Council weighs pause, reductions and low-income aid as water and sewer rates rise

Kevin Caustic of Raftelis, the city's rate consultant, presented an updated five-year financial forecast for the city's water and wastewater enterprise funds. Caustic said recent wetter winters and lower demand projections reduced estimated water demand since the last study, and that staff and consultants modeled the remaining years of a previously adopted five-year rate plan plus three alternatives: a one-year pause, a two-year pause, or one-time rate reductions of 5% or 10% in fiscal year 2025-26.

Caustic and Director of Administrative Services Mandy Kellogg explained that pausing or reducing the upcoming increases would shrink cash reserves and could jeopardize the city's ability to borrow for planned capital projects. For the water fund, Raftelis showed a one-year pause (alternative 1) as a compromise that preserves future years of planned increases while providing short-term relief; a two-year pause or one-time cuts would require substantial reductions to operations and maintenance or capital spending and could make future borrowing infeasible.

City staff and consultants emphasized tradeoffs: maintaining coverage ratios and minimum reserves (staff suggested a 90-day minimum) is important for creditworthiness and to finance work such as the intake tower, Napa intertie and tank rehabilitation. Public commenters urged care over long-term use of enterprise funds and compliance with Proposition 218 rules for utility fees.

At the close of discussion the council directed staff to pursue several items: refine and finalize the cost-allocation study (staff reported preliminary results shifting roughly $218,000 from water/wastewater to the General Fund), explore expanding the low-income assistance (CARES-style) program and funding levels, transition back to monthly billing starting July 1 if feasible, and consider conducting a rate study sooner than planned to evaluate structural changes (for example, shifting base vs. volumetric charges to reduce burden on low users). Staff said they will return with recommendations and budget options.

Why it matters: Rates fund a multi-million-dollar capital program and day-to-day operation of drinking-water and wastewater systems. The council discussed options for customer relief while balancing the need to fund deferred maintenance and future projects. The city did not adopt a rate cut at the meeting; instead it asked staff for targeted follow-up on affordability programs and accounting changes.