Camarillo City Council
AGENDA REPORT
Date: May 14, 2025
To: Honorable Mayor and City Councilmembers
From: Greg Ramirez, City Manager
Submitted by: Mark Uribe, Finance Director
Subject: Water Service Rates - Adopt a Resolution Setting the Amount of Water Rates and Charges for July 1, 2025, July 1, 2026, July 1, 2027, and July 1, 2028
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 water 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 water rate increases effective July 1, 2025, July 1, 2026, July 1, 2027, and July 1, 2028 to users of the City Water System and Camarillo Airport Water Zone.
Proposition 218 notices were sent to property owners on March 28, 2025. This notice provided users of the City Water System and Camarillo Airport Water Zone with a date of the public hearing and the proposed water rate increases indicated in the attached Resolutions.
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 it shows potential bond agents that the City has a reliable revenue source to meet minimum debt coverage, should the City need
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to bond future capital projects. Adopting four-year rates sets the maximum rates the City can charge. If during the course of the four-year cycle it is determined that the maximum rates are not required, the City Council may adopt rates that are lower than what is outlined in the four-year proposal.
The current study, prepared by Raftelis, establishes water 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 meetings between February and March 2025.
At the City Council meetings on February 26, 2025 and March 12, 2025, staff presented City Council with a history of expenditures and future projections of expenditures in the water 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’ water, and an outline of the public engagement plan to inform customers of the rate changes. At the March 26, 2025 meeting, City Council 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 any 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.
Water bills are mailed to approximately 13,700 users on a monthly basis. The bill contains two basic components:
1. Service Charge or Meter Charge, which is designed to cover fixed costs. This fixed charge increases relative to the size of the meter. Fixed cost includes elements such as meter reading, billing, maintenance, and capital costs associated with the meters.
2. Volumetric Charge or Commodity Charge is charged based on water usage. It is designed to cover the variable costs and includes elements such as water supply, delivery, and capital costs. This variable charge increases or decreases based upon an individual customer’s monthly usage pattern.
Since 1990, a tiered commodity charge designed to encourage conservation has been in effect for residential customers. Non-residential customers pay a fixed rate per unit of water used.
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Camarillo Airport Water Zone Rates
The Camarillo Airport Water Zone rates were originally set in accordance with the Water System Transfer Agreement dated February 28, 2006. The transfer agreement identifies unique costs to the City to operate the Airport Water System. Therefore, customers within the Camarillo Airport Water Zone are charged a higher rate structure than the City Water System users. Included in the transfer agreement was language stating that the service charge could be increased by the same percentage increase as the City Water System.
However, the volume charge increase would be equivalent to the dollar increase for the City Water System.
The proposed Resolutions set the water rates and charges for the City Water System and the Camarillo Airport Water Zone. The proposed water rates have been determined to achieve an overall revenue increase necessary to maintain operations, replace and repair aging infrastructure, pump and purchase scarce water resources, maintain and upgrade critical treatment facilities, account for the rising cost of materials and energy, and maintain compliance with regulatory requirements. The recommended action directs staff to enact the July 1, 2025, July 1, 2026, July 1, 2027, and July 1, 2028 rate adjustments.
Drought Rates
In October 2023, City Council adopted drought surcharges. These surcharges can be applied in addition to the City’s existing water rates during times of drought or other water emergency. In order for these to become active, City Council would need to take separate action to recognize that drought conditions exist and establish the severity level. Staff is not recommending changes to the existing drought rates and does not anticipate the use of drought surcharges in the near-term, but these existing surcharges by severity level are included in the attached resolution as a reference.
Proposition 218
Under the voter-approved ballot measure known as Proposition 218 (California Constitution Article XIII D, Section 4), water rates are considered “property related fees” and, prior to any increase in rates, the City is required to mail a 45-day prior notice to all property owners identifying a Public Hearing at which the City Council 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 City of Camarillo 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.
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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.
Noticed rates represent the maximum fee or charge implementable each year. Future Councils/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 Water 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 for proposed Water fees and no written protests submitted to the City Clerk for proposed Airport Water fees.
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 for proposed Water Fees and no written objections submitted to the City Clerk for proposed Airport Water Fees.
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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
1. Adopt a Resolution setting the water rates and charges for July 1, 2025, July 1, 2026, July 1, 2027, and July 1, 2028.
2. Adopt a Resolution setting the Airport System water rates and charges for July 1, 2025, July 1, 2026, July 1, 2027, and July 1, 2028.
ATTACHMENTS
1. A Resolution Setting the Amount of Water Rates and Charges in the City of Camarillo
2. A Resolution Setting the Amount of Airport Water System Rates and Charges in the City of Camarillo
3. Water and Airport Water Rate Study
REFERENCE MATERIALS – AVAILABLE FOR REVIEW AT CITY HALL None