Proposition 218
Hearing
Wastewater Rates
GROVERBEACH.ORG
Nick Szamet
Administrative Services Director
Background
GROVERBEACH.ORG
• On March 24, 2025, the Council received the results of the updated Wastewater Utility Rate Study provided by Clayton Tuckfield of Tuckfield and Associates
• Current rates adopted in May 2021 and re-established following repeal rate structure adopted in December 2023
• The existing rate structure does not sufficiently fund regular operations and maintenance costs or an additional $15 million in infrastructure improvements to address system deficiencies and future needs
• Inability to fund necessary sewer projects risks community health and safety and delays Measure K-14 street projects.
Purpose of Rate Study
• Evaluate sufficiency of existing sewer revenues to:
• Provide funding for current and future operation and
maintenance expenses and capital improvement spending
• Meet minimum reserve level requirements
• Meet legal obligations associated with outstanding debt (debt coverage ratio)
• Develop rates which will generate sufficient revenue to meet cost of providing essential services
3 4
• On-going financial support for the enterprise system
• O&M expenses continue to increase (benefits, electricity, chemicals, G&A) • Maintain cash reserves at appropriate levels (operating and capital) • Capital needs of the wastewater system (system replacements, improvements) • New debt is proposed to pay for needed capital improvements • $4.2M in FY 25-26
• $1.8M in FY 27-28
• $1.6M in FY 29-30
• New debt will require debt service payments and will require sewer fund to meet minimum debt service coverage ratios
Why Are Rates Changing?
Wastewater Capital Improvement Program
5 Project FY24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 Sewer Upgrade/Future Flows $706,000 $550,000
Front St Lift Station Upgrades $50,000 $200,000
Sewer Upgrade/Existing Flow $3,900,000 $2,700,000 $630,000 $2,000,000 S. Oak Park Lift Station Upgr. $190,000
Replace Damage Storm Drain $160,000
Nacimiento Lift Station Upgr. $130,000 $400,000 $3,100,000 Nacimiento Manhole Upgr. $20,000
Total $756,000 $4,650,000 $320,000 $3,100,000 $790,000 $2,020,000 Proposed Rate Structure
GROVERBEACH.ORG
• Study Findings
• Annual increases of 17.8% for
each of the next five years
beginning July 1, 2025
• 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 in year one
• Increasing to $16.26 in year five
Proposed
SFR Charges Current FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 Fixed Charges $25.64 $30.20 $35.58 $41.92 $49.38 $58.16 SSLOCSD Charge $50.96 $50.96 $50.96 $50.96 $50.96 $50.96 Fixed Charges $76.60 $81.16 $86.54 $92.88 $100.34 $109.12 Dollar Change $4.56 $5.38 $6.34 $7.46 $8.78
Percent Change 6.0% 6.6% 7.3% 8.0% 8.8%
$76.60 $81.16
$86.54
$92.88
$100.34
$109.12
$0
$20
$40
$60
$80
$100
$120
Current FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30
Fixed Charges
Comparison with Other Cities/CSDs
GROVERBEACH.ORG
$0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 $220 $240 Avila Beach CSD
Morro Bay
Cayucos CSD
Cambria CSD
San Luis Obispo
Paso Robles
Pismo Beach
Atascadero
Grover Beach July 1, 2025 Bill
Grover Beach Current Bill
Oceano CSD
Arroyo Grande
• The Cities/CSDs are
considering Wastewater
Rate Increases:
• San Luis Obispo
• Atascadero
• Oceano CSD
• Arroyo Grande
Outreach Page
GROVERBEACH.ORG
Learn More
Proposition 218 Process
GROVERBEACH.ORG
• March 24, 2025, Council received the results of the updated Wastewater Study provided by Clayton Tuckfield
• Council authorized the 218 Process on April 14
• Notices mailed to property owners and wastewater customers on April 25 in both English and Spanish with return protest ballot • Staff conducted two information sessions on May 8 at City Hall and May 28 at Ramona Center
Proposition 218 Process
GROVERBEACH.ORG
• If a simple majority of parcels plus one protest the new rates, they cannot be adopted by Council.
• Staff has determined the threshold to be 2,681
• City Clerk will provide number of protest ballots at time of the hearing
Wastewater Fund Repayment
GROVERBEACH.ORG
• There is $1.046 million in Interfund Advances to the Wastewater Fund to pay off outstanding loans from 2009-2012 and 2016 • Payment plan presented with the rate study and budget fully pays off all interfund advances by FY 2029-30.
• Amortized as six annual payments $187,500
• Includes 3% interest
• Repayment could be amortized over fewer years and increase annual payment
• No effect on wastewater rates
• Staff can further review the amortization options with Council Recommendation
GROVERBEACH.ORG
1. Conduct a Proposition 218 public hearing and determine the official number of written protests received on the proposed wastewater rate structure;
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.
