Agenda Item No. 3
CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and City Council DATE: June 9, 2025 FROM: Matthew Bronson, City Manager
PREPARED BY: Nick Szamet, Administrative Services Director SUBJECT: Proposition 218 Public Hearing and Adoption of Proposed Wastewater Rate Structure
RECOMMENDATION
1) Conduct a Proposition 218 public hearing and determine the official number of written protests received on the proposed wastewater rate structure; and 2) if the number of valid protest letters are below 50% plus one of the number of parcels within the City, approve the proposed rate structure and adopt the Resolution amending the Master Fee Schedule for wastewater rates effective July 1, 2025.
BACKGROUND
On March 24, 2025, staff and the utility rate study consultant Clayton Tuckfield with Tuckfield and Associates (Tuckfield) presented the results of the Wastewater Utility Rate Study and preliminary findings and recommendations to the Council. Development and presentation of this rate study was consistent with the Council’s priority of Water and Sewer Infrastructure and Needed Resources. This presentation followed previous Council agenda items providing an update on the City’s sewer system on February 24, 2025 and an update on street repairs and delays due to needed sewer improvements on January 27, 2025.
The rate study included a Revenue Requirements Analysis; Cost of Service Analysis; and Rate Design to fund operating and capital costs needed for the Wastewater Enterprise Fund over a five-year period from FY 2025-26 through FY 2029-30. The desired outcome of this study was to ensure that the rates are sufficient to cover costs associated with ongoing maintenance and operations of the wastewater utility, as well as anticipated capital improvements to address current system needs and existing deficiencies from aging and undersized infrastructure. The rates also include debt service obligations for financing major capital project upgrades and maintaining reserves equal to six months of typical maintenance and operations expenditures in accordance with industry standards. Monthly rates are charged to customers on a bi-monthly basis and constitute the primary source of revenue to operate the City’s wastewater system.
The rate study found that the current wastewater rate structure adopted in 2021 which includes a 2% increase on July 1, 2025 does not provide sufficient funding for long-term operation and maintenance expenses and capital projects for the City’s wastewater system. The study recommends annual wastewater rate increases of 17.8% for each of the next five years beginning July 1, 2025 (the technical effective date would be July 9, 2025, or 30 days after adoption with bills being prorated for this initial month by nine days or 69 cents for a single-family customer).
Under this rate structure, the average bi-monthly bill for single-family residential wastewater customers would increase from $25.64 to $30.20 in 2025; for a total monthly increase of $2.28 per month. The City’s wastewater rates are near the lowest in the county and the two agencies in the county with lower rates (Arroyo Grande and Oceano) are presently undergoing water and Staff Report: Proposition 218 Hearing and Adoption of Wastewater Rate Structure Page 2 June 9, 2025
sewer rate studies to increase their rates with Oceano’s proposed sewer rates scheduled for consideration on June 11. If the proposed rate increases are adopted, the City’s wastewater rates will continue to be among the lowest in the county.
On April 14, 2025, Council authorized the Proposition 218 notices following a mailer sent out by the City about the sewer system needs and proposed rate increase to each property owner and customer. Staff subsequently mailed a notice shown in Attachment 2 in both English and Spanish to all property owners and wastewater customers on April 25 notifying them of the rate study, planned rate increases, and provided a protest form for simplified remittance to the City. In addition, staff held informational sessions on May 8 and May 28 to further inform the public and answer questions about the proposed increases and provided presentations on this topic at the City Talk community forum and South County Chambers of Commerce “Rise and Shine” events this spring. Staff also met with community members about the proposed rate increases and developed a “frequently asked questions” page on the City’s website with responses to common questions raised: Wastewater (Sewer) Rates | Grover Beach, CA – Official Website.
To be valid, a signed written protest must be received by the City Clerk or submitted during the public protest hearing and represent an address with current wastewater service. Only one protest per address can be accepted and no protest will be accepted or valid if submitted after the close of the public protest hearing. At the end of the public hearing, the City Clerk will tally and report the qualifying written protests and the Council will then certify whether the written protests opposing the increases meet the 50% plus 1 threshold required to constitute a majority protest. If a majority protest does not exist, the Council may consider and adopt the Resolution shown in Attachment 1 to amend the Master Fee Schedule reflecting the updated wastewater rate structure.
