-Term - $ - $ - $ - $ - $ - $ - $ 74,183 $ 236,037 $ 330,452 $ 330,452 $ 115 New Washington Street Sewer Realignment (10) 11,250 $ 11,250 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 116 Long-Term - $ - $ 36,791 $ 36,791 $ 36,791 $ 36,791 $ 36,791 $ 36,791 $ 36,791 $ 36,791 $ 36,791 $ 117 Total Debt Service 1,128,414 $ 1,125,418 $ 1,600,246 $ 3,369,811 $ 5,171,253 $ 7,620,070 $ 10,875,576 $ 14,505,054 $ 18,430,200 $ 22,101,903 $ 24,962,009 $ 118 Total Expenses by Category 119 Personal Services 1,695,219 $ 1,994,857 $ 2,204,703 $ 2,416,344 $ 2,488,834 $ 2,563,499 $ 2,640,404 $ 2,719,616 $ 2,801,205 $ 2,885,241 $ 2,971,798 $ 120 MWRA Assessment 16,822,763 $ 17,143,800 $ 18,521,717 $ 19,077,369 $ 19,649,690 $ 20,239,181 $ 20,846,356 $ 21,471,747 $ 22,115,899 $ 22,779,376 $ 23,462,757 $ 121 Operations & Maintenance 1,855,559 $ 2,002,782 $ 2,071,455 $ 2,142,623 $ 2,216,382 $ 2,292,834 $ 2,372,082 $ 2,454,237 $ 2,539,412 $ 2,627,726 $ 2,719,302 $ 122 Capital Outlay 6,180,000 $ 6,451,864 $ 6,735,687 $ 7,031,997 $ 7,341,341 $ 7,664,293 $ 8,001,453 $ 8,353,444 $ 8,720,920 $ 9,104,561 $ 9,505,079 $ 123 Debt Service 1,128,414 $ 1,125,418 $ 1,600,246 $ 3,369,811 $ 5,171,253 $ 7,620,070 $ 10,875,576 $ 14,505,054 $ 18,430,200 $ 22,101,903 $ 24,962,009 $ 124 Total Expenses 27,681,955 $ 28,718,721 $ 31,133,808 $ 34,038,143 $ 36,867,500 $ 40,379,876 $ 44,735,872 $ 49,504,098 $ 54,607,636 $ 59,498,808 $ 63,620,946 $ City of Somerville| Water and Sewer Rate Study Report Stantec | 40

Appendix B: Sewer Fund Financial Sustainability Analysis Supporting Schedules Projection of Cash Outflows Schedule 4 Expense Line Item Escalation Factor FY 2021 (1) FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 125 Expense Execution Factors 126 Personal Services 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 127 MWRA Assessment 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 128 Operations & Maintenance 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 129 Capital Outlay 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 131 Debt Service 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 132 Expenses at Execution 133 Personal Services 1,695,219 $ 1,994,857 $ 2,204,703 $ 2,416,344 $ 2,488,834 $ 2,563,499 $ 2,640,404 $ 2,719,616 $ 2,801,205 $ 2,885,241 $ 2,971,798 $ 134 MWRA Assessment 16,822,763 $ 17,143,800 $ 18,521,717 $ 19,077,369 $ 19,649,690 $ 20,239,181 $ 20,846,356 $ 21,471,747 $ 22,115,899 $ 22,779,376 $ 23,462,757 $ 135 Operations & Maintenance 1,855,559 $ 2,002,782 $ 2,071,455 $ 2,142,623 $ 2,216,382 $ 2,292,834 $ 2,372,082 $ 2,454,237 $ 2,539,412 $ 2,627,726 $ 2,719,302 $ 136 Capital Outlay 6,180,000 $ 6,451,864 $ 6,735,687 $ 7,031,997 $ 7,341,341 $ 7,664,293 $ 8,001,453 $ 8,353,444 $ 8,720,920 $ 9,104,561 $ 9,505,079 $ 138 Debt Service 1,128,414 $ 1,125,418 $ 1,600,246 $ 3,369,811 $ 5,171,253 $ 7,620,070 $ 10,875,576 $ 14,505,054 $ 18,430,200 $ 22,101,903 $ 24,962,009 $ 139 Total Expenses 27,681,955 $ 28,718,721 $ 31,133,808 $ 34,038,143 $ 36,867,500 $ 40,379,876 $ 44,735,872 $ 49,504,098 $ 54,607,636 $ 59,498,808 $ 63,620,946 $ 140 Projects Designated To Be Funded with Cash (11) - $ 720,000 $ 240,000 $ 600,000 $ 300,000 $ 300,000 $ 300,000 $ 300,000 $ 300,000 $ 300,000 $ 300,000 $ 141 Total