POINT ARENA CITY COUNCIL
AGENDA ITEM SUMMARY
AGENDA ITEM: III A
MEETING DATE: 6/16/2026
TITLE
Proposition 218 Public Hearing and Adoption of Wastewater Service Rates for Fiscal Years 2026-27 Through 2030-31
RECOMMENDED ACTION
1. Conduct the Proposition 218 public hearing regarding proposed wastewater rates for Fiscal Years 2026-27 through 2030-31.
2. Receive the presentation from LT Municipal Consultants and accept public testimony regarding the proposed rate schedule.
3. Determine whether a majority protest exists pursuant to Proposition 218.
4. If no majority protest exists, adopt Resolution No. 2026-11 establishing wastewater service rates for Fiscal Years 2026-27 through 2030-31 as set forth in Attachment A.
5. Direct staff to implement the adopted rate schedule effective July 1, 2026.
ANALYSIS
Since the City Council's initial review of the Sewer Rate Study on April 21, 2026, the Proposition 218 process has continued with public outreach and stakeholder engagement. A community meeting was held on May 27, 2026, with wastewater rate consultant Alison Lechowicz of LT Municipal Consultants in attendance. Approximately ten community members participated in the meeting, where the consultant presented the findings of the rate study, explained the proposed rate structures, and answered questions regarding the City's wastewater system, regulatory requirements, and longterm financial needs. Ms. Lechowicz will provide a brief presentation to the Council at this meeting summarizing the study, public outreach efforts, and the proposed rate schedule.
As of the preparation of this report, the City has received eleven written protest letters regarding the proposed rate increases. Under Proposition 218, property owners may submit written protests prior to the close of the public hearing. The City may adopt rates up to the proposed amounts only if written protests are not received from a majority of affected property owners. Proposition 218 requires that rates be based on the reasonable cost of providing service, that revenues be used solely for wastewater purposes, and that property owners be provided notice and an opportunity to be heard before rates are adopted.
At its previous meeting, the City Council provided direction to proceed with the rate schedule that includes an approximately 30 percent increase during the first year, followed by additional increases over the five-year study period. Staff recognizes that any rate increase will create challenges for ratepayers. However, the City's wastewater treatment system is among the most heavily regulated services provided by the City, subject to extensive State Water Resources Control Board and federal environmental requirements.
Failure to adequately fund operations, maintenance, and capital improvements increases the risk of service disruptions, infrastructure failures, permit violations, and costly emergency repairs. The proposed rate adjustments are intended to stabilize the wastewater enterprise fund, improve system reliability, support future sewer infrastructure upgrades, and ensure continued compliance with environmental regulations while protecting public health and the coastal environment.
Each year concurrent with budget adoption, the City Council will review the Wastewater Enterprise’s financial standing and can adopt rates up to the amounts listed in the Proposition 218 public notice.
FISCAL IMPACT
Fiscal security for the WWTP enterprise funds and the City General Fund
ATTACHMENTS
1. Resolution 2026-14 Adopting Wastewater Service Rates for Fiscal Years 2026-27 Through 2030-31
2. Presentation by LT Municipal Consultants
3. Sewer Rate Study
4. Prop 218 Notification
CITY MANAGER SIGNATURE
_________________________________
Molly C. Haviland, City Manager
RESOLUTION 2026-14
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POINT ARENA ESTABLISHING WASTEWATER SERVICE RATES FOR FISCAL YEARS 2026-27 THROUGH 2030-31
THE CITY COUNCIL OF THE CITY OF POINT ARENA DOES HEREBY FIND, ORDER AND RESOLVE AS FOLLOWS:
Section 1. Recitals.
A. The City Council previously set June 16, 2026, as the date for a public hearing for consideration of a revised schedule ofsewer rates and charges.
B. The notice of the June 16, 2026, public hearing, and of the proposed schedule of rates and charges, was mailed to each City of Point Arena property owner on April 30, 2026 as required by Proposition 218.
C. The City’s rate consultant mailed out notices to 163 affected property owners. Under Proposition 218, the City would not be able to adopt the proposed sewer rates if 82 written protests are received.
D. The public notice provided instructions on how to file a written protest and a written objection relative to the proposed sewer rates.
E. On June 16, 2026, the City Council conducted a duly noticed public hearing concerning the proposed sewer rate increase and heard and considered all oral and written testimony and protests.