The protest threshold for Grover Beach is 2,681 or 50% of parcels in the city plus 1.
If the proposed rate structure is adopted, staff intends to quickly begin the process of debt issuance to finance capital projects for an initial amount of up to $4.2 million in improvements related to CIP Project 5002. Beginning this effort immediately enables the initial sewer project to be constructed this fall along with a related Measure K-14 street repair project in early 2026.
This project is largely similar to the scope of work introduced to Council on January 12, 2024 prior to putting this project on hold given the uncertainty in sewer rate funding with the citizen initiative Measure G-24. Staff intends to return to Council on July 28, 2025 for adoption of the Initial Resolution which provides for the appointment of a financing team as well as direction to the City Manager to develop terms for the execution of a bond. Staff will thereafter work with the financing team to determine the best type of issuance (private or public) and remaining terms before returning to Council for presentation and approval of the bond issuance by September 2025. Debt servicing for bond monies would be commenced in FY 2026-27 at an estimated amount of $392,900.
Lastly, the Council provided direction during the May 12th meeting to consider alternative timeframes for General Fund repayment of the prior interfund loans from the Wastewater Fund in addition to the six-year timeframe reflected in the Wastewater Rate Study and Proposed Budget.
This information will be presented at the June 9th meeting as part of both the Proposition 218 hearing and the subsequent budget hearing for the Council’s consideration and direction.
FISCAL IMPACT
The recommended rate increases would result in additional Wastewater Fund revenue of $186,514 beginning in FY 2025-26 and would result in $1,345,428 of additional revenue in FY 2029-30 of the plan. The proposed rate increases will provide sufficient funding to support regular Staff Report: Proposition 218 Hearing and Adoption of Wastewater Rate Structure Page 3 June 9, 2025
operations and maintenance of the sewer system, as well as necessary capital projects for sewer system upgrades.
ALTERNATIVES
The Council has the following alternatives to consider:
1. Conduct a Proposition 218 public hearing and determine the official number of written protests received on the proposed wastewater rate structure; and if the number of valid protest letters are below 50% plus one of parcels, approve the proposed rate structure and adopt the Resolution amending the Master Fee Schedule for wastewater rates effective July 1, 2025.; or
2. Do not adopt the Resolution amending the Master Fee Schedule for wastewater rates; or
3. Provide alternate direction to staff.
PUBLIC NOTIFICATION
The agenda was posted in accordance with the Brown Act. A Proposition 218 Hearing Notice was mailed on April 25, 2025 to all utility customers and registered property owners or customers who receive wastewater services. Information regarding the proposed rates and a link to the online copy of the Utility Rate Study, as well as other related information, was posted on the City website.
A Public Hearing Notice was also published in New Times on May 29. Additionally, staff have conducted community forums as outreach sessions on May 7 and May 28 and posted questions and answers to the City website.
Attachments
1. Resolution to amend the Master Fee Schedule
2. Proposition 218 public notice
RESOLUTION NO. 25-XX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GROVER BEACH,
CALIFORNIA, AMENDING THE MASTER FEE SCHEDULE FOR
WASTEWATER RATES
WHEREAS, the City Council of the City of Grover Beach has created a Master Fee Schedule by adopting Resolution No. 25-XX; and
WHEREAS, notice of the Public Hearing to consider proposed adjustments to the Master Fee Schedule for Wastewater Rates was mailed at least 45 days prior to the scheduled Public Hearing as required by state law (Cal. Const. art. XIIID, §6); and WHEREAS, on June 9, 2025, the City Council conducted a Public Hearing, considered testimony, and at the conclusion of the protest hearing determined that the number of valid written protests received was less than 50% plus one of the total number parcels subject to the fee in the City and approved the recommendations in the Utility Rate Study regarding adjustments to Wastewater Rates.