Cash Outflows 27,681,955 $ 29,438,721 $ 31,373,808 $ 34,638,143 $ 37,167,500 $ 40,679,876 $ 45,035,872 $ 49,804,098 $ 54,907,636 $ 59,798,808 $ 63,920,946 $ (1) FY 2021 operating expenses reflect the City's FY 2021 Revised Budget, after which all future operating costs escalate based upon assumed escalation factors presented in Schedule 5. (2) Sewer cleaning/repairs original budget of $2.04 million was adjusted to $3.2 million per discussions with City Staff to account for emergency system repairs identified by the City. (3) Reflects the City's projected Bond Anticipation Note (BAN) annual interest payments (ranging from 2-5 years per project), as well as the associated long-term debt service payments for each project. (4) Per discussions with City Staff, approximately 80% of project amounts may be funded by FEMA grant contributions. However, for purposes of this analysis, the entire debt service schedule for these projects has been considered. (5) Projected debt schedules pushed out one year to FY 2023 per discussions with City Staff. (7) Due to assumption that Sewer Separation Projects are pushed out and start every 2 years, Sewer Separation Project 6 does not occur within the projection period presented herein. (8) Projected debt schedules moved forward one year to FY 2026 per discussions with City Staff. (9) Per discussions with City Staff, approximately 25% of the project amount will be developer funded. As such, only 75% of the debt service schedule originally provided by staff is considered in this analysis. Furthermore, the projected debt schedules have been pushed out one year to start in FY 2024. (11) Reflects cash funding of vehicles and Yard 3 CIP, as directed by City Staff. (6) Per discussions with City Staff, Sewer Separation Project 3 was assumed to be pushed out 2 years to FY 2026, after which point the remaining Separation Projects are assumed to start every 2 years thereafter. For all projects that were pushed out over the projection, the original debt service amounts were assumed to increase by 4% to account for an assumed 4% annual inflationary increase in capital costs. (10) The New Washington Street Sewer Realignment project and associated debt service was added to CIP per the request of staff on 4/15/2021. The project assumes a spending schedule of $500k over 3 years, with an assumed 2 year BAN (2.3% assumed interest rate) that is followed by long-term debt service (20 years at 4.0% assumed interest rate). City of Somerville| Water and Sewer Rate Study Report Stantec | 41

Appendix B: Sewer Fund Financial Sustainability Analysis Supporting Schedules Cost Escalation Factors Schedule 5 Inflation Factor FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Repair & Maintenance 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% Fuel, Utilities, Chemicals 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Professional Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% O&M General 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Indirect Cost Subsidy 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% MWRA Assessment (1) 1.91% 8.04% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% W&S Maintenance Series - 10 Year 4.40% 4.40% 4.40% 4.40% 4.40% 4.40% 4.40% 4.40% 4.40% 