Consultants from Bartle Wells Associates told the Arcadia City Council on Tuesday that the city’s water and wastewater utilities face substantial near‑term capital needs and recommended rate adjustments over a five‑year period to restore reserves and fund projects.

“Rates must fund operations, debt service and necessary capital,” Bartle Wells principal Eric Helgeson told the council during a staff presentation. Helgeson said the water enterprise faces roughly $36 million in capital work over five years and the wastewater enterprise about $51.4 million over the same period.

The study presented two broad options. One is an “immediate revenue recovery,” which raises a larger share of revenue up front; the other phases increases into later years. Helgeson said the phased option raises somewhat less revenue initially but ends with a slightly higher final rate because the city takes longer to reach target reserve levels. City staff emphasized the presentation was informational and that no council action was requested at the meeting.

Why this matters: tabbed as a staff report, the study shows the water fund’s reserves would fall sharply without changes. Helgeson said a short‑term loan from the sewer fund (about $3.5 million) is already in place to cover immediate cash needs but that the city should pursue debt financing after rates are in place so reserves do not fall below prudent levels. Tabitha (city staff member who introduced the item) said the combined first‑year bill for a typical single‑family household would rise under the two scenarios: roughly a 14% increase (about $19.01 monthly) under immediate recovery and about an 11% increase (about $8.88 monthly) under the phased plan, holding wastewater flat for the first two years in the analysis.

Details the council heard:
- Water: Bartle Wells presented $36 million in five‑year capital needs, including a near‑term spike of about $12 million in fiscal year 2025–26. The city’s water reserve balance would decline substantially without new revenue and probable debt issuance; Helgeson recommended the city preserve prudent reserves and consider bonds to spread capital costs. The firm also recommended aligning customer class cost allocation to be more proportional to service and removing the outside‑city rate differential so all water customers pay the same rates proportionate to service costs.
- Wastewater: The presentation showed about $51.4 million in capital needs over five years and recommended no rate increases for the wastewater enterprise for the first two years followed by smaller step increases (about 6.5% in later years under the plan presented). Consultants recommended moving single‑family sewer billing to a fixed monthly charge (eliminating the small volumetric/seasons cap construct) to improve predictability and administration.
- Legal/procedure: Helgeson reviewed Proposition 218’s procedural steps: notice of maximum rates mailed at least 45 days before a public hearing and the right of property‑owner/customer protest to block the increase if a majority protests. The city would need council authorization to mail Prop 218 notices and to follow the statutory hearing schedule if it chooses to proceed.

Council and staff next steps: staff said they would return with the Prop 218 notice package and a recommended schedule for public outreach and hearings if the council directs. Tabitha and Helgeson said the consultant team will work with staff on implementation, public outreach (including an open house after notices go out), and the formal Prop 218 hearing process.

What council members asked: questions from council focused on timing, the relative tradeoffs between an up‑front versus phased approach, which customer classes gain or lose under cost‑of‑service adjustments, and clarification that Prop 218 notice and protest thresholds apply. Helgeson and staff said the choice is a policy call: accelerate revenue collection and preserve reserves now, or phase increases to smooth short‑term impacts but finish at a slightly higher long‑term rate.

Ending: staff will post the full rate study and schedule outreach. The item was an informational staff report; no rates were adopted at the meeting.