Council hears HDR presentation proposing multi-year utility rate increases

Josiah Close, project manager with HDR Engineering, told the Avalon City Council the firm updated its 2021 utility rate study and now recommends raising rate‑funded capital for the saltwater, sewer and solid‑waste systems to avoid long‑term borrowing. "So our overall goal with setting rates is to fully recover the cost to provide service to customers," Close said, describing the study's methodology and use of industry manuals to allocate costs fairly across customer classes.

Close said the study uses the FY25/26 budgets as the baseline and proposes using reserves short term to smooth the transition to higher funding levels. He described a proposed revenue path that would yield "about a 7.5 percent increase per year for 3 years and then about a 6% for the last 2 years," driven by inflationary increases in operating costs and the scale of capital needs (notably solid‑waste landfill work). He emphasized the study preserves existing rate structure relationships while increasing overall revenue to meet projected capital and operational requirements.

Finance director Matt Baker and HDR said the next steps are for council to set a public hearing and authorize mailing Prop 218 notices; under Prop 218 rules the city must wait at least 45 days after notices are mailed and will tally protests at the hearing. Close explained the protest threshold: if protests do not total 50% plus one, council could adopt the study and new rates. Council members asked staff for comparable city data and noted that if capital projects come in under budget the size of future increases could change. HDR and staff agreed to return with comparable benchmarks and next procedural steps.