15.2 PUBLIC HEARING - WATER DEMAND OFFSET POLICY, FEE STUDY, AND FEES BACKGROUND: The City of Santa Rosa is required by California State Law to prepare an Urban Water Management Plan (UWMP) and Water Shortage Contingency Plan (Shortage Plan) every five years to assess the adequacy and reliability of water supplies for current and future needs as well as plan for and detail how the City will respond to various levels of water supply shortage. Staff will present the Water Demand Offset (WDO) Policy, 2021 WDO Fee Study, and WDO Fees which have been developed to implement the City's Shortage Plan requirement that new construction must offset water demand during water shortage emergencies that require very restrictive water allocations (water rationing) by the City's existing customers. RECOMMENDATION: It is recommended by the Board of Public Utilities and Santa Rosa Water that the Council, by resolution: 1) adopt the Water Demand Offset Policy; 2) adopt the 2021 Water Demand Offset Fee Study; 3) adopt the Water Demand Offset Fees; and 4) authorize the Water Demand Offset Fees to be adjusted on an annual basis to account for inflation at the beginning of the calendar year (January 1) starting in 2023, using the Engineering News Record's 20-Cities Construction Cost Index; and it is further recommended by the Board of Public Utilities that the Council consider a General Fund subsidy to offset the Water Demand Offset Fee for affordable housing projects.