DIF Payment Schedule
GROVERBEACH.ORG
Palladium Encore 1 Encore 2 Trinity 1 Trinity 2 Cleaver 950 ECR Development Impact Fee
402 W Grand Ave
BP-22-00452
401 W Grand Ave Bldg 1
BP-23-00425
401 W Grand Ave Bldg 2
BP-24-00191
197 W Grand Ave Bldg 1
BP-24-00351
197 W Grand Ave Bldg 2
BP-24-00506
1206 W Grand Ave
BP-22-00446
950 El Camino Real
BP-22-00031
Adminstrative DIF $ 3,629.30 $ 4,152.47 $ 2,451.31 $ 9,808.00 $ 740.39 $ 4,721.55 $ 24,839.92 Fire Protection DIF $ 5,023.94 $ 37,270.44 $ 3,077.10 $ 1,843.52 $ 801.71 $ 5,976.95 $ 2,621.08 Law Enforcement DIF $ 4,284.51 $ 4,866.88 $ 2,852.12 $ 827.60 $ 896.70 $ 5,839.00 $ 26,698.08 Park Improvement DIF $ 72,576.87 $ 76,207.67 $ 41,191.22 $ 26,182.56 $ 18,882.57 $ 142,968.03 $ - Recreation Facility DIF $ 12,975.15 $ 13,624.23 $ 7,364.10 $ 22,008.00 $ 3,375.75 $ 25,559.25 $ - Stormwater DIF $ 5,325.75 $ 9,849.60 $ 3,877.20 $ 6,658.74 $ - $ 8,319.51 $ 19,643.85 Transportation DIF $ 49,673.74 $ 57,608.15 $ 36,856.96 $ 12,691.44 $ 6,816.95 $ 34,296.77 $ 146,076.96 Wastewater DIF $ 31,113.93 $ 25,749.45 $ 25,749.45 $ 16,093.42 $ 24,141.73 $ 32,722.72 $ 21,430.82 Water System DIF $ 36,490.31 $ 29,539.78 $ 27,802.14 $ 19,113.98 $ 26,064.52 $ 38,227.94 $ 19,849.07 DIF Total $ 221,093.50 $ 258,868.67 $ 151,221.60 $ 115,227.26 $ 81,720.32 $ 298,631.72 $ 261,159.78 Paid 11/30/2023 Paid 7/16/2024 Paid 11/12/2024 Paid 4/29/2025 Estimate (In Plan Review) Due Prior to Occupancy Due Prior to Occupancy 6 Year Repayment
GROVERBEACH.ORG
Payback in Years
6 Included in Rate Study and Proposed Budget
Begining Reserves $5,555,974 $5,580,433 $5,453,942 $5,313,669 $5,314,723 $5,333,859 Revenues $18,318,279 $21,428,114 $19,387,502 20,091,753.84 20,719,496.45 21,355,891.34 Exependitures $18,106,320 $21,367,105 $19,340,275 19,903,200.00 20,512,860.00 21,142,053.00 Annual Surplus/(Deficit) $211,959 $61,009 $47,227 188,553.84 206,636.45 213,838.34 Wastewater Fund Repayment ($187,500) ($187,500) ($187,500) ($187,500) ($187,500) ($187,500) Ending Reserves $5,580,433 $5,453,942 $5,313,669 $5,314,723 $5,333,859 $5,360,198
30.87% 30.06% 28.37% 27.55% 26.85% 26.19%
FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 5 Year Repayment
GROVERBEACH.ORG
Payback in Years
5 Begining Reserves $5,555,974 $5,546,558 $5,386,193 $5,212,045 $5,179,225 $5,164,486 Revenues $18,318,279 $21,428,114 $19,387,502 20,091,753.84 20,719,496.45 21,355,891.34 Exependitures $18,106,320 $21,367,105 $19,340,275 19,903,200.00 20,512,860.00 21,142,053.00 Annual Surplus/(Deficit) $211,959 $61,009 $47,227 188,553.84 206,636.45 213,838.34 Wastewater Fund Repayment ($221,375) ($221,375) ($221,375) ($221,375) ($221,375) $0 Ending Reserves $5,546,558 $5,386,193 $5,212,045 $5,179,225 $5,164,486 $5,378,325
30.68% 29.69% 27.83% 26.85% 25.99% 26.28%
FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 4 Year Repayment
GROVERBEACH.ORG
Payback in Years
4 Begining Reserves $5,555,974 $5,487,703 $5,268,482 $5,035,480 $4,943,804 $5,150,440 Revenues $18,318,279 $21,428,114 $19,387,502 20,091,753.84 20,719,496.45 21,355,891.34 Exependitures $18,106,320 $21,367,105 $19,340,275 19,903,200.00 20,512,860.00 21,142,053.00 Annual Surplus/(Deficit) $211,959 $61,009 $47,227 188,553.84 206,636.45 213,838.34 Wastewater Fund Repayment ($280,230) ($280,230) ($280,230) ($280,230) $0 $0 Ending Reserves $5,487,703 $5,268,482 $5,035,480 $4,943,804 $5,150,440 $5,364,279
30.36% 29.04% 26.89% 25.63% 25.92% 26.21%
FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 3 Year Repayment
GROVERBEACH.ORG
Payback in Years
3 Begining Reserves $5,555,974 $5,399,681 $5,092,438 $4,771,413 $4,959,967 $5,166,604 Revenues $18,318,279 $21,428,114 $19,387,502 20,091,753.84 20,719,496.45 21,355,891.34 Exependitures $18,106,320 $21,367,105 $19,340,275 19,903,200.00 20,512,860.00 21,142,053.00 Annual Surplus/(Deficit) $211,959 $61,009 $47,227 188,553.84 206,636.45 213,838.34 Wastewater Fund Repayment ($368,252) ($368,252) ($368,252) $0 $0 $0 Ending Reserves $5,399,681 $5,092,438 $4,771,413 $4,959,967 $5,166,604 $5,380,442
