Cotati council accepts draft water and sewer rate study, starts Proposition 218 notice and sets May 27 hearing

The Cotati City Council voted unanimously to accept a draft water and sewer rate study and directed staff to begin the Proposition 218 public-noticing process for proposed rate adjustments, setting a public hearing for May 27, 2025.

The action follows a presentation by Craig Scott, Cotati public works director and city engineer, and Mark Hildebrand of Hildebrand Consulting, who told the council that rising costs for purchased water and a near-term spike in capital projects require rate increases and, for water, short-term debt financing to avoid service shortfalls.

Hildebrand summarized the legal framework at the start of his presentation, saying: “There is a law, that’s commonly known as Proposition 218, that dictates how the city has to charge its rates,” and reminding the council that the measure both limits charges to the cost of service and requires a public-notice and protest process before adoption. Scott and Hildebrand said the city last completed a rate update in 2022 and that updated forecasts show both utilities now facing higher-than-expected costs and capital needs.

Key study findings and proposals shown to the council included: - Water capital: the consultant presented a schedule of near-term capital work totaling about $8,600,000 over the next six years. Hildebrand also referenced a larger projection at one point in the presentation ($10,400,000) while reviewing changes since 2022; the council discussion noted the discrepancy and asked staff to clarify the final capital total before coming back with a final recommendation. - Water rates: the draft recommendation presented to the council proposed increases greater than the prior 6%-per-year scenario. Hildebrand said the working proposal was roughly 11% per year for the next three years followed by 8% per year for two years (presented as the consultant’s preliminary recommendation). - Water bills: the consultant showed example monthly impacts: an average single-family water customer’s current bill of $52.52 would increase to $58.29 in year one under the proposal — a $5.77 monthly increase, per the consultant’s slides. - Water financing: because the near-term capital schedule would significantly draw down existing cash reserves, the consultant recommended debt financing for most capital spending over the next four years, with debt service assumed to be repaid over a longer term (discussed as a 20-year repayment schedule during council questions). - Sewer capital and rates: the sewer capital program proposed roughly $2,700,000 in projects over the next six years. The draft sewer rate path presented was approximately 10% per year for four years followed by 5% thereafter. An example in the presentation showed an average single-family sewer bill rising from $90.52 to $99.59 in year one under the proposal.

Council members asked for more detail on several items before final adoption, including the precise capital totals, the schedule and term of any debt, how reserve balances would be treated if the Cypress storage tank project is delayed, and why Cotati’s sewer rate level is higher than some neighboring cities. Staff and the consultant repeatedly explained that Proposition 218 requires the city to send notices and allow an opportunity to protest before adoption, that water-purchase and treatment costs (including charges from the Sonoma County Water Agency and the City of Santa Rosa’s subregional treatment plant) drive a large share of utility costs, and that debt proceeds legally must be used only for capital projects and cannot be commingled to pay operating costs.

Public comment at the meeting included multiple residents who said they were concerned about higher bills, questioned the scale of outside agency cost increases (Sonoma County Water Agency), pointed to aging pipes in parts of the city, and urged clearer bill-language for customers (for example, clarifying single-family versus multi-family categories and the bill tiers). Craig Scott and staff responded to questions on metering and billing methodology, explaining that sewer bills are set using a “winter average” methodology (the industry practice of using wintertime water use as a proxy for sewage flows) and that the trunk sewers to the treatment plant are metered even though individual household sewer flows are not.

After the presentation and public comment period, a council motion to adopt a resolution accepting the draft study and to direct staff to proceed with Proposition 218 noticing and to set the hearing for May 27, 2025 carried unanimously (4–0). The council instructed staff to return with a final recommendation and clarified information at a March meeting, including reconciling the consultant’s differing capital totals and detailing how reserves and any debt proceeds would be managed.

Council direction and next steps: staff and the consultant will finalize the study and return with a final rate recommendation (the consultant indicated a March 11 milestone for a final recommendation on the schedule shown in the presentation), staff will prepare and mail the Proposition 218 notices required by state law, and a public hearing and potential rate adoption are scheduled for May 27, 2025. If the council pursues debt financing, staff and finance advisors will evaluate borrowing options and the council requested language and policy options to set aside funds for a targeted project (the Cypress storage tank) should the project be delayed.

Votes at a glance The council recorded a single formal action on the draft rate study and noticing process: - Motion: Adopt a resolution accepting the draft water and sewer rate study and direct staff to proceed with the Proposition 218 noticing process and set a date for the public hearing and adoption of rates (May 27, 2025). - Mover: Councilmember Sparks (as recorded in the meeting transcript) - Second: not specified in the transcript - Vote: Mayor Ford — yes; Councilmember Savage — yes; Councilmember Parks — yes; Councilmember Harvey — yes. Tally: 4 yes, 0 no.

Why this matters The study would raise bills for many Cotati customers and proposes debt-financing to accelerate capital repairs and a large set of near-term projects. The council and residents emphasized the importance of clearer customer communications, verification of capital totals, the treatment of reserves, and alternatives such as regional financing or infrastructure financing districts. The Proposition 218 process gives property owners a formal opportunity to protest the proposed increases before any final rate adoption by the council.

The council is scheduled to revisit the final recommendation before the Prop 218 notices are mailed and to hold the public hearing on May 27, 2025 where rate adoption may occur.