La Palma council initiates Prop 218 process for water and sewer rate adjustments tied to Walker Well funding

The La Palma City Council voted unanimously to receive a water and sewer rate study prepared by Willdan Financial Services and to initiate the Proposition 218 process that would allow the city to consider proposed rate adjustments. The council set a public hearing for Nov. 4, 2025, and staff must mail the statutorily required notices to property owners by Sept. 19 to allow the hearing and written-protest period required under Prop 218.

Willdan—s consultant Chris Fisher told the council the water enterprise begins the five-year study period with depleted reserves — an operating reserve of about $115,000 compared with a target near $1 million — and emphasized that restoring reserves is necessary to fund operations, maintenance and capital projects. Fisher identified the Walker Well replacement as the most significant water capital project (estimated at about $10,000,000) and said the city faces roughly $18,000,000 in water capital projects over a 10-year period (about $6,000,000 in the first five years).

Fisher presented three financing scenarios for the Walker Well: Scenario 1 (100% cash funded by rates, the consultant—s recommended option), Scenario 2 (50% cash/50% debt) and Scenario 3 (25% cash/75% debt). Under Scenario 1 the average combined bimonthly water and sewer bill (current $123.64) would increase by roughly $16 in the first year to about $139.96 and could reach about $219 by the end of the five-year period for an average customer (about 1,600 cubic feet over two months). Scenario 2 and Scenario 3 would modestly reduce year-five bills relative to Scenario 1 while leaving more long-term debt on the books.

A councilmember asked whether low-income assistance could be embedded in rates; Fisher said the rate structure must follow the cost-of-service principle required by Proposition 218 and that low-income assistance is typically provided outside the enterprise fund using other unrestricted city funds. When asked about specific income thresholds, Fisher said he did not have those numbers on hand: "I don't remember what the specific income limits are," he said, and noted that many cities model eligibility after local utility programs.

The council instructed staff to prepare Prop 218 notices and set a Nov. 4 public hearing; if written protests from property owners exceed a majority of properties, the council cannot proceed to adopt the rates. If adopted, the rate adjustments would be implemented Jan. 1, 2026, per staff's presented timeline.