F. The proposed increase in sewer rates is statutorily exempt from the provisions of CEQA pursuant to Title 14, section 15273 of the California Code of Regulations as it applies only to rates necessary to operate and maintain the City’s sewer system.
G. All legal prerequisites to adoption of a sewer rate increase have occurred prior to adoption of this Resolution.
Section 2. Effective Date.
The rates and charges set forth in this Resolution shall take effect on July 1, 2026.
Section 3. Schedule of Monthly Rates and Charges.
A. Rate Structure
Each customer will be charged based on the schedule of rates shown below:
Customer Class Billing Unit 1-Jul-26 1-Jul-27 1-Jul-28 1-Jul-29 1-Jul-30 Residential Dwelling
Unit
$91.85 $110.23 $126.77 $139.45 $146.41
Non-residential
Auto shop 1,000 sq ft $91.85 $110.23 $126.77 $139.45 $146.41 Church/meeting hall 1,000 sq ft $61.54 $73.85 $84.94 $93.43 $98.09 Coffee Shop (no grease trap) 1,000 sq ft $51.44 $61.73 $70.99 $78.09 $81.99 Medical /dental Office 1,000 sq ft $91.85 $110.23 $126.77 $139.45 $146.41 Professional Office, Fire Station 1,000 sq ft $28.47 $34.17 $39.30 $43.23 $45.39 Restaurant 1,000 sq ft $201.15 $241.40 $277.63 $305.40 $320.64 Retail 1,000 sq ft $28.47 $34.17 $39.30 $43.23 $45.39
Theater 1,000 sq ft $56.03 $67.24 $77.33 $85.06 $89.31
Hotel per room $51.44 $61.73 $70.99 $78.09 $81.99
Elementary School per student $5.51 $6.61 $7.61 $8.37 $8.78 High School per student $7.35 $8.82 $10.14 $11.16 $11.71 B. Special Circumstances
The City at its discretion may assign customers to a special usage category based on their actual, estimated, or assumed sewer consumption. Special use customers will be assigned a rate proportional to the single family rate shown above which is equivalent to consumption of 90 gallons per day.
Section 4. Findings
A . At the close of the public hearing, the City received eleven written protests. The City’s rate consultant has certified the tabulation of written protests. Thus, no majority protest to the proposed sewer rate increases has been presented under Proposition 218.
B. Thatrevenues derived fromthose rates will be utilized tomeeting sewer operating expenses including the purchasing or leasing of supplies, equipment/materials, sewer operations/sewer capital and will not exceed the funds required to provide sewer service.
C. That revenues derived from these rates will not be used for any purpose other than providing sewer service including sewer capital projectsthat upgrade infrastructure within the service area.
D. That the amounts of those rates imposed upon any parcel or person as an incident of property ownership will not exceed the proportional cost of the service attributable to the parcel.
Section 5: The City Clerk shall certify the passage and adoption of this resolution and enter it into the book of original resolutions.
PASSED AND ADOPTED The foregoing Resolution No. 2026-14 passed and adopted at a Regular meeting of the Point Arena City Council on the 16th day of June, 2026 by the following vote. Motion by _______, Seconded by ________.
Ayes:
Noes:
Absent:
Abstain:
Barbara Burkey
Mayor
ATTEST:
Paul Andersen
City Clerk
Sewer Rate Public Hearing
City of Point Arena
June 16, 2026
Timeline
The last rate study was conducted in 2016; rates last increased 2021 The City recently secured a grant for $841,000 for sewer pipeline improvements that requires the City to conduct a rate study
On April 21, 2026, City Council reviewed costs and rate options On April 30, 2026, notice of the proposed rate increase was mailed to all property owners On May 27, 2026, a customer outreach meeting was held Tonight, we will hear public comment and count the protests 2 Current Financial Standing
3 Current fund balance of about ($66,000)
Absent a rate increase in FY2026/27, revenues of about $286,900 would NOT cover operating expenses of about $361,100 resulting in net negative revenues of about ($74,200).
Why is a rate increase needed?
