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City moves to begin Prop. 218 process after sewer rate study recommends more fixed fees
Summary
Public works and consultant presentations recommended shifting residential sewer charges to a larger fixed component (about 49% fixed / 51% volumetric) and using reserves to smooth increases; council authorized staff to initiate the Prop 218 notice and hearing process.
City staff and consultant NBS presented a five-year sewer service rate study and requested direction to begin the Proposition 218 noticing process. Management analyst Sarah Kadlik and NBS's Sarah Mares reviewed the city's cost-of-service analysis, capital-improvement plan and a proposed rate design that moves residential charges toward a roughly 49% fixed, 51% volumetric mix to improve revenue stability.
The study shows that the largest single cost driver is the Sewerage Agency of Southern Marin (SASM) treatment fee, and that water consumption trends (about a 4.7% reduction over five years) reduce volumetric bases for revenue. Mares explained the proposed financial plan, reserve-target formula, and a recommended 4% annual increase after year one. She said the recommended reserve target was developed with the city's CIP consultant and results in a reserve target just over $3 million; the study would use surplus reserves to limit near-term rate shock.
Council members asked about equity, the use of reserves, and regional comparisons. Councilmember Burke asked whether reserves were being applied in year one to blunt increases; staff replied reserves were spread through the five-year period and would reduce rate pressure compared with an approach that did not use reserves. Staff also explained an optional exhaustion-of-administrative-remedies procedure newly permitted under state law that adds procedural protection but extends the Prop. 218 process timeline.
Council action: Council approved staff's recommendation to move forward with the Prop. 218 notice and process, with a public hearing currently scheduled for June 1, 2026. If no successful protests follow the Prop. 218 process, council would then adopt new rates per the study's schedule.
Next steps: Staff will mail Prop. 218 notices to affected property owners, finalize proposed rates and supporting documentation, and hold the public hearing to consider protests and adoption.
