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City presents water and wastewater rate study; staff recommends rate increases plus debt to protect reserves
Summary
Staff and consultant presented a five-year water and wastewater financial plan to fund $21M in water and $35M in sewer CIP; options include phased rate increases and debt issuance to smooth near-term impacts, and staff indicated they will begin the Prop 218 notice process in mid-March.
City staff and consultant John Wright presented a detailed five-year water and wastewater rate study designed to fund the capital improvement program and stabilize utility reserves.
Wright and staff said the city faces substantial near-term capital needs — roughly $21 million for water projects and $35 million for sewer over the five-year horizon — and that doing nothing would drive the utility funds into a negative cash balance in later years. To address the funding gap, staff recommended a combination of targeted rate increases and debt financing (bond issuance) to spread capital costs over time and reduce the immediate burden on ratepayers.
Under the proposed scenarios, the water commodity charge (per thousand gallons) would move from a current rate of $3.75 per 1,000 gallons to $3.96 in the early year and could reach approximately $5.18 per 1,000 gallons by the fifth year under the recommended plan. Staff translated those changes to monthly bill impacts for three typical residential consumption profiles: a low user (~7,000 gallons) would see a roughly $2 monthly increase; a typical user (~12,000 gallons) about $2; and a higher user with a pool about $3.
On the wastewater side, staff proposed consolidating classes by strength/loading (BOD/EOD) to create a more data-driven schedule; that consolidation means some commercial classes could see large percentage adjustments in year one while residential impacts are modest (roughly 4% for single-family residents in year one). Wright emphasized that some providers with low existing rates could still see their bills rise but that spreading costs with debt would keep annual increases more even over time.
Staff asked the council for direction to pursue the “balance scenario” (rate increases plus bond financing), to consolidate sewer classes, and to start the Prop 218 public-notice process on March 17; council members signaled support for staff returning on March 17 to start the official Proposition 218 process and for public outreach, including online notices, mailed notices and community meetings.
No final rate ordinance was adopted at the meeting; staff will return after the Prop 218 notice period and any protest-counting to present final rates for adoption.