NOW, THERFORE, THE CITY COUNCIL OF THE CITY OF GROVER BEACH, CALIFORNIA, DOES DELARE, DETERMINE, AND ORDER AS FOLLOWS:
THAT the Master Fee Schedule be amended as set forth in Exhibit “A” attached to this Resolution; and
THAT the fees listed in Exhibit “A” of this Resolution shall become effective as on the various dates as listed.
On motion by Council Member _____, seconded by Council Member ____, and on the following roll-call vote, to wit:
AYES: Council Members –
NOES: Council Members –
ABSENT: Council Members –
ABSTAIN: Council Members –
RECUSED: Council Members –
the foregoing Resolution was PASSED, APPROVED, and ADOPTED at a regular meeting of the City Council of the City of Grover Beach, California this 9TH day of June 2025.
KASSI DEE, MAYOR
Attest:
WENDI B. SIMS, CITY CLERK
Attachment 1
July 1 2025 July 1 2026 July 1 2027 July 1 2028 July 1 2029 Wastewater Rates (Monthly)
Boarding house (per unit) $ 18.31 $ 21.57 $ 25.41 $ 29.93 $ 35.26 Plus per bedroom charge $ 11.78 $ 13.88 $ 16.35 $ 19.26 $ 22.69 Car washes & Laundromats minimum charge $ 7.29 $ 8.59 $ 10.12 $ 11.92 $ 14.04 Per 100 cubic feet above minimum $ 2.39 $ 2.82 $ 3.32 $ 3.91 $ 4.61 Church $ 17.74 $ 20.90 $ 24.62 $ 29.00 $ 34.16
Plus per parsonage or dwelling unit $ 15.10 $ 17.79 $ 20.96 $ 24.69 $ 29.08 Commercial establishment (Public Place) (Up to 5 Fixtures) $ 17.72 $ 20.87 $ 24.58 $ 28.96 $ 34.11 Each additional fixture $ 4.85 $ 5.71 $ 6.73 $ 7.93 $ 9.34 Factories, industrial plants, with 20 or less employees $ 11.92 $ 14.04 $ 16.54 $ 19.48 $ 22.95 Each additional employee over 20 $ 1.37 $ 1.61 $ 1.90 $ 2.24 $ 2.64 Hotel, motel, auto court or lodge (per unit) $ 18.20 $ 21.44 $ 25.26 $ 29.76 $ 35.06 Mobile home (per space) $ 15.10 $ 17.79 $ 20.96 $ 24.69 $ 29.08 Restaurants minimum charge $ 2.52 $ 2.97 $ 3.50 $ 4.12 $ 4.85 Per 100 cubic feet against minimum $ 4.85 $ 5.71 $ 6.73 $ 7.93 $ 9.34 Schools minimum annual charge per ADA and employees $ 3.90 $ 4.59 $ 5.41 $ 6.37 $ 7.50 Schools with Cafeterias additional
Per ADA and employees $ 1.63 $ 1.92 $ 2.26 $ 2.66 $ 3.13 Single-Family dwelling unit $ 15.10 $ 17.79 $ 20.96 $ 24.69 $ 29.08 Theater, clubhouse or place of amusement $ 17.72 $ 20.87 $ 24.58 $ 28.96 $ 34.11 Travel trailer and recreation vehicle space $ 7.77 $ 9.15 $ 10.78 $ 12.70 $ 14.96 Multi-Family, Two or more dwellings (per unit) $ 15.10 $ 17.79 $ 20.96 $ 24.69 $ 29.08 Plus Per Each coin-operated washer $ 3.30 $ 3.89 $ 4.58 $ 5.40 $ 6.36 $ 0.47 $ 0.55 $ 0.65 $ 0.77 $ 0.91
Storm Water Fee (monthly) $ 4.85 $ 4.85 $ 4.85 $ 4.85 $ 4.85 Excess Discharge per 100 cubic feet (3,000 Cubic Feet per GBMC 7182)
CITY OF GROVER BEACH
MASTER FEE SCHEDULE
ADMINISTRATIVE SERVICES DEPARTMENT
Rates Effective
Description
Higher rate where heavy discharge or character of wastewater discharge warrants
Effective: 7/1/25 9
Exhibit A
1 NOTICE TO PROPERTY OWNERS AND UTILITY CUSTOMERS
REGARDING PUBLIC HEARING
FOR PROPOSED WASTEWATER RATE INCREASES
Hearing Date & Time: June 9, 2025, 6:00 PM
Hearing Location: City Hall, 154 South 8th Street
Grover Beach, CA 93433
Why are you receiving this notice?
