Sonoma Water presents $82M plan and proposes 10.76% Petaluma Aqueduct rate increase; city presses on bond limits

Sonoma Water officials told the Rohnert Park City Council on March 11 that the agency’s proposed FY25–26 water transmission budget would total about $82 million and would include a Petaluma Aqueduct rate increase in the range of 7.6%–10.76%, with Petaluma customers facing the top end of that range.

Jake Spalding, finance manager at Sonoma Water, said the composite budget combines multiple funds for operations, capital and regulatory work and that operations and maintenance account for about 56% of the proposed budget. He told the council the agency had secured roughly $12.6 million in federal FEMA funding for hazard mitigation projects and expects to seek additional grants, but it plans to issue a roughly $33 million revenue bond to fund near-term capital projects on the Petaluma Aqueduct.

"The total proposed budget is about $82 million," Spalding said. "We were able to bring the rate increase down from over 40% to the 10.76% that you're seeing for the Petaluma Aqueduct today."

Why rates rise when customers use less water was a major theme in council questions. Sonoma Water reiterated that its wholesale rate is fully volumetric: most costs are fixed, and the agency divides those fixed costs by the amount of water sold. When deliveries fall — for example because of drought-driven conservation — the per-acre-foot cost rises even if an individual customer’s total bill drops when they use less water.

The presentation listed several capital priorities that the bond would fund, including upgrades at the Eli and Wilford booster pump stations and a longer-term Water Treatment System modernization project. Spalding said Sonoma Water has completed condition assessments and is developing a 20-year master plan to prioritize projects and sequencing.

Council members pressed staff on whether revenue bond proceeds could be directed toward Rohnert Park-specific repairs or whether the bond must fund projects in Sonoma Water’s capital program. Spalding said revenue bonds must pay for projects in Sonoma Water’s capital program and cannot be legally reallocated to individual contractor facilities, though the agency can pass grant funds to contractors where legally permissible.

City Manager Marcela Pedra asked how rate increases would affect Rohnert Park’s budget; staff replied the city would likely use some fund balance and that municipal budget planning accounts for projected water rate changes. Sonoma Water also said it had identified approximately $1 million in lower-priority O&M and about $88 million in capital projects that could be deferred outside the three-year bonding window to reduce immediate rate pressure.

Next steps include the Technical Advisory Committee and Water Advisory Committee review (the TAC recommended the rates unanimously on March 3), a water advisory committee vote scheduled for April 7, and Sonoma Water Board consideration on April 22.

For residents: the Petaluma Aqueduct customers also elected a discretionary $10-per-acre-foot capital charge this year to build fund balance for future projects; the charge is applied per acre-foot across aqueduct contractors, the presenters said.

The council did not take action on Sonoma Water’s proposal at the March 11 meeting; the presentation provided background and a public Q&A that drew questions about deferred maintenance, grant uncertainty and the legal limits of bond proceeds.