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San Fernando staff recommend 5% water, 3% sewer rate increases; council directs notice, hearing and outreach
Summary
City staff recommended 5% annual water rate increases and 3% annual sewer increases to shore up reserves and fund aging water and sewer infrastructure, and the council directed staff to begin the Proposition 218 notice and hearing process.
San Fernando public works staff on June 16 presented an initial financial plan and rate study recommending annual increases for the city's utilities: 5% per year for the water utility and 3% per year for the sewer utility. Staff said the increases are intended to restore and maintain recommended reserve levels, cover inflation and create a predictable funding stream for capital repairs and system replacement.
Public Works Director Wendell Johnson and consultant representatives outlined drivers of the plan: rising operating costs, a 2020–21 pension obligation bond, and a backlog of capital needs for aging pipelines and treatment infrastructure. Staff described reserve targets: a stabilization/contingency fund equal to roughly three months (25%) of annual operating costs and an infrastructure replacement funding approach based on average capital projects over a 10-year horizon.
Under staff’s recommendation the water plan would generate roughly $1,000,000 per year for capital investment; the sewer plan would generate roughly $600,000 per year. The recommended schedule would preserve or build reserves and avoid depleting cash balances by the end of the five-year planning horizon.
Consultants proposed a modest set of rate-structure changes to improve equity: charges for larger meters (8-inch and 10-inch) to reflect capacity impacts, and aligning how schools are billed on the sewer side by billing them like other customers rather than using student counts. Staff also recommended a pass-through mechanism that would allow the city to recover higher costs if it must purchase Metropolitan Water District (MWD) supply in emergency circumstances (versus producing groundwater locally).
Staff described the implementation timeline under Proposition 218 procedures: finalize rates in July (staff to post required notice), conduct the public hearing in September, and implement rates in January 2026. Staff said notices must be mailed at least 45 days before the hearing. Council members asked about impacts on customers: staff said the average residential bimonthly bill would rise about $7 (about $3.50 per month) under the recommended plan, with larger users seeing higher increases. Council members were also briefed on the city’s efforts to seek grants to offset capital needs and to continue improving billing and collections.
Council consensus was to maintain the proposed schedule and proceed with public outreach and the Proposition 218 notice and hearing process. Staff will return with public outreach materials, refined financial modeling and final rates for council approval and Proposition 218 noticing.