4 Fund existing operating costs + annual inflationary cost increases Pay back the $66,000 negative fund balance
The City recently secured a grant of $841,000 for pipeline improvements but other projects may not be covered by grants
Pond dredging: $150,000 – assumed to be financed; repayment cost of $12,600/yr Jetter: $90,000
Security fence, gate, and lighting: $60,000
Tractor and truck replacement, repairs, maintenance,
and contingency: $150,000
Proposed Residential Rate Schedule
5 CURRENT PROPOSED
Customer Class Billing Unit Monthly Rate 1-Jul-26 1-Jul-27 1-Jul-28 1-Jul-29 1-Jul-30 33% 20% 15% 10% 5%
Residential Dwelling Unit $69.12 $91.85 $126.31 $132.64 $139.27 $146.23 Residential customers will continue to be billed a fixed charge per dwelling unit Based on the cost of serving 90 gallons of sewer flow per day Sewer flows are not metered
90 gallons per day is typical efficient indoor water usage for a household of 2 to 3 people The City’s sewer system is designed, engineered, and operated to maintain capacity for 90 gallons per day
Rate Survey
6 SD – Sanitary District
PUD – Public Utility District
CSD – Community Service District
CWD – County Water District
$61 $65 $69
$83 $86 $91 $92 $96 $97
$118
$151
$207
$0
$50
$100
$150
$200
$250
Single Family Residential Monthly Sewer Bill Survey
(fixed rates or 90 gallons per day of flow)
Proposed Non-Residential Rate Schedule
7 CURRENT PROPOSED
Customer Class Billing Unit Monthly Rate Billing Unit 1-Jul-26 1-Jul-27 1-Jul-28 1-Jul-29 1-Jul-30 Non-residential Varies 20% 15% 10% 5%
Auto shop
Current non-residential
rates vary based on land
use
1,000 sq ft $91.85 $110.23 $126.77 $139.45 $146.41
Church/meeting hall 1,000 sq ft $61.54 $73.85 $84.94 $93.43 $98.09 Coffee Shop
(no grease trap) 1,000 sq ft $51.44 $61.73 $70.99 $78.09 $81.99 Medical Office 1,000 sq ft $91.85 $110.23 $126.77 $139.45 $146.41 Professional Office 1,000 sq ft $28.47 $34.17 $39.30 $43.23 $45.39 Restaurant 1,000 sq ft $201.15 $241.40 $277.63 $305.40 $320.64 Retail 1,000 sq ft $28.47 $34.17 $39.30 $43.23 $45.39
Theater 1,000 sq ft $56.03 $67.24 $77.33 $85.06 $89.31
Hotel per room $51.44 $61.73 $70.99 $78.09 $81.99
Elementary School per student $5.51 $6.61 $7.61 $8.37 $8.78 High School per student $7.35 $8.82 $10.14 $11.16 $11.71 Proposed fixed charges billed annually. Rates are proportional to sewer flow and pollutants. Flow and pollutants are based on industry standard estimates and observed trends in the City of Fort Bragg.
Proposition 218 Public Hearing
Hear Public Comment
Tabulate protests
Ratepayers can block the increase with a 50% protest
163 parcels
82 parcel protest threshold
Protests will be validated
Only one protest per parcel will count
Rates, if adopted, are the legal maximum rates. The City can adopt lower rates as appropriate.
8 1
DATE:
TO:
FROM:
SUBJECT:
May 1, 2026
City of Point Arena
LT Municipal Consultants
Sewer Rate Study
FINAL TECHNICAL MEMORANDUM
SECTION 1: INTRODUCTION
1.1 Background
The City of Point Arena (City) is located on the Pacific Coast of Mendocino County along State Highway
1. The City has a population of about 460, making it one of the smallest incorporated cities in the state.
The City owns and operates a wastewater treatment plant which serves about 155 active service connections. The original sewer system dates back to the early 1930s, with the current treatment facility constructed in 1982. The current sewer system consists of two aerated facultative ponds and four percolation ponds. The percolation ponds have sufficient capacity to meet the City’s discharge needs most of the year. However, during larger wet weather events, the percolation rate in the ponds is not able to keep up with the effluent flows and a neighboring spray field must be utilized for additional discharge.
The City secured a grant of $841,400 from the CA State Water Resources Control Board to conduct the necessary planning work to replace pipeline segments causing excessive inflow and infiltration (I&I), improve the headworks system to capture debris, and obtain back-up power. The grant requires that the City conduct a cost of service analysis to ensure that its Wastewater (Sewer) Enterprise Fund is financially stable and can fund operations and maintenance costs. The City last conducted a rate study in 2016 and last increased rates in 2021. The goal of this rate study update is to determine a rate plan that covers the City’s cost of service for the next five years, spanning fiscal year (FY) 2026/27 through FY2030/31. Rate increases are needed to cover operating expenses, repay the sewer fund’s existing negative fund balance, and fund capital improvements that are not covered by the grant.
