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Finance committee recommends 10% water rate increase, voters to receive Prop. 218 notice
Summary
The Palo Alto Finance Committee voted to recommend the City Council adopt a resolution approving the fiscal year 2026 water utility financial forecast and amended rate schedules, including a proposed 10% distribution increase (about $11.40/month for a residential customer) and use of reserves plus deferred capital to limit near-term hikes.
Lisa Belier, senior resource planner in the City of Palo Alto Utilities Department, presented the utilities’ recommendation that the Finance Committee forward to the City Council a resolution adopting the FY2026 water utility financial forecast and amended rate schedules. Belier told the committee the recommendation includes a 10% overall rate increase for FY26 — roughly $11.40 per month for a typical residential customer — and described the factors driving the proposal: growing labor costs, drought-driven sales reductions and increases from the San Francisco Public Utilities Commission (SFPUC).
The proposal relies on reserve use and targeted capital deferrals to keep the FY26 increase at 10%. Belier told the committee staff modeled deferring about $4.6 million of capital projects in 2026 and $2.7 million in…
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