The City of Milpitas is located in Santa Clara County near the southern tip of San Francisco Bay, adjacent to the City of San José. Milpitas is a general law city, incorporated in 1954, and operates under a Council-Manager form of government. The City Council consists of the Mayor, who is elected every two years, and four Council members elected at-large to staggered four-year terms. The City's utility customer base includes a substantial technology, manufacturing, and industrial sector, regional retail centers, and a large number of restaurants. According to the City's FY 2024-25 Annual Comprehensive Financial Report, the City's largest employers are Cisco Systems (3,600 employees), KLA (2,917), and Western Digital Technologies/SanDisk (1,219). The California Employment Development Department estimates the City's labor force at 43,700, with 41,900 employed residents and an unemployment rate of 4.2 percent (August 2026, preliminary, not seasonally adjusted). Sewer and Wastewater System The wastewater collection system consists of approximately 160 miles of gravity sewers and generally flows from east to west and south to north towards the San Francisco Bay. Most of the collection system flows by gravity to the Milpitas Main Lift Station then is pumped to the San Jose-Santa Clara Regional Wastewater Facility through dual force mains. The Venus Way Lift Station (Venus Way LS) pumps sewage from a small portion of the City that is at a lower elevation up to a higher elevation where it then flows by gravity to the Main LS. The collection system also includes almost 3,000 manholes. Wastewater from the City's collection system is conveyed to and treated by the San Jose-Santa Clara Regional Wastewater Facility (RWF). The RWF serves 1.5 million residents and over 17,000 businesses in eight cities and four sanitation districts: Cities of San José, Santa Clara, Milpitas Cupertino Sanitary District (Cupertino), West Valley Sanitation District (Campbell, Los Gatos, Monte Sereno, and Saratoga) County Sanitation Districts 2-3 and Burbank Sanitary District (both unincorporated) The City of Milpitas pays a share of the capital cost of the RWF, based on the City's capacity rights in proportion to the 167 MGD total capacity of the RWF. The City also pays a share of the operating cost, based on the volume of wastewater discharged to RWF. The City has rights to discharge 14.25 MGD to the RWF under its current allotment. Water System The City's water service area is supplied by the San Francisco Public Utilities Commission (SFPUC) and Valley Water (VW). The overall water service area is approximately 12 square miles, which generally coincides with City limits, except for some areas in the Calaveras Hills along the City's eastern edge. The City can be divided into two distinct topographical areas: the relatively flat "valley floor" on the western side and the steeper "hillside" area within the Calaveras Hills. Service elevations within the City range from near sea level in the west to almost 900 feet above mean sea level (msl) in the east. As of January 1, 2026, the City's population was estimated to be 82,107 and the City had 16,993 metered water service connections. The City has nine customer billing codes organized into three categories (residential, commercial, and public/ institutional) and up to three connection types (water, fire, and irrigation). Almost 89 percent of connections were residential, which includes multi-family connections. Under normal conditions, the City operates its potable water system such that the SFPUC and VW supplies remain separate. The City's existing potable water system includes the following major facilities: five turnouts, one emergency groundwater well, three emergency interties, five storage reservoirs, five pump stations, 17 pressure reducing valves (PRVs), one groundwater well (currently under construction) and approximately 183 miles of pipelines. The City purchases recycled water from the South Bay Water Recycling (SBWR) Program. The SBWR Program is an on-going, multi-year effort to use high-quality recycled water produced at the RWF and distributed for irrigation, industrial, and other purposes. The SBWR Program is administered through the City of San José's Environmental Services Division. Recycled water is used for irrigating public and private areas such as parks, medians, and industrial uses to supplement potable water use. The City maintains and operates approximately 24 miles of SBWR-owned recycled water lines that serve approximately 252 service connections. The City has an agreement with SBWR to be reimbursed for its costs to operate and maintain the SBWR-owned system within the City. The City bills for water and sewer services on a bi-monthly basis. Purpose and Objectives of Rate Studies Public agencies in California conduct cost-of-service and rate studies to ensure there is a strong nexus between rates charged to customers and costs incurred to provide service, as required by Proposition 218. The City of Milpitas (City) last conducted a cost-of-service study in 2022-23, which established rates for Fiscal Years (FY) 2023-24 through 2027-28. The major objectives of the rate studies are: Develop a five-year financial plan to sufficiently fund the City's operations and maintenance (O&M) expenses, debt service payments, and Capital Improvement Plan (CIP) while adequately funding reserves and meeting debt coverage requirements. Conduct a cost-of-service analysis that establishes a clear nexus between the cost to serve customers and the water and sewer rates charged to customers, per Proposition 218 requirements. Develop a five-year schedule of water and sewer rates that is fair, equitable, and compliant with Proposition 218. Annual Proposition 218 True-Up The City is also seeking consultant support for an Annual Proposition 218 True-Up to be performed following the close of each fiscal year, as described in Section 11 of Attachment C – Scope of Services .
