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Stanton staff says sewer operating costs covered but capital needs will exhaust reserves without phased rate increases
Summary
A consultant presented a 5‑year sewer rate study showing operating revenues cover day‑to‑day expenses but large capital projects would deplete reserves by year five; staff recommended phased rate increases, Proposition 218 compliance and a June 10 public hearing if council moves forward.
Stanton — A sewer‑rate study presented Feb. 1 found the city’s current rates cover routine operations and maintenance but would not generate sufficient cash to fund the capital improvement program over five years without rate increases.
An unidentified rate‑study presenter walked the council through the methodology: projecting revenue under current rates, reconciling billing with audited financials, and comparing projected revenue to a five‑year revenue requirement that includes operating costs and planned capital projects. The presenter said the last authorized increase to sewer rates was enacted in 2022 and that the 2017 rate structure remains the baseline.
The study identified several large capital projects that drive the funding gap: concrete pipe replacement ($1.7 million), a sewer point‑repair program ($1.8 million) and two pipeline replacement projects ($3.3 million and $1.9 million). The presenter warned that, under the current rate structure and the proposed CIP schedule, reserve balances would decline steadily and “in the fifth year, any cash reserves, including cap cash reserves available for capital projects, would be completely exhausted.”
To avoid that outcome, the consultant proposed phased rate increases for typical residential equivalents. The presentation cited the current annual sewer charge of $72.25 for a single‑family equivalent and outlined an initial increase to roughly $87 in the first year and further increases in subsequent years to generate revenue for capital spending while maintaining a minimum reserve policy.
Staff noted the process must comply with Proposition 218: if the council directs staff to proceed, the city would need to mail notices at least 45 days before a public hearing; staff proposed a June 10 hearing and said the 45‑day mail deadline would be April 24. At that hearing, property owners could submit written protests; if protests exceed a majority of affected property owners, the council could not adopt the rates.
Councilmembers asked questions about past reserve levels and timing of CIP expenditures; one councilmember said reserves had been as high as $1,000,000 and another said the sewer capital fund currently holds about $7,000,000 but that larger pipeline projects would rapidly consume those funds without additional revenue.
What’s next: Staff will present the study again at the public hearing if council schedules it, mail Proposition 218 notices if the council chooses to move forward, and return with any protest results and a recommendation for adoption or further revisions.
