ADMINISTRATIVE REPORT
MEETING DATE: February 11, 2026 AGENDA CATEGORY: CONSENT - Miscellaneous TO: Honorable Mayor and City Council
FROM: Kristina Budak, Water Director
DATE: January 27, 2026
SUBJECT: Authorization to issue Proposition 218 notices for Sewer User Rates for Fiscal Year 2026- 2027 through Fiscal Year 2030-2031
[Document Description]
RECOMMENDATION:
Staff recommends granting authorization to mail notices.
BACKGROUND:
The Water Department – Wastewater Division provides services for the collection and treatment of the City’s wastewater. The Sewer Enterprise is self -sustaining, supported primarily by user fees that provide for the daily operations of the sewer and stormwater collection systems and the two wastewater treatment plants. The single -family residential fee is collected via the homeowner’s property tax bill.
Commercial and industrial customers pay a flat rate on their property tax bill and are subject to sewer surcharge fees based on their wastewater strength classification and water consumption.
In 2025 the Water Department (Water) partnered with HF&H Consultants (HF&H) to c onduct a revenue rate study to assess the revenue requirements needed to cover costs of operating and maintaining the existing systems and infrastructure. Water prepared 15-year infrastructure and financial plans, identifying capital improvement projects, operation and maintenance, and staffing requirements needed to maintain a proper level of service in the coming years. Using the 15 -year plans, HF&H completed a full cost of service analysis and provided recommendations for rates beginning FY 2026-27.
Results of the rate analysis were presented to City Council on October 22, 2025. Since then, City staff has received direction regarding acceptable rate options, engaged in multiple public outreach events, and has taken into consideration feedback from community stakeholders.
Based on the above, City staff is recommending a five-year rate increase from FY 2026-27 through FY 2030-31 as shown below:
Fiscal Year Proposed Rate
2026-27 $475
2027-28 $575
2028-29 $675
2029-30 $775
2030-31 $875
Annual sewer fees are viewed as property -related fees for utility service and are subject to Proposition 218. This requires that fees adopted by City for services rendered do not exceed the reasonable estimated cost for providing the services. Staff ha s 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 February. The public hearing to consider the proposed update is scheduled for the April 22 nd, 2026, City Council meeting. City Council is not voting tonight to approve the proposed Sewer User Rate increase.
Tonight' s Council action authorizes staff to mail out P roposition 218 to sewer customers notifying them of the proposed Sewer User Rates from FY 2026-27 through FY 2030-31.
FISCAL IMPACT:
Sufficient funds are budgeted to fund the costs associated with mailing out the notices; therefore, there is no impact to the General Fund.
COUNCIL GOAL:
Reliable Infrastructure
ATTACHMENTS:
1. Proposed Rates
2. Presentation