La Verne hears stark forecasts in water and sewer rate study; consultants propose large increases or $7 million debt to avoid shortfall

La Verne’s joint city council and ad hoc water and sewer rates study committee heard on April 7 that the city faces large funding gaps in its water enterprise unless it adopts substantial rate increases or pursues external debt.

Consultant Mr. Wright of the rate-study team told council members that "if the city did nothing, . . . your cash reserve situation for water . . . would be almost negative $50 million by 2030." He outlined a multi-step process — financial planning, cost-of-service, then rate design — and showed two illustrative scenarios: one relying solely on multi-year rate increases, the other combining rate increases with $7 million in debt financing for major capital projects including an AMI meter conversion and a major treatment-plant expenditure.

Why it matters: the study attributes the pressure to large projected capital needs (a roughly $2 million AMI water-loss project and a $4–5 million treatment project among the top items), rising purchase-water costs tied to Metropolitan Water District increases, and ongoing inflation assumptions that drive operating-cost forecasts. Under the consultant’s preliminary scenario of phased rate adjustments, cumulative water rate-revenue increases through 2030 can exceed 170% before reserves recover under the no-debt plan; adding a $7 million debt issuance smooths early-year reserve shortfalls but still requires significant rate adjustments later.

Council members and ad hoc committee participants repeatedly asked for concrete examples of household and typical commercial bill impacts. Council Member Laauo said she was “surprised” by the five‑year increase projections and asked for actual-dollar examples so residents could budget, not just percentages. Committee members asked the consultant to check cumulative‑increase calculations and to prepare sample bills showing how average residential and multifamily customers would be affected.

Several members also pressed the consultant on assumptions: one noted account‑growth assumptions of only about 0.3–0.4% annually tied to a largely built‑out community; another asked whether the 12% annual escalation assumed for purchased water from Three Valleys was appropriately staged or should decline as the city reduces reliance on imported water. The consultant said the 12% reflects Metropolitan Water District trajectories and that reducing reliance changes dollar exposure but not the supplier’s percentage increase.

Prop 218 and timing: the consultant emphasized the statutory Proposition 218 process and the outreach that precedes it. Staff and committee members said the materials would need to include finalized cost-of-service work and example bills before a Prop 218 notice would be mailed; a council member observed that an October 1 effective date was optimistic and that a later January 1 start could be preferable if more time is needed for public engagement.

Next steps and outreach: staff committed to delivering more detailed cost‑of‑service results, corrected cumulative calculations, peer comparisons to neighboring jurisdictions where feasible, and bill‑impact examples for the council and the ad hoc committee. The consultant and staff confirmed that Proposition 218 notices are usually mailed separately (not folded into regular bills) and that the council will hold public outreach meetings before any final Prop 218 action.

The study session was informational only; no rate decision or vote was taken. The council recessed the study session and reconvened for its regular meeting later that evening.