The City of Grover Beach (“City”) is mailing this notice to you because you are a wastewater customer or are the owner of record of a property that receives wastewater service. This notice describes proposed changes to the wastewater rates and gives information about a public hearing to be held on June 9, 2025, at City Hall, 154 South 8 th Street, Grover Beach, CA, 93433 regarding these proposed changes in accordance with California Proposition 218 Process.
What do wastewater rates fund?
The City provides wastewater service to residential, and commercial customers. Monthly wastewater rates charged to system users (“Customer”) on a bi-monthly basis are the primary source of revenue for the wastewater system. These funds are dedicated exclusively to maintaining, improving and operating the wastewater system.
Customer rates support several essential components including daily operations and routine maintenance of collection systems, critical infrastructure improvements and replacement projects to ensure system reliability, administrative costs necessary for effective system management, and building adequate financial reserves to address emergencies and unexpected repairs. This careful financial planning ensures the wastewater utility can provide reliable wastewater services now while preparing for future community needs.
Why are rate increases needed?
Current rates do not provide adequate funding for long-term operation and maintenance expenses and capital projects. The City engaged a consultant to perform a study of the City’s wastewater funds, and to recommend user rates designed to meet the City’s financial obligations, including operating, debt service costs, funds for needed capital projects, and maintenance of cash reserves. The rate structures developed in the study comply with federal, state, and City laws and guidelines. They are consistent with industry practices and are equitable among the City’s customer classes. At the City Council Meeting on March 24, 2025, the rate study was presented which included recommended wastewater utility rates. Subsequently, the City Council approved scheduling the Proposition 218 hearing for June 9, 2025.
The proposed rates are based on a comprehensive utility rate study and financial plan to ensure a reliable and functional wastewater system. The City will annually review revenues and expenditures for the wastewater funds to ensure that sufficient and appropriate revenues are collected to effectively provide for the short and long-term service needs of the community. The rate study report providing the rate development methodology is available at City Hall and on the City’s website at www.groverbeach.org.
New rates
To provide necessary funding to operate and carry out long-term improvements to the wastewater system, the City is proposing to implement new rates as a series of annual revenue adjustments over the next five years.
The following tables summarize the proposed water and wastewater rates.
Attachment 2
2 Wastewater Current and Proposed Monthly Charges
Impact on your bill
For the proposed rates effective July 1, 2025, the wastewater portion of the bill would increase from $25.64 to $30.20 bi monthly for an increase of $4.56 per billing cycle or $2.28 per month for a single-family dwelling unit.
Example wastewater calculations using proposed July 1, 2025:
City Wastewater:.................................. $15.10 per Month per Dwelling Unit X 2 Months X 1 Dwelling Unit = $30.20
1.0% Utility Tax: ..................................................................................................................................................$.31 SSLOCSD Charge...........................................................................................................................................$50.96 Total: $81.47
How do you file a protest or participate in the public hearing? The City Council will consider the new rate structure and proposed revenue increase at a public hearing on Monday, June 9 at 6:00 p.m. at City Hall, 154 South 8th Street, Grover Beach, CA, 93433. You are invited to present oral or written testimony at the public hearing. 3 Any property owner, or tenant directly liable for the proposed fee or charge, of a parcel subject to the proposed rates may submit a written protest to the proposed rate revisions. If written protests are filed with respect to a majority of the affected property parcels, the proposed rate revisions will not be adopted.
A written protest must contain the street address or Assessor's Parcel Number (APN) for the parcel(s) or utility service address with respect to which the protest is made. The protest must also be signed by the property owner or tenant directly liable for the proposed fee or charge (only one protest per APN will count). Protests may be mailed or hand delivered to the City’s offices at 154 South 8th Street, Grover Beach, CA, 93433. Protests may also be delivered to the City Clerk at the public hearing. To be valid, a signed written protest must be received by the City Clerk at or before the time of the protest hearing.