4.40% Default Inflation Factor 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% (1) Annual MWRA Assessment cost escalation factor in FY 2022 reflects resulting factor based upon preliminary MWRA estimates. The FY 2023 escalation factor reflects an estimated assessment increase provided by City Staff. MWRA Assessments in FY 2024 through the remainder of the projection are projected to increase at 3.00% annually based upon a 5 year history of the assessment change. City of Somerville| Water and Sewer Rate Study Report Stantec | 42

Appendix B: Sewer Fund Financial Sustainability Analysis Supporting Schedules Capital Investment Plan (CIP) Schedule 6 Project Description FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 Total Cost Debt Funded Projects (1) 1 Somerville Ave. Utility & Streetscape Improvements - Sewer $ 7,320,000 $ 12,060,000 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 19,380,000 2 Poplar St. Stormwater Pump Station (2) $ 510,000 $ 830,000 $ 4,840,000 $ 10,960,000 $ 4,690,000 $ - $ - $ - $ - $ - $ - $ 21,830,000 3 Spring Hill Sewer Separation: Project Area 1- Sewer (2) $ 840,000 $ 3,240,000 $ 3,530,000 $ 2,750,000 $ - $ - $ - $ - $ - $ - $ - $ 10,360,000 4 Nunziato Stormwater Storage (2) $ - $ - $ 8,450,000 $ 6,530,000 $ 1,630,000 $ - $ - $ - $ - $ - $ - $ 16,610,000 5 Sewer Improvements (3) $ - $ 4,050,000 $ 4,210,000 $ 4,390,000 $ 4,560,000 $ 4,750,000 $ 4,940,000 $ 5,140,000 $ 5,340,000 $ 5,540,000 $ 5,740,000 $ 48,660,000 6 Manhole Sealing $ 830,000 $ 460,000 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 1,290,000 7 Somerville Marginal Interceptor Rehabilitation $ 160,000 $ 4,450,000 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 4,610,000 8 SSES & I/I Assessment $ 60,000 $ 1,600,000 $ 1,730,000 $ 1,800,000 $ 610,000 $ 630,000 $ 660,000 $ 680,000 $ 710,000 $ 740,000 $ 740,000 $ 9,960,000 9 Willow to Grove Sewer Replacement $ - $ 220,000 $ 1,330,000 $ 1,460,000 $ - $ - $ - $ - $ - $ - $ - $ 3,010,000 10 Flint St. Sewer Replacement $ - $ 220,000 $ 1,680,000 $ 1,820,000 $ - $ - $ - $ - $ - $ - $ - $ 3,720,000 11 Sewer Separation Project 1 $ - $ - $ 2,570,000 $ 9,480,000 $ 19,820,000 $ 19,820,000 $ - $ - $ - $ - $ - $ 51,690,000 12 Sewer Separation Project 2 $ - $ - $ 2,570,000 $ 9,480,000 $ 19,820,000 $ 19,820,000 $ - $ - $ - $ - $ - $ 51,690,000 13 Sewer Separation Project 3 (4) $ - $ - $ - $ - $ 2,780,000 $ 10,250,000 $ 21,440,000 $ 21,440,000 $ - $ - $ - $ 55,910,000 14 Sewer Separation Project 4 (4) $ - $ - $ - $ - $ - $ - $ 2,890,000 $ 10,400,000 $ 22,410,000 $ 22,410,000 $ - $ 58,110,000 15 Sewer Separation Project 5 (4) $ - $ - $ - $ - $ - $ - $ - $ - $ 3,120,000 $ 11,250,000 $ 24,230,000 $ 38,600,000 16 Sewer Separation Project 6 (4) (5) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - 17 Spring Hill Sewer Separation: Highland Avenue - Sewer $ - $ 140,000 $ 250,000 $ 4,620,000 $ 1,300,000 $ - $ - $ - $ - $ - $ - $ 6,310,000 18 Spring Hill Sewer Separation: Project Area 2B- Sewer (6) $ - $ - $ - $ - $ 210,000 $ 2,430,000 $ 3,560,000 $ - $ - $ - $ - $ 6,200,000 19 Boynton Yards - Pump Station (7) $ - $ - $ 480,000 $ 960,000 $ 9,285,000 $ 8,325,000 $ 8,325,000 $ - $ - $ - $ - $ 27,375,000 20 Boynton Yards - Infrastructure (7) $ - $ - $ 322,500 $ 