1.2 Legal Requirements
The implementation of public agency utility rates in California is governed by the substantive and procedural requirements of Proposition 218 the “Right to Vote on Taxes Act” which is codified as Articles XIIIC and XIIID of the California Constitution. The City must follow the procedural requirements of Proposition 218 for all utility rate increases. These requirements include:
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2 1. Noticing Requirement – The City must mail a notice of the proposed rate increases to all affected property owners. The notice must specify the amount of the fees, the basis upon which they were calculated, the reason for the fees, and the date/time/location of a public rate hearing at which the proposed rates will be considered/adopted.
2. Public Hearing – The City must hold a public hearing prior to adopting the proposed rate increases. The public hearing must be held not less than 45 days after the required notices are mailed.
3. Rate Increases Subject to Majority Protest – At the public hearing, the proposed rate increases are subject to majority protest. If more than 50% of affected property owners submit written protests against the proposed rate increases, the increases cannot be adopted.
Proposition 218 also established substantive requirements that apply to sewer rates and charges, including:
1. Cost of Service – Revenues derived from the fee or charge cannot exceed the funds required to provide the service. In essence, fees cannot exceed the “cost of service”.
2. Intended Purpose – Revenues derived from the fee or charge can only be used for the purpose for which the fee was imposed.
3. Proportional Cost Recovery – The amount of the fee or charge imposed upon any parcel or person as an incident of property ownership shall not exceed the proportional cost of service attributable to that parcel.
4. Availability of Service – No fee or charge may be imposed for a service unless that service is used by, or immediately available to, the owner of the property.
5. General Government Services – No fee or charge may be imposed for general governmental services where the service is available to the public at large.
Charges for sewer service are exempt from additional voting requirements of Proposition 218, provided the charges do not exceed the cost of providing service and are adopted pursuant to the procedural requirements of Proposition 218.
1.3 Current and Proposed Monthly Sewer Rates
The proposed five-year rate plan is provided in Table 1. Rates are billed annually on the Mendocino County tax roll. Governmental and exempt parcels are direct billed. For ease of understanding, the monthly equivalent cost is provided. The first rate change is proposed to take effect on July 1, 2026, with subsequent increases each July 1 through 2030. For any additional connections built out in the City, the rates for the sewer service fees will also apply to them. If adopted, the first adjustment for residential customers will consist of an increase from $69.12 (current) to $91.85 (proposed) beginning July 1, 2026, an increase of $22.73 per month.
3 Table 1: Current and Proposed Monthly Sewer Rates
CURRENT PROPOSED
Customer Class Billing Unit Monthly Rate Billing Unit Jul 1, 2026 Jul 1, 2027 Jul 1, 2028 Jul 1, 2029 Jul 1, 2030 +20% +15% +10% +5%
Residential Dwelling Unit $69.12 Dwelling Unit $91.85 $110.23 $126.77 $139.45 $146.41 Non-residential
Auto shop
Current non-residential rates
vary based on land use
1,000 sq ft $91.85 $110.23 $126.77 $139.45 $146.41
Church/meeting hall 1,000 sq ft $61.54 $73.85 $84.94 $93.43 $98.09 Coffee Shop (no grease trap) 1,000 sq ft $51.44 $61.73 $70.99 $78.09 $81.99 Medical Office 1,000 sq ft $91.85 $110.23 $126.77 $139.45 $146.41 Professional Office 1,000 sq ft $28.47 $34.17 $39.30 $43.23 $45.39 Restaurant 1,000 sq ft $201.15 $241.40 $277.63 $305.40 $320.64 Retail 1,000 sq ft $28.47 $34.17 $39.30 $43.23 $45.39
Theater 1,000 sq ft $56.03 $67.24 $77.33 $85.06 $89.31
Hotel per room $51.44 $61.73 $70.99 $78.09 $81.99
Elementary School per student $5.51 $6.61 $7.61 $8.37 $8.78 High School per student $7.35 $8.82 $10.14 $11.16 $11.71 The current non-residential rates are based on the assignment of equivalent dwelling units (EDUs) by the City. The proposed non-residential rates consist of fees based on the number of square feet for most customers, the number of rooms for hotel customers, and the number of students (average daily attendance) for the schools.