29.87% 28.07% 25.48% 25.71% 26.00% 26.29%
FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 2 Year Repayment
GROVERBEACH.ORG
Payback in Years
2 Begining Reserves $5,555,974 $5,223,560 $4,740,196 $4,787,423 $4,975,976 $5,182,613 Revenues $18,318,279 $21,428,114 $19,387,502 20,091,753.84 20,719,496.45 21,355,891.34 Exependitures $18,106,320 $21,367,105 $19,340,275 19,903,200.00 20,512,860.00 21,142,053.00 Annual Surplus/(Deficit) $211,959 $61,009 $47,227 188,553.84 206,636.45 213,838.34 Wastewater Fund Repayment ($544,373) ($544,373) $0 $0 $0 $0 Ending Reserves $5,223,560 $4,740,196 $4,787,423 $4,975,976 $5,182,613 $5,396,451
28.90% 26.13% 25.56% 25.80% 26.08% 26.37%
FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30
SSLOCSD
GROVERBEACH.ORG
Background
GROVERBEACH.ORG
• Private septic tank systems before
1965
• Core sewer system constructed in
1965 - now 60 years old
• Served 3,600 residents in 1965
• Did not include properties in the
northern portion of city or industrial
area south of Farroll Road
• Industrial area still mostly served by
private septic systems with connection
to City sewer now required
2006 Sewer System Master Plan and Recommended Upgrades
GROVERBEACH.ORG
• 2006 - Garing, Taylor and Associates prepared a comprehensive Sewer Master Plan
• A Master Plan evaluates a sewer system and provides recommendations for repairs and upgrades
• 2006 - City’s population had grown to 13,248 residents • Sewer flow - increased from 0.29 MGD to estimated 1.06 MGD • Many sewer mains built in the 1960s were at or near capacity • Master Plan recommended:
Upgrades to numerous sewer mains
Construct new gravity main south of Farroll Road to eliminate three sewer pump stations
Estimated cost of improvements - $1,465,000
2006 Sewer System Master Plan and Recommended Upgrades
GROVERBEACH.ORG
• 2006 – 2018:
Some of the recommended upgrades completed
A sewer main was constructed south of Farroll Road
Eliminated three of the City’s six sewer pump stations • 2014 - Grover Beach voters approved Measure K-14
Bond measure to rehabilitate local streets
• 2015 - Council prioritized K-14 street projects and provided policy direction Policy - Ensure sewer upgrades completed prior to street improvements
Council has reiterated this policy direction to staff 2018 Sewer System Master Plan and Recommended Upgrades
GROVERBEACH.ORG
• 2018 - MKN and Associates prepare an updated Sewer Master Plan
• MKN developed a computerized model of the City's sewer system Input current measured flows and estimated future flows based on population growth predictions
2018 population - 13,560 - Measured average sewer flow – 0.73 MGD Average sewer flows projected to increase to 1.13 MGD by 2050 Model identified the need for system upgrades based on existing flows Evaluated new development’s fair share of recommended system upgrades Background
GROVERBEACH.ORG
• City’s sewer collection
system today includes:
35 miles of gravity
sewer mains - 6 to 12-
inches in diameter
Three sewer pump
stations
• Two private sewer pump
stations (Mar Brisa, State
Park)
Sewer System Master Plan
GROVERBEACH.ORG
• Sewer Master Plan: model system, evaluate deficiencies, identify projects and cost, prioritize improvements
• Initial Master Plan developed in 2006 with updated plan in 2018 • Improvements made over time though needs have also increased over time • Significant cost escalation since 2018 with construction projects and inflation • $15 million now needed in capital improvements and system upgrades • Most of this need tied to existing deficiencies caused by aging infrastructure and population growth prior to 2018
10 projects to address
existing deficiencies
• Example:
• Upgrade sewer
main on N. 9th
from 8-inch to
10-inch
• Needed work
before K-14
street repair
project
Financial Plan
GROVERBEACH.ORG