ADMINISTRATIVE REPORT
MEETING DATE: March 26, 2025 AGENDA CATEGORY: CONSENT - Miscellaneous TO: Honorable Mayor and City Council
FROM: Kristina Budak, Water Director
DATE: March 14, 2025
SUBJECT: Authorization to issue Proposition 218 notices for City Domestic Water System Rates for Fiscal Year 2025/26 through 2029/30.
[Document Description]
RECOMMENDATION:
Staff recommend granting authorization to mail Proposition 218 notices to ratepayers notifying them of the proposed changes to Domestic Water Quantity Rates and Monthly Readiness-to-Serve Rates for Fiscal Year 2025/2026 through 2029/2030
BACKGROUND: The Water Department – Water Resources Department provides domestic water services for the distribution of clean drinking water to residents and businesses within the City of Bakersfield's Domestic Service Area. The Domestic Water Enterprise fund is self -sustaining supported primaril y by service connection fees, water availability fees and monthly domestic water sales to residents within the Domestic Service Area. The City of Bakersfield' s domestic water system currently has one of the lowest monthly rates in urban Bakersfield.
In 2022, the City contracted with a consultant to prepare a five -year Domestic Water Rate Study. The consultant recommended a 5-year rate increase of 15%, 10%, 10%, 3%, 3% annually but a rate increase of 10% in FY 24, with four additional years of 6% increase s, was ultimately approved by the City Council in June 2023 and adopted July 1, 2023.
Since the rate increase went into effect, water system infrastructure continues to age and significant well rehabilitations, service line replacements, and generator replacements have been identified. In addition, new State regulations have recently passed that impact the City’s operation of the Domestic Water System. These regulations include Water Conservation is a Way of Life , Lead and Copper Rule Improvements, and additional water quality regulations for PFOs, which were all finalized in 2024. These regulations have increased anticipated operating and capital improvement project expenditures to comply with regulations that were not factored in the current rate study.
Chapter 14.04 of the Bakersfield Municipal Code outlines the process by which the City establishes the fees and rates for the Domestic Water Service Area. Based on the above reasoning and several factors which contribute to increased costs, including electricity, removal of the groundwater contaminant 123- TCP and PFOs, system repair and maintenance, and additional capital improvement projects, it has been determined that this rate increase for Fiscal Years 2025/26 through 2029/30 is necessary to help meet these costs.
California state law (Proposition 218) requires that fees adopted by City for services rendered do not exceed the reasonable estimated cost for providing the services. Staff have determined that the proposed rates do not exceed the cost of services. Proposition 218 also requires a public hearing in which the public may support or protest the rate increase.
Proposition 218 process entails a protest -ballot whereby property owners are notified of a proposed fee or fee increase and have a 45-day period to issue a protest against the fee increase, either in writing or at a public hearing. Notices would be mailed out in April. The public hearing to consider the proposed update is scheduled for June 1 1, 2025, City Council meeting. City Council is not voting tonight to approve the proposed Domestic Water Quantity Rates increases.
Tonight' s Council action authorizes staff to mail out Proposition 218 to Domestic Water customers notifying them of the proposed Domestic Water Quantity Rates changes for Fiscal Years 2025/26 through 2029/30. Under the terms of the operation and maintenance agreement between the City and California Water Service Company (Cal Water), rate change notices and customer billing for the City' s Domestic Water Service Area is administered by Cal Water.
FISCAL IMPACT:
No impact to the general fund.
COUNCIL GOAL:
Reliable Infrastructure
ATTACHMENTS:
1. Domestic Water – Prop 218 Notice of Public Hearing
2. 2025-0326 - Water Rate Presentation