Camarillo Sanitary District
AGENDA REPORT
Date: May 14, 2025
To: Honorable Mayor and City Councilmembers
From: Greg Ramirez, District Manager
Submitted by: Mark Uribe, Finance Director
Subject: Sewer Service Rates - Introduce a CSD Ordinance Amending Chapter VII, Section 7001, of the Operations Code Relating to Sewer Service Charges
BACKGROUND
The City of Camarillo retained an independent consultant, Raftelis Financial Consultants, Inc. (Raftelis), to prepare a comprehensive rate study. The Study, completed in March 2025, establishes sewer rates that are based on the cost of providing the service as required by Proposition 218. The Study developed a financial plan which included the capital improvement plan, operating budgets, customer billing and water usage data, and future growth and inflationary assumptions for the Study period. The Study was included as an attachment to the March 26, 2025 agenda report and was published to the City’s website.
Staff is proposing sewer rate increases effective July 1, 2025, July 1, 2026, July 1, 2027, and July 1, 2028 to users of the Camarillo Sanitary District (CSD) sewer system.
Proposition 218 notices were sent to property owners on March 28, 2025. This notice provided users of the sewer system with a date of the public hearing and the proposed rate increases indicated in the attached Ordinance.
DISCUSSION
The City has historically adjusted water and sewer rates on a two-year cycle. A comprehensive rate study is conducted to analyze the costs of providing water and sewer services to the community. The last rate study was completed in 2023, with rates effective January 1, 2024, and July 1, 2024. Staff recommends changing the two-year cycle of rate studies to a four-year cycle because a four-year cycle gives customers transparency in what to expect over a longer time horizon and shows potential bond agents that CSD has a reliable revenue source to meet minimum debt coverage, should the City need to bond future capital projects.
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Adopting four-year rates sets the maximum rates CSD can charge. If during the course of the four-year cycle it is determined that the maximum rates are not required, the CSD Board may adopt rates that are lower than what is outlined in the four-year proposal.
The current study, prepared by Raftelis, establishes sewer rates based on the cost of providing the service and incorporates the expected cost of the capital improvement plan, operating budgets, customer billing and water use data, and future growth and inflationary estimates for the study period.
The results of the rate study have been discussed at five Utilities Committee (UC) meetings between November 2024 and February 2025 and three City Council/CSD Board meetings between February and March 2025.
At the City Council/CSD Board meetings on February 26, 2025 and March 12, 2025, staff presented the CSD Board with a history of expenditures and future projections of expenditures in the sewer enterprise. Staff also presented a high-level overview of how rates are determined, what factors affect rate changes, customer impacts of the proposed rates, comparisons to neighboring agencies’ sewer rates, and an outline of the public engagement plan to inform customers of the rate changes. At the March 26, 2025 meeting, the CSD Board authorized the mailing of the Proposition 218 notification to all property owners. The Proposition 218 notifications were mailed on March 28, 2025.
Since mailing the notices, staff has held two informational open houses to engage community members who may have questions on the rate increases. The open houses were held on April 8 and April 26 at the Camarillo Library and City Hall Council Chambers, respectively. Dozens of water and sewer customers attended the meetings to share concerns and hear more about the process.
Proposition 218
Under the voter-approved ballot measure known as Proposition 218 (California Constitution Article XIII D, Section 4), sewer rates are considered “property related fees” and, prior to any increase in rates, CSD is required to mail a 45-day prior notice to all property owners identifying a Public Hearing at which the CSD Board will consider any protests from property owners regarding the proposed rate increase.
In compliance with Proposition 218, notices of the proposed rate increase were mailed to all billing customers as well as affected property owners within the CSD District who are not utility billing customers (e.g., landlords) on March 28, 2025. The notices explained the rate proposal, the basis for the rates, why rate adjustments are necessary, and the method for protesting or objecting to the rate increase. The notice also provided the day, time, and place of the Public Hearing.
Pursuant to Government Code Sections 6062a, 54354.5 and 66016 regarding Proposition 218 noticing requirements, the Public Hearing Notice and the Resolution were published in the local newspaper on May 3 and May 10, 2025.
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Noticed rates represent the maximum fee or charge implementable each year. Future CSD Boards will have the discretion to implement a rate lower than noticed as a matter of policy or if financially prudent. The City historically updates the financial needs of the Sewer Enterprise annually to monitor changing conditions and ensure that the rates noticed are still required. As part of this four-year proposal, that practice would continue.
The Proposition 218 Process requested that letters of protest be submitted in writing. As of 9 a.m. on Friday, May 9, 2025, there were eight written protests submitted to the City Clerk.
AB 2257
California enacted AB 2257, effective January 1, 2025, a bill sponsored by the Association of California Water Agencies (ACWA) and authored by Assemblymember Lori Wilson (D- Suisun City), which assists local agencies in defending against lawsuits under Proposition 218. The bill establishes a formal objection procedure for ratepayers to raise concerns about proposed rate changes before litigation becomes an option.
This process is designed to address disputes during the public participation stage, reducing the likelihood of surprise lawsuits after rates are approved. AB 2257 aligns with existing constitutional provisions and Proposition 218, which set standards for public notice, hearings, and protest procedures.
The legislation created an exhaustion of administrative remedies procedure that requires ratepayers to bring an objection regarding a proposed property-related water or sewer fee or charge, or any special assessment to the local public agency governing body’s attention prior to the deadline established by the local public agency as part of the rate or assessment consideration process. The purpose is also to provide an opportunity for the local public agency to address or resolve the objection or objections before its governing body makes a final decision on whether to establish a new, or amend a current, property- related fee or special assessment pursuant to Proposition 218.
On February 26, 2025, the City Council adopted a resolution establishing a procedure for Property Owner Objections to Proposed Water Fees. The procedures were published to the City’s website, outlined in the Proposition 218 notices, and identified the opportunity for letters of objection to be submitted in writing. As of 9 a.m. on Friday, May 9, 2025, there were no written objections submitted to the City Clerk.
FISCAL IMPACT
If these increases are approved, the FY 2025/26 Budget and future budgets will reflect the changes in revenue associated with these rate increases.
RECOMMENDATION
Sewer Service Rates - Introduce a CSD Ordinance
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1. Introduce an Ordinance of the Board of the Camarillo Sanitary District amending Chapter VII, Section 7001, of the District’s Operations Code relating to Sewer Service rates.
ATTACHMENTS
1. Ordinance Amending Chapter VII, Section 7001 of the District’s Operations Code Relating to Sewer Service Rates
2. Sewer Rate Study
REFERENCE MATERIALS – AVAILABLE FOR REVIEW AT CITY HALL None