645,000 $ 6,172,500 $ 5,535,000 $ 5,535,000 $ - $ - $ - $ - $ 18,210,000 21 Clarendon Hill $ 300,000 $ 800,000 $ 2,400,000 $ 1,400,000 $ - $ - $ - $ - $ - $ - $ - $ 4,900,000 22 New Washington Street Sewer Realignment (8) $ 20,000 $ 250,000 $ 230,000 $ - $ - $ - $ - $ - $ - $ - $ - $ 500,000 23 Cash Funded Projects 24 Sewer Vehicles (9) $ - $ 520,000 $ 40,000 $ 400,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 1,660,000 25 Yard 3 Annual PAYGO $ - $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 2,000,000 26 Total CIP Budget (in Future Dollars) (10) $ 10,040,000 $ 29,040,000 $ 34,832,500 $ 56,895,000 $ 71,177,500 $ 71,860,000 $ 47,650,000 $ 37,960,000 $ 31,880,000 $ 40,240,000 $ 31,010,000 $ 462,585,000 27 Cumulative Projected Cost Escalation (10) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 28 Resulting CIP Funding Level $ 10,040,000 $ 29,040,000 $ 34,832,500 $ 56,895,000 $ 71,177,500 $ 71,860,000 $ 47,650,000 $ 37,960,000 $ 31,880,000 $ 40,240,000 $ 31,010,000 $ 462,585,000 (1) Project amounts and timing presented herein reflects adjustments made during meetings with City Staff. FY 2031 project values were calculated based upon debt service schedules provided by City Staff. (2) Per discussions with City Staff, approximately 80% of project amounts may be funded by FEMA grant contributions. However, for purposes of this analysis, the entire debt service schedule for these projects has been considered. (3) Project and associated debt schedules pushed out one year to FY 2023 per discussions with City Staff. (4) Per discussions with City Staff, Sewer Separation Project 3 was assumed to be pushed out 2 years (first year of debt service in FY 2026), after which point the remaining Separation Projects are assumed to start every 2 years thereafter. (5) Due to assumption that Sewer Separation Projects are pushed out and start every 2 years, Sewer Separation Project 6 does not occur within the projection period presented herein. (6) Project and associated debt schedules moved forward one year to FY 2026 per discussions with City Staff. (8) The New Washington Street Sewer Realignment project and associated debt service was added to CIP per the request of staff on 4/15/2021. (9) Projected vehicle costs of $400,000 in FY 2024 reflects assumption of additional vac truck per discussion with City Staff. (10) CIP already includes inflationary assumptions as provided by City Staff. (7) Project values displayed for Boynton Yards are net of assumed 25% developer funding based upon discussions with City Staff. As such, only 75% of the debt service schedule originally provided by staff is considered in this analysis. Furthermore, the project and debt schedules have been pushed out one year to start in FY 2024. City of Somerville| Water and Sewer Rate Study Report Stantec | 43