4 Figure 1 compares the City’s current and proposed average single family residential bill with those of surrounding agencies. The City’s current rates are at the low end of agencies surveyed and will move to the middle of surveyed agencies following the proposed rate adjustment.
Figure 1: Monthly Sewer Bill Survey
$61 $65 $69
$83 $86 $91 $92 $96 $97
$118
$151
$207
$0
$50
$100
$150
$200
$250
Single Family Residential Monthly Sewer Bill Survey
(fixed rates or 90 gallons per day of flow)
5 SECTION 2: CUSTOMER BASE AND CURRENT RATE REVENUES
Table 2 presents the current annual sewer rates and estimated revenue collected for FY2025/26. The categories and customer counts are proposed to be updated in this rate study. The City charges all customers fixed rates for sewer service. Customers are billed annually on the Mendocino County tax roll, with the exception of schools and governmental parcels which are billed directly by the City. The current rate per equivalent dwelling unit (EDU) is $829.44 per year, or $69.12 per month. It is estimated that in fiscal year FY2025/26, the City collected about $256,800 in service charge revenues from the tax roll and an additional $30,100 from direct billing. In a typical year, service charges are the only source of revenue for the City’s sewer fund.
Table 2: Current Sewer Rates and Annual Revenues
Revenues (FY2024/25 Tax Roll)
Customer Category Customer
Count
Sum of
EDUs Revenue
Residential
Single-Family 89 96.00 $79,626
Duplex or Double 5 16.00 $13,271
Mobile Homes 5 11.00 $9,124
Vacant Residential 6 7.00 $5,806
Subtotal Residential 105 130.00 $107,827
Non-residential (Tax Roll)
Banks 1 1.50 $1,244
Churches 4 7.00 $5,806
Courts 4 13.00 $10,783
Hotels - Motels 3 18.60 $15,428
Multiple 4 42.00 $34,836
Offices - Non-Professional 1 1.00 $829
Professional Buildings 1 2.00 $1,659
Range 1 2.00 $1,659
Recreational: Non-Profit Organizations, Grange Halls, etc. 3 7.00 $5,806 Recreational: Resorts, Campgrounds, Golf Course, etc. 1 3.50 $2,903 Restaurant or Bars 6 33.00 $27,372
Retail Store 8 21.50 $17,833
Retail Store - Over Office 3 10.00 $8,294
Right-of-Way 1 1.00 $829
Service Shops - TV Appliance, Repair, Garage, Barber, etc. 5 9.50 $7,880 Service Station 1 2.00 $1,659
Vacant Commercial 1 2.00 $1,659
Warehousing: Bulk Oil & Gas, Storage, Truck Stops 1 1.00 $829 Wholesale Outlets: Drink Wholesale, Lumber, and Building 1 2.00 $1,659 Subtotal Commercial 50 179.60 $148,967
Non-residential (Direct Bill) 36.25 $30,065
Total 155 309.85 $286,900
6 SECTION 3: COST OF SERVICE
3.1 Operating Expenses
In FY2025/26, the City expects to incur about $797,300 in total to operate and maintain the sewer system, see Table 3. Table 3 also includes a projection of operating expenses over the next five years representing the rate study period. Salaries and benefits are expected to increase by 4% annually, program supplies & services are expected to increase by 5% annually, and all other expenses are expected to increase 3% annually to account for inflation. The City’s largest expenses in FY2025/26 are wastewater rehab professional services, about $450,000 this year. However, it is assumed these are one time expenses.