Two information sessions will be held to provide opportunities for members of the Grover Beach Community to learn more about the rate increases as well as ask questions. Please see details below.
Information Session #1 Information Session #2
Date: May 8, 2025, 5:30 PM – 6:30 PM Date: May 28, 2025, 5:30 PM – 6:30 PM Location: City Hall Location: Ramona Park Community Center I, __________________________________________, oppose the proposed sewer rate increases. (Please Print Name)
I am a property owner.
I am a tenant of the property who is directly liable for payment of the proposed fee (account holder).
Assessor’s Parcel Number or Account Holder Address:
_______________________________________________________ Signature: _______________________ Date: ________________ Proposed Sewer Rate Protest Form
1 AVISO A LOS PROPIETARIOS Y USUARIOS DE SERVICIOS
PÚBLICOS SOBRE LA AUDIENCIA PÚBLICA
RELATIVA AL PROPUESTO AUMENTO DE TARIFAS DE AGUAS
RESIDUALES
Fecha y hora de la audiencia: 9 de junio, 2025, 6:00 PM Lugar de la audiencia: Consejo Municipal, 154 South 8th Street Grover Beach, CA 93433
¿Por qué está recibiendo este aviso?
La Ciudad de Grover Beach (“Ciudad”) le envía este aviso por correo porque usted es un cliente del servicio de aguas residuales o es el propietario registrado de una propiedad que recibe este servicio. Este aviso describe los cambios propuestos en las tarifas de aguas residuales y proporciona información sobre una audiencia pública que se llevará a cabo el 9 de junio de 2025 en el Consejo Municipal, ubicado en 154 South 8th Street, Grover Beach, CA, 93433, con respecto a dichos cambios propuestos, de conformidad con el proceso establecido por la Propuesta 218 de California.
¿Para qué se utilizan los fondos de las tarifas de aguas residuales? La Ciudad proporciona servicios de aguas residuales a clientes residenciales y comerciales. Las tarifas mensuales por este servicio, que se cobran a los usuarios del sistema (“Cliente”) de manera bimestral, constituyen la principal fuente de ingresos para el sistema de aguas residuales. Estos fondos están destinados exclusivamente al mantenimiento, mejora y operación del sistema. Las tarifas que pagan los clientes respaldan varios componentes esenciales, incluyendo las operaciones diarias y el mantenimiento rutinario de los sistemas de recolección, mejoras e inversiones en infraestructura crítica para garantizar la confiabilidad del sistema, costos administrativos necesarios para una gestión eficaz y la creación de reservas financieras adecuadas para hacer frente a emergencias y reparaciones imprevistas. Esta cuidadosa planificación financiera garantiza que el sistema de aguas residuales pueda ofrecer un servicio confiable en el presente, al mismo tiempo que se prepara para las necesidades futuras de la comunidad.
¿Por qué se necesitan aumentos en las tarifas?
Las tarifas actuales no proporcionan fondos adecuados para los gastos operativos y de mantenimiento a largo plazo, así como para los proyectos de capital. La Ciudad contrató a un consultor para realizar un estudio de los fondos de aguas residuales de la Ciudad y recomendar tarifas de usuarios diseñadas para cumplir con las obligaciones financieras de la Ciudad, incluyendo los costos operativos, el servicio de la deuda, los fondos para proyectos de capital necesarios y el mantenimiento de reservas de efectivo. Las estructuras de tarifas desarrolladas en el estudio cumplen con las leyes y directrices federales, estatales y locales. Son consistentes con las prácticas de la industria y son equitativas entre las distintas clases de clientes de la Ciudad. En la reunión del Concejo Municipal del 24 de marzo de 2025, se presentó el estudio de tarifas, el cual incluyó las tarifas recomendadas para el servicio de aguas residuales. Posteriormente, el Concejo Municipal aprobó la programación de la audiencia de la Proposición 218 para el 9 de junio de 2025.
