San Jose council approves sewer‑service increases after business owner warns of disproportionate industrial increases

San Jose City Council on June 3 approved increases to the city's sewer service and use charges and to storm sewer service charges after a contentious public comment period in which a local brewery representative said his business’s bill rose roughly 40% even though typical residential increases averaged around 9%.

Dan Gordon, identified in public discussion with councilmembers as associated with Gordon Biersch, told the council he received a bill reflecting about a 40% increase for his business and asked the city to perform an accounting review under Proposition 218 and to provide calculations and refunds if an error was found. “I was against the proposed rate increase averaging approximately 9%. My bill reflected not a 9% increase, but a 40% rate increase,” he said during public comment.

Councilmembers and staff responded with a technical explanation of rate methodology and the legal limits that guide any post-hoc recalculation. Jeff (staff) explained the sewer rate structure draws from base unit costs that are allocated by pollutant loads (for example, biochemical oxygen demand, or BOD; suspended solids; ammonia) as well as volume, and that customers with higher pollutant loads can see disproportionate percentage changes when treatment costs rise. “If you're spending 10 cents a month on BOD and it doubles, that's not a big monthly impact. If you're spending $100,000 on BOD and it doubles, that's a much larger financial impact,” the staff member said.

Staff and councilmembers cited several drivers of cost pressure: a multiyear capital program to rebuild the wastewater treatment plant, COVID-related supply and labor cost changes, higher chemical and electrical costs, and new regulatory demands (for example, nitrogen removal requirements under regional Bay Area rules). Councilmember David Cohen noted that more stringent regulatory requirements today mean treatment costs have risen since earlier decades, and that customers who still emit the high-strength industrial streams that plants were built to treat can face high bills when unit costs rise.

Vice Mayor Foley asked for an independent audit of rate calculations; she said it should be considered as part of the city auditor’s work plan. Foley said she was proud of industrial employers such as Gordon Biersch and emphasized the need for transparency in rate-setting.

The record also included a July 1 rate letter referenced by staff showing that for some industrial customers the BOD component rose by 64% and suspended solids by 62% in the new schedule; staff said such large percentage changes reflect the relatively small number of customers who discharge large quantities of those pollutants.

Council approved the rates by roll call, with the motion passing 10–0 with one member absent. Council directed staff to consider an auditor review and agreed to continue monitoring and outreach for impacted businesses. Staff emphasized Proposition 218 procedural limits on retroactive recalculations and refunds but said they would provide the underlying calculations and support a review requested by customers.

Votes: Motion to approve sewer service and storm sewer service charge increases passed 10–0 with one absent.