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Millbrae council authorizes Prop 218 notice for proposed water rate increases, schedules public hearing
Summary
Council voted 5‑0 to issue a Proposition 218 public notice for proposed water rate increases of 7% per year over five years, and to allow a wholesale water pass‑through above $7 per unit; the notice starts the formal public‑hearing process with a scheduled hearing June 10 and possible rate changes effective July 1.
The Millbrae City Council on April 22 authorized staff to mail a Proposition 218 public hearing notice proposing a series of water rate increases and to set a public hearing for June 10.
Finance Director Mike Sung and consultant Alex Handler of Bartle Wells presented the water rate study and staff recommendations. Handler said the city’s water enterprise faces long‑term capital needs (the five‑year capital improvement program totals about $22.5 million) and rising wholesale charges from the San Francisco Public Utilities Commission (SFPUC). To address those needs, the consultant recommended a phased approach of 7% rate increases annually for five years. The council voted 5‑0 to proceed with the notice and public‑hearing timeline.
Staff described the primary drivers behind the recommendation: significant near‑term capital projects including water main replacements and the LaPrenda storage tank replacement (a city staffer said the tank was originally built around 1957), ongoing wholesale water cost inflation, and general operating cost increases. The proposed rate structure includes a fixed monthly charge by meter size and a quantity charge based on metered consumption; staff noted that Millbrae bills bi‑monthly so bills will appear larger but are issued less frequently than monthly programs.
The council also authorized a pass‑through provision that would allow the city to pass wholesale SFPUC increases above a $7-per‑unit threshold to customers; staff said the notice assumes SFPUC wholesale rates will rise to about $7 per unit over five years and the pass‑through would provide protection if wholesale costs exceed that level.
Staff emphasized the city’s customer assistance program for qualifying low‑income residents: a 25% discount on fixed water and wastewater charges for residents enrolled in qualifying assistance programs. City staff and the consultant said the dollar value of that discount will rise proportionally as rates increase, and encouraged eligible customers to apply.
Alex Handler presented alternatives and modeled consequences of smaller rate increases. He said cutting the increase to 6% or 5% annually would reduce available capital funding and require larger reserve drawdowns, potentially deferring critical projects. The council majority said phased increases were preferable to deferring infrastructure work and facing larger increases later.
City staff recommended issuing the Proposition 218 notice this week, scheduling the public hearing for June 10, and returning to council for the hearing and any final action. The motion to issue the notice and continue the Prop 218 process was made by Councilmember Rinaldi, seconded by Councilmember Nguyen, and passed 5‑0.
