Canyon Lake staff warn rate increases likely as agency finishes rate study; reiterate ban on backyard chickens to protect reservoir and flag generator-regs risk

At a March council meeting, a staff member described an ongoing rate study and told the council that water rates for existing customers likely will increase once the city completes budget decisions and picks a scenario.

The staff member said the city has “embarked on a rate study that is in the middle of finishing up” and that council members should expect concrete numbers next month or in a memo if staff are out of town. The staff member said the city must follow Proposition 218 notice and participation requirements when setting rates: “It dictates how we set rates, how you're informed as a customer, how we set rates, what your rights are to those rates, and how you can participate in that rate setting.”

The staff member distinguished capacity fees from customer rates, saying, “Capacity fees are designed for new people to pay for new development. And rates are designed for existing customers to pay for existing things like chemicals, like imported water costs, like existing labor, like that hundred million dollar PFAS treatment plant that I get to build…”

Why it matters: the staff member linked growth in operating and capital costs — including a large PFAS treatment plant referenced in the meeting as a roughly “hundred million dollar” project — to upward pressure on customer rates. The staff member said the city will present more detailed numbers as the rate study and budget process conclude.

Public-health restriction on backyard chickens

The staff member also addressed recurring public inquiries about backyard chickens. Citing the city’s role as steward of a drinking-water source, the staff member said chickens are not permitted in Canyon Lake: “It’s a drinking water reservoir. You made the choice when you moved here. If you'd like to raise chickens, there's other property around that might be suitable, but chickens are not permitted.”

Staff explained the technical and cost reasons for the restriction. Because the reservoir is one of only a few in the state that allows full body contact, the State Water Code and Safe Drinking Water Act require the agency to treat for human-borne pathogens such as Cryptosporidium and Giardia; adding farm animals would introduce other bacteria and viruses that require different, costly treatments. The staff member said adding animal sources could multiply treatment costs beyond the already-cited capital project: “When you start adding on all those different animals and they don't all have the same bacteria, they don't all have the same treatment processes, that hundred million dollar treatment plant just went to $1.50. Plus chemical, plus discarded media, plus, plus, plus.”

Enforcement and possible state action

The staff member said the city enforces a municipal ordinance forbidding farm animals and that the property owners association’s lease rules also carry consequences. On penalties the staff member said the city’s enforcement has not been lenient and that fines can reach “tens of thousands of dollars,” and in severe cases the city has authority to remove or destroy animals to protect public health. The staff member warned that persistent noncompliance could prompt state action; the State Water Board could fine the local agency or seek legislative action to revoke the city’s special permission allowing body-contact recreation in the reservoir.

Generators, air-quality rules and operational risk

Council members asked about broader regulatory pressures on operations, including recent proposals from South Coast air quality regulators. The staff member said standby generators are critical: nearly every pump station in the 100-square-mile service area has an on‑site generator to maintain pressure and deliver water during outages. The staff member described a national/regional pattern in which older, costly-to-repair generators are being rendered noncompliant by air rules, then sold out of state at a fraction of their value.

“This is a huge issue,” the staff member said. They noted a mismatch in policies — air-quality rules that limit generator use and water regulators who require steady pressure and flow — and urged regional and federal attention and funding. The staff member cited recent examples where solar backup systems failed during fires and combustible generators were needed, and they said future federal funding and regional policy choices will affect whether smaller agencies can maintain necessary equipment.

What remains unresolved: staff said they expect to return with specific rate numbers, and council members asked staff to provide additional details on timing and potential rates once the rate study finishes. The city will also continue to monitor state and regional rulemaking affecting standby generators and seek avenues for funding and regulatory relief.