Appendix B: Sewer Fund Financial Sustainability Analysis Supporting Schedules FAMS - Control Panel Schedule 7 SEWER ENTERPRISE FUND FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2026 FY 2031 Sewer Usage Rate Plan 0.00% 10.50% 10.50% 10.50% 10.50% 10.50% 10.50% 10.50% 9.00% 9.00% 9.00% 64.79% 160.78% Debt Service Coverage (1.25 Target) 2.74 5.52 4.13 2.61 2.21 1.89 1.63 1.48 1.36 1.31 1.34 Scenario Manager Debt Service / Revenue 4.8% 4.1% 5.4% 10.4% 14.5% 19.3% 25.0% 30.2% 35.1% 38.6% 40.0% Growth Normal Tri-Annual Single-Family Bill @ 18 CCF $204.79 $222.11 $241.25 $262.36 $285.70 $311.50 $340.04 $371.58 $401.48 $434.02 $469.48 Check - Combined Tri-Annual W&S Single-Family Bill $315.49 $339.13 $367.97 $399.70 $434.76 $473.51 $511.98 $551.07 $588.93 $629.84 $674.08 Annual W&S Bill as % of MHI 1.0% 1.0% 1.1% 1.2% 1.3% 1.5% 1.6% 1.7% 1.8% 1.9% 2.1% Net Cash Flow ($ M) -$3.08 -$0.96 -$0.36 $1.16 $1.26 $0.65 $0.40 $0.19 -$0.54 -$0.66 $0.44 $0.0M $20.0M $40.0M $60.0M $80.0M 21 22 23 24 25 26 27 28 29 30 31 Operating/Cash Debt $0.0M $2.0M $4.0M $6.0M $8.0M $10.0M $12.0M 20 21 22 23 24 25 26 27 28 29 30 31 Current Plan Target $0.0M $20.0M $40.0M $60.0M $80.0M 21 22 23 24 25 26 27 28 29 30 31 Current Plan $0.0M $10.0M $20.0M $30.0M $40.0M $50.0M $60.0M $70.0M 21 22 23 24 25 26 27 28 29 30 31 O&M Cash In Cash Out $0.0M $20.0M $40.0M $60.0M $80.0M 21 22 23 24 25 26 27 28 29 30 31 Current Plan Operating Fund CIP Spending Revenues vs. Expenses CIP Funding Borrowing CALC SAVE CTRL LAST OVR $0.0M $1.0M $2.0M $3.0M $4.0M $5.0M $6.0M $7.0M 20 21 22 23 24 25 26 27 28 29 30 31 I/I Fund Stabilization Fund Target Stabilization Fund & I/I Fund City of Somerville| Water and Sewer Rate Study Report Stantec | 44

Appendix B: Sewer Fund Financial Sustainability Analysis Supporting Schedules Pro Forma Schedule 8 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Operating Revenue 2 Sewer Rate Revenue 22,884,640 $ 22,884,640 $ 26,100,950 $ 28,761,979 $ 31,713,139 $ 34,986,102 $ 38,615,992 $ 42,641,764 $ 47,106,616 $ 51,377,932 $ 56,050,710 $ 3 Change in Revenue From Growth - $ 342,078 $ 106,773 $ 117,192 $ 128,706 $ 141,428 $ 155,487 $ 171,021 $ 188,187 $ 204,445 $ 222,167 $ 4 Other Revenue Adjustments - 572,116 - - - - - - - - - 5 Subtotal 22,884,640 $ 23,798,834 $ 26,207,722 $ 28,879,171 $ 31,841,845 $ 35,127,530 $ 38,771,479 $ 42,812,785 $ 47,294,803 $ 51,582,378 $ 56,272,877 $ 6 Weighted Average Rate Increase 0.00% 9.67% 9.75% 9.81% 9.87% 9.93% 9.98% 10.03% 8.63% 8.66% 8.69% 7 Additional Rate Revenue From Rate Increase - $ 2,302,115 $ 2,554,257 $ 2,833,968 $ 3,144,257 $ 3,488,462 $ 3,870,285 $ 4,293,831 $ 4,083,129 $ 4,468,333 $ 4,889,799 $ 8 Total Rate Revenue 22,884,640 $ 26,100,950 $ 28,761,979 $ 31,713,139 $ 34,986,102 $ 38,615,992 $ 42,641,764 $ 47,106,616 $ 51,377,932 $ 56,050,710 $ 61,162,676 $ 9 Plus: Other Operating Revenue 521,100 $ 1,201,444 $ 607,120 $ 669,017 $ 737,662 $ 813,793 $ 898,225 $ 991,867 $ 1,095,721 $ 1,195,074 $ 1,303,765 $ 10 Equals: Total Operating Revenue 23,405,740 $ 27,302,393 $ 29,369,099 $ 32,382,156 $ 35,723,763 $ 39,429,785 $ 43,539,989 $ 48,098,483 $ 52,473,653 $ 57,245,784 $ 62,466,441 $ 11 Less: Operating Expenses 12 Personal Services (1,695,219) $ (1,994,857) $ (2,204,703) $ (2,416,344) $ (2,488,834) $ (2,563,499) $ (2,640,404) $ (2,719,616) $ (2,801,205) $ (2,885,241) $ (2,971,798) $ 13 MWRA Assessment (16,822,763) $ (17,143,800) $ (18,521,717) $ (19,077,369) $ (19,649,690) $ (20,239,181) $ (20,846,356) $ (21,471,747) $ (22,115,899) $ (22,779,376) $ (23,462,757) $ 14 Operations & Maintenance Costs (1,855,559) $ (2,002,782) $ (2,071,455) $ (2,142,623) $ (2,216,382) $ (2,292,834) $ (2,372,082) $ (2,454,237) $ (2,539,412) $ (2,627,726) $ (2,719,302) $ 15 Equals: Net Operating Income 3,032,199 $ 6,160,954 $ 6,571,224 $ 8,745,820 $ 11,368,857 $ 14,334,271 $ 17,681,147 $ 21,452,882 $ 25,017,137 $ 28,953,441 $ 33,312,583 $ 16 Plus: Non-Operating Income/(Expense) 17 Interest Income 63,134 $ 47,956 $ 42,989 $ 45,983 $ 55,049 $ 62,219 $ 66,175 $ 68,400 $ 67,110 $ 62,621 $ 61,785 $ 18 Stabilization Fund Contributions to Debt Service 1,128,414 $ 1,125,418 $ 1,600,246 $ 3,318,203 $ 1,628,943 $ 1,622,609 $ 1,622,585 $ 1,622,585 $ 1,622,585 $ 1,622,585 $ 1,622,585 $ 19 I/I Fund Contributions to Debt Service - $ - $ - $ 51,608 $ 1,017,546 $ 219,553 $ 207,573 $ 207,528 $ 207,528 $ 207,528 $ 207,528 $ 20 Equals: Net Income 4,223,748 $ 7,334,328 $ 8,214,459 $ 12,161,614 $ 14,070,396 $ 16,238,652 $ 19,577,480 $ 23,351,395 $ 26,914,360 $ 30,846,175 $ 35,204,482 $ 21 Less: Revenues Excluded From Coverage Test 22 Stabilization Fund Contributions to Debt Service (1,128,414) $ (1,125,418) $ (1,600,246) $ (3,318,203) $ (1,628,943) $ (1,622,609) $ (1,622,585) $ (1,622,585) $ (1,622,585) $ (1,622,585) $ (1,622,585) $ 23 I/I Fund Contributions to Debt Service - $ - $ - $ (51,608) $ (1,017,546) $ (219,553) $ (207,573) $ (207,528) $ (207,528) $ (207,528) $ (207,528) $ 24 Equals: Net Income Available For Debt Service 3,095,334 $ 6,208,910 $ 6,614,213 $ 8,791,803 $ 11,423,906 $ 14,396,490 $ 17,747,322 $ 21,521,282 $ 25,084,247 $ 29,016,062 $ 33,374,369 $ 25 Total All-In Debt Service Coverage Test 26 Net Income Available for Subordinate Debt Service 3,095,334 $ 6,208,910 $ 6,614,213 $ 8,791,803 $ 11,423,906 $ 14,396,490 $ 17,747,322 $ 21,521,282 $ 25,084,247 $ 29,016,062 $ 33,374,369 $ 27 Total Short-Term Debt Service (BAN) 341,914 $ 360,963 $ 710,672 $ 1,466,389 $ 2,526,884 $ 4,078,960 $ 5,112,028 $ 4,711,512 $ 3,811,250 $ 3,709,939 $ 2,603,318 $ 28 Total Long-Term Debt Service 786,501 $ 764,455 $ 889,574 $ 1,903,422 $ 2,644,370 $ 3,541,110 $ 5,763,549 $ 9,793,542 $ 14,618,950 $ 18,391,965 $ 22,358,690 $ 29 Total Annual Debt Service Targ. 1,128,414 $ 1,125,418 $ 1,600,246 $ 3,369,811 $ 5,171,253 $ 7,620,070 $ 10,875,576 $ 14,505,054 $ 18,430,200 $ 22,101,903 $ 24,962,009 $ 30 Calculated All-In Debt Service Coverage 1.25 2.74 5.52 4.13 2.61 2.21 1.89 1.63 1.48 1.36 1.31 1.34 31 Cash Flow Test 32 Net Income Available For Debt Service 3,095,334 $ 6,208,910 $ 6,614,213 $ 8,791,803 $ 11,423,906 $ 14,396,490 $ 17,747,322 $ 21,521,282 $ 25,084,247 $ 29,016,062 $ 33,374,369 $ 33 Less: Non-Operating Expenditures 34 Net Debt Service Payment (Net of Stabilization & I/I Fund Contributions) - $ - $ - $ - $ (2,524,764) $ (5,777,909) $ (9,045,418) $ (12,674,940) $ (16,600,087) $ (20,271,790) $ (23,131,896) $ 35 Capital Outlay (6,180,000) $ (6,451,864) $ (6,735,687) $ (7,031,997) $ (7,341,341) $ (7,664,293) $ (8,001,453) $ (8,353,444) $ (8,720,920) $ (9,104,561) $ (9,505,079) $ 36 Cash Flow Surplus/(Deficit) (3,084,666) $ (242,954) $ (121,474) $ 1,759,806 $ 1,557,801 $ 954,289 $ 700,451 $ 492,898 $ (236,759) $ (360,289) $ 737,394 $ 37 Unrestricted Reserve Fund Test 38 Balance At Beginning Of Fiscal Year 9,960,262 $ 6,875,596 $ 5,912,641 $ 5,551,167 $ 6,710,974 $ 7,968,775 $ 8,623,064 $ 9,023,514 $ 9,216,412 $ 8,679,653 $ 8,019,363 $ 39 Cash Flow