Santa Clara adopts higher water, sewer and recycled-water rates, citing wholesale cost increases

The Santa Clara City Council on June 10 approved increases to the city’s water, sewer and recycled-water rates that take effect July 1, 2025, citing steep wholesale cost increases and regional treatment-plant upgrades as the main drivers.

City staff said the proposed adjustments are driven largely by higher wholesale water purchases and the city’s share of Regional Wastewater Facility (RWF) operating and capital costs. Director Gary Welling, who presented the rate hearing, told the council the city’s water and sewer utilities are facing “large increases in costs associated with wholesale water purchases and the city’s contributions to the regional wastewater facility.”

The council adopted the staff recommendation (Alternative 1) after a public hearing and questions from members. The approved increases for fiscal year 2025–26 include an 11.2% increase for potable water, 9.9% for single-family sewer, 7.8% for multifamily sewer, an average commercial increase of about 6.65%, and a 7.3% increase in recycled-water consumption charges. Staff estimated the average single-family monthly combined water-and-sewer bill will rise about $17.07 per month; multifamily customers about $15.72 per month.

Why it matters: Welling and other staff emphasized that a large share of the increase is pass-through costs the city cannot control. Welling said the city purchases about 80% of its treated water from Valley Water and that Valley Water has enacted sharp increases over the past three years (15%, 14% and ~13%), and is forecasting annual increases averaging 9.9% for the coming decade. On the sewer side, the RWF’s multi-year capital program — including a new sludge dewatering facility — is raising operating and financing costs; staff said the city’s five‑year contribution to the RWF capital program is substantial (Welling cited about $89.4 million as Santa Clara’s share of an approximately $534 million RWF package discussed earlier).

Council questions and outside review: Council members pressed staff on groundwater use, data-center water demand, comparisons with nearby jurisdictions and what the city can do to moderate future increases. Tom Francis, a representative who works with regional wholesale suppliers, told the council he believes San Francisco’s wholesale water program is financially stable and defended the regional planning process while acknowledging affordability concerns.

Public process and outcome: Under Proposition 218 requirements the city opened a formal protest period tied to the hearing. Deputy City Clerk reported 13 written protests to the water increase and 14 to the sewer increase; staff said those totals did not constitute a majority protest and the council could proceed. After the hearing, Council Member Karen Hardy moved the staff recommendation; the motion was seconded and passed by a recorded tally of 6–1. (No roll-call names were provided in the transcript for the 6–1 tally.)

What the city will do next: Staff pointed to programs to help low‑income households — including a low-income rate assistance program and the Help Your Neighbor program — and said they will continue multiagency discussions with Valley Water, the RWF and other wholesalers about affordability. Welling said the city is working on building utility reserves and exploring financing strategies that may smooth future rate impacts.