ADMINISTRATIVE REPORT
MEETING DATE: May 13, 2026 AGENDA CATEGORY: Hearings TO: Honorable Mayor and City Council
FROM: Kristina Budak, Water Director
DATE: April 29, 2026
SUBJECT: Public Hearing to Consider Adoption of Sewer User Rates for Fiscal Years 2026-27 through 2030-31
[Document Description]
RECOMMENDATION:
Staff recommends adoption of the resolution.
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 sewer user rates that provide for the daily operations of the sewer and stormwater collection systems and the two wastewater treatment plants. The fixed sewer service charge, often referred to as the flat rate, is collected on the property tax bill for all residential, commercial, and industrial customers. Commercial and indus trial customers, in addition to the flat rate, are also 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 conduct a reve nue 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 (COSA) and provided recommendations for rates beginning FY 2026-27.
Results of the COSA were presented to City Council on October 22, 2025. Since then, City staff received direction regarding acceptable rate options, received feedback from community stakeholders, and engaged in multiple public outreach events.
In 2026, HF&H conducted a new COSA taking into consideration the feedback provided. With the results of the 2026 COSA, Water staff finalized the 2026-2030 Sewer Rates and Fees Report 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 has de termined 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 Notices for the proposed increased rates were mailed to all a ffected property owners informing them of proposed changes to sewer user rates for FY 2026-27 through FY 2030-31. Notices were mailed out to residents on March 5, 2026 and March 19, 2026.
If approved, the proposed rates will go into effect July 1, 2026, and future increases would go into effect each July 1 thereafter through July 1, 2031.
FISCAL IMPACT:
The resolution has no impact to the General Fund. Failure to adopt the proposed rates will result in the Sewer Enterprise Fund being underfunded for upcoming fiscal years.
COUNCIL GOAL:
Reliable Infrastructure
ATTACHMENTS:
1. Resolution to Adopt Sewer Rates
2. Exhibit A – Rate Schedule for FY26.27 – 30.31
3. 2026-2030 Sewer Rates and Fees Report