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Concord to propose 7.75% water rate increase; staff urges shift in revenue mix toward availability fee
Summary
City staff told the Finance Committee that lower water usage in FY25 reduced revenues and that the FY26 budget proposes a 7.75% rate increase driven primarily by capital and debt service needs; staff recommended adjusting the fixed availability charge to stabilize revenue.
City staff told the Finance Committee on June 2 that fiscal 2025 water revenues were below budget because usage was down, and the FY26 budget includes a 7.75% water rate increase to help cover capital and debt service costs.
The manager's presentation said FY25 revenues were down $159,000 from budget because water usage fell; the FY26 budget shows a 7.75% rate increase that staff estimate would raise the typical water portion of a household bill by about $1.65 per month. Staff said the FY26 revenue increase is also driven by a projected increase in the availability charge and higher utility investment fee receipts tied to new development.
Why it matters: staff emphasized that Concord’s water revenue structure historically relies more on usage charges than fixed availability charges. Because the city must cover constant plant and debt costs even in wet years, staff argued the fund should transition part of its revenue base toward a larger fixed availability charge to stabilize revenue streams and reduce volatility caused by weather or conservation.
Operational notes and consultation: the budget includes a modest consulting line—about $6,000—to review and advise on the water investment fee and meter/connection fee structure. Water Superintendent Marco Philippa described the investment fee work as the standard review used when developers ask how connection fees should be set by meter size and service type.
Peer comparison: staff presented a rate comparison chart requested by councilors showing Concord’s combined water rates are among the lower third of comparable communities; with the proposed 7.75% increase Concord would remain relatively low compared with peers.
Direction vs. decision: the council discussed the rate proposal and the structure (availability vs usage) and asked staff clarifying questions. No final rate ordinance or fee schedule was adopted at the June 2 meeting; staff said proposed rates will be brought to council in the usual budget/rate schedule (typically August for fall billing preparations).
Ending: staff will return with formal rate ordinances and the investment‑fee consultant results as part of the next steps in the budget process.