Surplus/(Deficit) (3,084,666) $ (242,954) $ (121,474) $ 1,759,806 $ 1,557,801 $ 954,289 $ 700,451 $ 492,898 $ (236,759) $ (360,289) $ 737,394 $ 40 Projects Designated To Be Paid With Cash - $ (720,000) $ (240,000) $ (600,000) $ (300,000) $ (300,000) $ (300,000) $ (300,000) $ (300,000) $ (300,000) $ (300,000) $ 41 Balance At End Of Fiscal Year 6,875,596 $ 5,912,641 $ 5,551,167 $ 6,710,974 $ 7,968,775 $ 8,623,064 $ 9,023,514 $ 9,216,412 $ 8,679,653 $ 8,019,363 $ 8,456,757 $ 42 Minimum Working Capital Reserve Target 6,112,062 $ 6,342,432 $ 6,839,363 $ 7,090,901 $ 7,306,472 $ 7,528,654 $ 7,757,653 $ 7,993,680 $ 8,236,955 $ 8,487,703 $ 8,746,157 $ 43 Excess/(Deficiency) Of Working Capital To Target 763,533 $ (429,790) $ (1,288,195) $ (379,927) $ 662,303 $ 1,094,410 $ 1,265,862 $ 1,222,732 $ 442,698 $ (468,340) $ (289,401) $ (1) Assumption of higher rate revenue collections starting in FY 2022, which serves as basis for future rate revenue projections. Sewer liens redeemed (within other operating revenue) are projected at 2.30% of rate revenues starting after FY 2022. City of Somerville| Water and Sewer Rate Study Report Stantec | 45

Appendix B: Sewer Fund Financial Sustainability Analysis Supporting Schedules Funding Summary by Fund Schedule 9 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 Stabilization Fund Balance At Beginning Of Fiscal Year 3,778,344 $ 4,175,646 $ 4,683,325 $ 4,718,203 $ 3,028,943 $ 3,022,609 $ 3,022,585 $ 3,022,585 $ 3,022,585 $ 3,022,585 $ 3,022,585 $ Annual Revenues (1) 1,496,000 $ 1,600,000 $ 1,600,000 $ 1,600,000 $ 1,600,000 $ 1,600,000 $ 1,600,000 $ 1,600,000 $ 1,600,000 $ 1,600,000 $ 1,600,000 $ Less: Payment Of Debt Service (1,128,414) $ (1,125,418) $ (1,600,246) $ (3,318,203) $ (1,628,943) $ (1,622,609) $ (1,622,585) $ (1,622,585) $ (1,622,585) $ (1,622,585) $ (1,622,585) $ Subtotal 4,145,930 $ 4,650,228 $ 4,683,079 $ 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 $ Less: Restricted Funds (3,000,000) $ (3,000,000) $ (3,000,000) $ (3,000,000) $ (3,000,000) $ (3,000,000) $ (3,000,000) $ (3,000,000) $ (3,000,000) $ (3,000,000) $ (3,000,000) $ Total Amount Available For Projects 1,145,930 $ 1,650,228 $ 1,683,079 $ - $ - $ - $ - $ - $ - $ - $ - $ Amount Paid For Projects - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ Subtotal 1,145,930 $ 1,650,228 $ 1,683,079 $ - $ - $ - $ - $ - $ - $ - $ - $ Add Back: Restricted Funds (2) 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 $ Plus: Interest Earnings (3) 29,716 $ 33,097 $ 35,124 $ 28,943 $ 22,609 $ 22,585 $ 22,585 $ 22,585 $ 22,585 $ 22,585 $ 22,585 $ Less: Interest Allocated To Cash Flow - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ Balance At End Of Fiscal Year 4,175,646 $ 4,683,325 $ 4,718,203 $ 3,028,943 $ 3,022,609 $ 3,022,585 $ 3,022,585 $ 3,022,585 $ 3,022,585 $ 3,022,585 $ 3,022,585 $ Infiltration & Inflow Balance At Beginning Of Fiscal Year 1,034,793 $ 1,243,304 $ 1,453,379 $ 1,665,029 $ 1,826,466 $ 1,019,553 $ 1,007,573 $ 1,007,528 $ 1,007,528 $ 1,007,528 $ 1,007,528 $ Annual Revenues (4) 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ Less: Payment Of Debt Service - $ - $ - $ (51,608) $ (1,017,546) $ (219,553) $ (207,573) $ (207,528) $ (207,528) $ (207,528) $ (207,528) $ Subtotal 1,234,793 $ 