Table 3: Operating Expense Projection
Budget Escalation Projected
FY2025/26 Factor FY2026/27 FY2027/28 FY2028/29 FY2029/30 FY2030/31 Wastewater
Salaries & Wages $90,000 4.0% $93,600 $97,300 $101,200 $105,200 $109,400 Payroll Taxes & Benefits $10,000 4.0% $10,400 $10,800 $11,200 $11,600 $12,100 General Administration Costs $38,000 3.0% $39,100 $40,300 $41,500 $42,700 $44,000 Professional Services [1] $32,855 3.0% $33,800 $34,800 $35,800 $36,900 $38,000 Program Supplies & Services $73,000 5.0% $76,700 $80,500 $84,500 $88,700 $93,100 Enterprise Supplies & Services $36,000 3.0% $37,100 $38,200 $39,300 $40,500 $41,700 Subtotal Wastewater $279,855 $290,700 $301,900 $313,500 $325,600 $338,300 Wastewater Rehab
Salaries & Wages $40,000 4.0% $41,600 $43,300 $45,000 $46,800 $48,700 Payroll Taxes & Benefits $4,000 4.0% $4,200 $4,400 $4,600 $4,800 $5,000 General Administration Costs $108 3.0% $100 $100 $100 $100 $100 Professional Services [2] $450,000 3.0% $0 $0 $0 $0 $0
Program Supplies & Services $23,350 5.0% $24,500 $25,700 $27,000 $28,400 $29,800 Subtotal Wastewater Rehab $517,458 $70,400 $73,500 $76,700 $80,100 $83,600 Total Operating Expenses $797,313 $361,100 $375,400 $390,200 $405,700 $421,900 1 - Average of professional services expense from FY2025 and FY2024 actuals 2 - Assumes budgeted professional services are one time expenses, since previous years show $0
3.2 Capital Improvement Plan
Table 4 details the rate funded capital projects needed to upgrade the system over the next 5 years from FY2026/27 to FY2030/31. Table 4 shows only the portion of capital improvement projects that are expected to be rate funded. Contingency costs are included in Table 4 to account for additional work that will likely need to be conducted concurrently with the I&I project. The City is also seeking grant funding for other projects including treatment plant upgrades and regulatory upgrades to help mitigate impacts to ratepayers. Over the next 5 years, rate funded projects total to $285,000. 7 Table 4: Capital Improvement Projects
Project
Projected TOTAL FY2026/27 FY2027/28 FY2028/29 FY2029/30 FY2030/31 Backhoe & Chlorine Injector $0 $0 $0 $75,000 $0 $75,000 Security Fence & Lighting $0 $60,000 $0 $0 $60,000
Contingency & Inflation $0 $25,000 $25,000 $50,000 $50,000 $150,000 Total $0 $25,000 $85,000 $125,000 $50,000 $285,000
This year (FY2025/26) the City is completing sludge removal and pond dredging for a cost of about $150,000. It is assumed that this project will be loan-funded with payback over a 15 year period at 3% interest rate. Annual debt service cost is estimated to be $12,600.
3.3 Reserves
Utilities should maintain reserves to fund issues such as unexpected costs and emergency repairs and to provide cash flow in case of revenue shortfalls or delays in disbursements from the County tax collector.
It is also common for utilities to maintain additional reserve funds such as a capital reserve or debt service reserve.
The City’s sewer fund is estimated to have a negative balance of about $66,000 as of July 1, 2026. The negative balance represents prior year cost overruns that the sewer fund was unable to pay from existing revenues. Due to the wastewater fund’s negative position, it is not projected that the target reserve balance will be met within the next five years. However, due to proposed rate increases, it is projected that the deficit will be reversed and this negative fund balance will be repaid over the next five years. It is estimated that the wastewater fund will end FY2030/31 with a positive fund balance of about $63,500.
3.4 Cash Flow Projection
Table 5 includes a five-year cash flow projection spanning from FY2026/27 to FY2030/31. Rate revenues are proposed to increase 26% in FY2026/27, 20% in FY2027/28, 15% in FY2028/29, 10% in FY2029/30, and 5% in FY2030/31. Rate revenue increases are proposed to fund operating costs, repay the negative fund balance, fund capital costs, and fund new debt service. Rate increases are proposed to take effect each July 1 from 2026 to 2030. The proposed rates and rate design are described in more detail in the following section.
