Cloverdale directs Prop 218 notices after consultant warns of multi‑year utility shortfalls

Cloverdale — City councilmembers on June 24 directed staff to mail Prop 218 notices laying out proposed water and wastewater rate increases after hearing a consultant warn that the utilities would draw down reserves sharply without new revenue.

The city’s rate study consultant, Mark Hildebrand, presented a 10‑year financial plan that combines operating forecasts, a cost‑of‑service allocation and a capital improvement program. The study projects roughly $3 million a year in water capital needs and about $800,000 a year for wastewater capital over the coming decade, and it recommends reserve policies of roughly three months operating reserve plus a replacement/capital reserve.

Hildefrand said the study is driven by four factors since the city's last rate review: a near‑20 percent decline in billed water usage, higher overhead allocations and a new operator position at the treatment plant, and roughly $3.5 million in additional capital projects the city will need to deliver. Without rate action the city's water reserves would be drawn down toward their minimums over the next several years, he said.

"Any time the columns are higher than the green background, that's a deficit year," Hildebrand explained in the council chambers. He told the council that the proposed approach would be 7 percent annual increases for water for five years then 6 percent thereafter, and about 4 percent per year for wastewater. The consultant also modeled a one‑time reduction to the first year (6 percent) if a near‑term 75‑unit development adds customers and base revenue.

Council members pressed for more detail on which capital projects would be delivered and on whether recent solar installations and other offsets might reduce the burden on ratepayers. Public works staff said the wastewater plant's new photovoltaic array has been online only a short time and that budgeted offsets are conservative pending measured production.

Several residents and technical commenters told the council they support infrastructure investment but urged transparency and monitoring so rate increases track results. "You can ask people to conserve, and when they do it generally means rates go up," Hildebrand conceded, noting the difficult policy trade‑off.

What happens next: Councilors asked staff to proceed with Prop 218 noticing for the proposed maximum increases (mailing by July 1 is required), and to return at an August public hearing with tighter numbers, updated project timing and solar savings estimates so the council and public can consider a final rate decision. The first billed increase would take effect after the public‑hearing and protest period required by state law.

Speakers quoted: Consultant Mark Hildebrand, presenting the financial and capital forecasts; Derek Montagne (public works director), answering operational questions; and several residents at the public comment period, who urged clearer project timing and environmental safeguards.

Next steps: Staff will mail required Prop 218 notices and post a public hearing for August; council asked staff to update the analysis with measured solar savings and a short memo that ties capital deliveries to specific projects and timelines.