San Leandro council authorizes Prop. 218 notices to pursue wastewater rate increases

The San Leandro City Council voted unanimously March 3 to authorize staff to mail Prop. 218 notices as part of a wastewater utility rate-setting process that would fund a multiyear capital plan and rising operating costs.

Water Pollution Control Manager Hayes Morehouse and consultant Eric Helgeson of Bartle Wells Associates presented a rate study that identifies about $55 million in sewer system capital needs over the next five years, of which roughly $7 million is expected to come from grants. The consultant said the financial plan relies on rates and reserves rather than additional financing to fund the capital program.

Under the consultant’s proposal, residential sewer rates—cited in staff materials as $53.20 in the current year—would increase to $57.12 in the next year and rise gradually, reaching roughly $80.63 by 2030 under the study’s assumptions. The study also recommended updating commercial rate classes into low, medium and high strength categories to better align cost recovery with service. The consultant said the city serves about 18,500 residential customers, 1,300 businesses and nine industrial customers, and that the city’s sewer system includes roughly 25 miles of mains, pump stations and a treatment plant.

The rate study includes a $2 million-per-year set-aside to address a nutrient-optimization project to meet new state wastewater requirements that require reductions in nitrogen discharges; staff said the Water Board regulation must be met by 2034 and the set-aside is intended to support planning and eventual construction. Staff also noted higher biosolids-disposal costs and factored a doubling of prior disposal budgets into near-term operations costs. The study assumes about 3.5% annual escalation in costs after the initial adjustments.

The Prop. 218 procedural requirement mandates a 45-day advance notice to property owners showing the maximum rates that could be adopted; if less than a majority of property owners file written protests, the council could adopt the noticed rates at a public hearing planned for May 5. The consultant and staff recommended a July 1 effective date for any adopted rate changes.

Councilmember Acevedo moved the item forward and Councilmember Aguilar seconded; the motion to authorize mailing Prop. 218 notices and continue the rate-setting process passed 7-0. Councilmembers asked technical questions about biosolids disposal, the city’s pipe-replacement program (staff proposed replacing about 1% of mains per year at a proposed $2.1 million per year sewer-repair budget), and whether the five-year rate plan could be revisited sooner if conditions change. Staff said the five-year schedule is typical but that the council could reopen the process earlier if needed.