1,443,304 $ 1,653,379 $ 1,813,422 $ 1,008,920 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ Less: Restricted Funds (1,000,000) $ (1,000,000) $ (1,000,000) $ (1,000,000) $ (1,000,000) $ (1,000,000) $ (1,000,000) $ (1,000,000) $ (1,000,000) $ (1,000,000) $ (1,000,000) $ Total Amount Available For Projects 234,793 $ 443,304 $ 653,379 $ 813,422 $ 8,920 $ - $ - $ - $ - $ - $ - $ Amount Paid For Projects - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ Subtotal 234,793 $ 443,304 $ 653,379 $ 813,422 $ 8,920 $ - $ - $ - $ - $ - $ - $ Add Back: Restricted Funds (2) 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ Plus: Interest Earnings (3) 8,511 $ 10,075 $ 11,650 $ 13,044 $ 10,633 $ 7,573 $ 7,528 $ 7,528 $ 7,528 $ 7,528 $ 7,528 $ Less: Interest Allocated To Cash Flow - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ Balance At End Of Fiscal Year 1,243,304 $ 1,453,379 $ 1,665,029 $ 1,826,466 $ 1,019,553 $ 1,007,573 $ 1,007,528 $ 1,007,528 $ 1,007,528 $ 1,007,528 $ 1,007,528 $ Enterprise Fund Balance At Beginning Of Fiscal Year 9,960,262 $ 6,875,596 $ 5,912,641 $ 5,551,167 $ 6,710,974 $ 7,968,775 $ 8,623,064 $ 9,023,514 $ 9,216,412 $ 8,679,653 $ 8,019,363 $ Cash Flow Surplus/(Deficit) (3,084,666) $ (242,954) $ (121,474) $ 1,759,806 $ 1,557,801 $ 954,289 $ 700,451 $ 492,898 $ (236,759) $ (360,289) $ 737,394 $ Less: Cash-Funded Capital Projects - $ (720,000) $ (240,000) $ (600,000) $ (300,000) $ (300,000) $ (300,000) $ (300,000) $ (300,000) $ (300,000) $ (300,000) $ Subtotal 763,533 $ - $ - $ - $ 662,303 $ 1,094,410 $ 1,265,862 $ 1,222,732 $ 442,698 $ - $ - $ Plus: Interest Earnings 63,134 $ 47,956 $ 42,989 $ 45,983 $ 55,049 $ 62,219 $ 66,175 $ 68,400 $ 67,110 $ 62,621 $ 61,785 $ Less: Interest Allocated To Cash Flow (63,134) $ (47,956) $ (42,989) $ (45,983) $ (55,049) $ (62,219) $ (66,175) $ (68,400) $ (67,110) $ (62,621) $ (61,785) $ Balance At End Of Fiscal Year 6,875,596 $ 5,912,641 $ 5,551,167 $ 6,710,974 $ 7,968,775 $ 8,623,064 $ 9,023,514 $ 9,216,412 $ 8,679,653 $ 8,019,363 $ 8,456,757 $ (1) Annual revenues reflect assumed contributions from the City's General Fund (assumptions provided by City Staff) and transfers in from the Sewer Enterprise operating fund in order to pay for future debt service. A transfer in from the General Fund of $2.2 million is included in FY 2021, allocated 68% to sewer and 32% to water based upon current Stabilization Fund allocation methodology. An additional $2 million of cash infusions from the City's General Fund is assumed for the remainder of the projection period, allocated 80% to sewer and 20% to water based upon the future capital needs of the two systems and per discussions with City Staff. (2) Per discussions with City Staff, a minimum reserve target of $3 Million has been established for the Sewer Stabilization Fund and $1 Million for the Infiltration & Inflow (I/I) Fund. (3) Interest earned on Stabilization Fund balances will be retained in the Stabilization Funds as interpreted from City's financial policies. The same assumption has been made for the City's I/I Fund. (4) Annual assumed revenues to I/I Fund of $200k based upon assumed average annual receipts provided by City Staff. City of Somerville| Water and Sewer Rate Study Report Stantec | 46