Las tarifas propuestas se basan en un estudio integral de tarifas de servicios públicos y un plan financiero para garantizar un sistema de aguas residuales confiable y funcional. La Ciudad revisará anualmente los ingresos y gastos de los fondos de aguas residuales para asegurarse de que se recauden ingresos suficientes y apropiados para cubrir eficazmente las necesidades de servicio a corto y largo plazo de la comunidad. El informe del estudio de tarifas, que proporciona la metodología para el desarrollo de las tarifas, está disponible en el Consejo Municipal y en el sitio web de la Ciudad en www.groverbeach.org. 2 Nuevas tarifas
Para proporcionar los fondos necesarios para operar y llevar a cabo mejoras a largo plazo en el sistema de aguas residuales, la Ciudad propone implementar nuevas tarifas como una serie de ajustes anuales de ingresos durante los próximos cinco años. Las siguientes tablas resumen las tarifas propuestas para el agua y las aguas residuales.
Cargos Mensuales Actuales y Propuestos de Aguas Residuales Impacto en su factura
Para las tarifas propuestas que entrarán en vigor el 1 de julio de 2025, la parte correspondiente a las aguas residuales en la factura aumentaría de $25.64 a $30.20 bimestralmente, lo que representa un aumento de $4.56 por ciclo de facturación o $2.28 por mes para una unidad de vivienda unifamiliar.
Ejemplo de cálculos de aguas residuales utilizando las tarifas propuestas a partir del 1 de julio de 2025:
Aguas Residuales de la Ciudad: $15.10 por mes por unidad de vivienda × 2 meses × 1 unidad de vivienda = $30.20
Impuesto sobre servicios públicos del 1.0%: ....................................................................................................$.31 Cargo de SSLOCSD.......................................................................................................................................$50.96 Total: $81.47
¿Cómo presentar una protesta o participar en la audiencia pública? 3 El Concejo Municipal considerará la nueva estructura tarifaria y el aumento propuesto de los ingresos en una audiencia pública el lunes 9 de junio a las 6:00 p.m. en el Consejo Municipal, ubicado en 154 South 8th Street, Grover Beach, CA, 93433. Se invita a los interesados a presentar testimonios orales o escritos en la audiencia pública.
Cualquier propietario de una propiedad o inquilino directamente responsable de la tarifa o cargo propuesto, de una parcela sujeta a las tarifas propuestas, puede presentar una protesta por escrito a las revisiones tarifarias propuestas. Si se presentan protestas por escrito respecto a la mayoría de las parcelas afectadas, las revisiones tarifarias propuestas no serán adoptadas.
Una protesta por escrito debe contener la dirección del inmueble o el Número de Parcela del Asesor (APN) de la(s) parcela(s) o la dirección del servicio de utilidad en relación con la cual se presenta la protesta. La protesta también debe estar firmada por el propietario de la propiedad o el inquilino directamente responsable de la tarifa o cargo propuesto (solo una protesta por APN será válida). Las protestas pueden ser enviadas por correo o entregadas en persona en las oficinas de la Ciudad, ubicadas en 154 South 8th Street, Grover Beach, CA, 93433. Las protestas también pueden ser entregadas al Secretario de la Ciudad durante la audiencia pública. Para ser válidas, las protestas escritas y firmadas deben ser recibidas por el Secretario de la Ciudad en o antes de la hora de la audiencia de protesta.
Se llevarán a cabo dos sesiones informativas para brindar oportunidades a los miembros de la comunidad de Grover Beach de obtener más información sobre los aumentos de tarifas y hacer preguntas. A continuación se detallan los detalles.
Sesión Informativa #1 Sesión Informativa #2
Fecha: May 8, 2025, 5:30 PM – 6:30 PM Fecha: May 28, 2025, 5:30 PM – 6:30 PM Lugar: City Hall Lugar: Ramona Park Community Center
Yo, __________________________________________, me opongo al aumento propuesto de las (Favor de escribir el nombre en letra de imprenta)
tarifas de alcantarillado.
Soy propietario.
Soy inquilino de la propiedad y responsable directo del pago de la tarifa propuesta (titular de la cuenta).
Número de Parcela del Asesor o Dirección del Titular de la Cuenta:
______________________________________________________
Firma: _______________________ Fecha: ________________
Formulario de Protesta de Tarifa de Alcantarillado
Propuesta