8 Table 5: Cash Flow Projection
Projected: Years 1 - 5 (Prop 218 Period)
FY2026/27 FY2027/28 FY2028/29 FY2029/30 FY2030/31
Rate Increase % 26% 20% 15% 10% 5%
Rate Increase Effective Date July 1, 2026 July 1, 2027 July 1, 2028 July 1, 2029 July 1, 2030 BEGINNING FUND BALANCE ($66,000) ($65,600) ($44,800) ($33,700) ($28,200)
REVENUES
Sewer Service Fees 361,500 433,800 498,900 548,800 576,200 Subtotal Revenues 361,500 433,800 498,900 548,800 576,200
EXPENSES
Operating Expenses
Wastewater Fund 290,700 301,900 313,500 325,600 338,300 Wastewater Rehab Fund 70,400 73,500 76,700 80,100 83,600 Subtotal Operating 361,100 375,400 390,200 405,700 421,900 Net Operating Revenues 400 58,400 108,700 143,100 154,300 Non-Operating Expenses
CIP Projects (Rate Funded) 0 25,000 85,000 125,000 50,000 New Debt Service [1] 0 12,600 12,600 12,600 12,600
Subtotal Non-Operating 0 37,600 97,600 137,600 62,600
Total Expenses 361,100 413,000 487,800 543,300 484,500
Total Net Revenues 400 20,800 11,100 5,500 91,700
ENDING FUND BALANCE ($65,600) ($44,800) ($33,700) ($28,200) $63,500 Target Reserve Balance [2] 320,800 331,600 342,700 354,300 366,400 Target Met? no no no no no
Debt Service Coverage [3] n/a 4.63 8.63 11.36 12.25
1 - $150,000 pond dredging over 15 years at 3%
2 - 9 months of operating expenses plus $50,000 for an emergency repair 3 - Net operating revenues divided by total debt service. Annual target is > 1.2 9 SECTION 4: COST ALLOCATION
The revenue requirements of the Sewer Fund and the determination of the sewer flows and loadings of the wastewater utility provide the basis for performing the cost of service analysis. The concept of proportionate allocation to each customer class indicates that allocations should take into consideration the quantity of effluent a customer contributes in addition to the pollutant strength of that sewer effluent. The key factors used to assign sewer utility costs are estimated effluent (flow) going to the wastewater treatment plant and effluent strengths, measured in biochemical oxygen demand (BOD) and total suspended solids (TSS). Higher levels of BOD or TSS equate to increased treatment costs.
Table 6 provides the results of the cost allocation analysis. Projected sewer operating expenses are allocated to the flow, BOD, and TSS categories with FY2025/26 serving as the test year. All expenses are allocated 60% to flow, 20% to BOD, and 20% to TSS with the exception of enterprise supplies & services which are allocated more heavily to BOD and TSS. In total, 58% of costs are allocated to flow, 21% to BOD, and 21% to TSS.
Table 6: Cost Allocation
Expenses
FY2025/26
Budget Flow BOD TSS
Operating Expenses
Wastewater
Salaries & Wages $90,000 60% 20% 20%
Payroll Taxes & Benefits $10,000 60% 20% 20%
General Administration Costs $38,000 60% 20% 20%
Professional Services $32,855 60% 20% 20%
Program Supplies & Services $73,000 60% 20% 20%
Enterprise Supplies & Services $36,000 20% 40% 40%
Subtotal Wastewater $279,855 $153,513 $63,171 $63,171
Wastewater Rehab
Salaries & Wages $40,000 60% 20% 20%
Payroll Taxes & Benefits $4,000 60% 20% 20%
General Administration Costs $108 60% 20% 20%
Professional Services $450,000 60% 20% 20%
Program Supplies & Services $23,350 60% 20% 20%
Subtotal Wastewater Rehab $517,458 $310,475 $103,492 $103,492 Total Expenses for Cost
Allocation $797,313 $463,988 $166,663 $166,663
Total Cost Allocation 58% 21% 21%
10 SECTION 5: RATE DESIGN
5.1 Methodology
The proposed sewer rate design is based on the allocation of equivalent units (EDUs) to various customer classes. EDUs are allocated based on estimated sewer flow or discharge expressed in gallons per day (gpd) and pollutant strength expressed as milligrams per liter (mg/l) compared to the flow and strength of a single family residential customer. One EDU is defined as 90 gpd of discharge and 200 mg/l of BOD and TSS. These parameters were estimated based on industry typical values and from observed flows and loadings from the City of Fort Bragg, a neighboring agency. The flows and pollutant loadings of non-residential customers were also based on industry typical values, observed values within the City of Fort Bragg, and actual water usage data from a sampling of customers. The sum of all customer flows equals about 29,296 gallons per day which is approximately equal to actual dry weather flows at the City of Point Arena’s treatment plant of 28,000 gallons per day.
The weighting of flows and loads and their relative impact on rates is taken from Table 6. The equation used to calculate EDUs for each customer is provided below.
EDU calculation: 𝑬𝑬𝑬𝑬𝑬𝑬 = 𝑭𝑭𝑭𝑭𝑭𝑭𝑭𝑭
𝟗𝟗𝟗𝟗𝟗𝟗𝟗𝟗𝟗𝟗 𝐗𝐗 (58% + [21% X 𝑩𝑩𝑩𝑩𝟐𝟐 𝒎𝒎 / ]+ [21% X 𝑻𝑻𝑻𝑻𝑻𝑻𝟐𝟐 𝒎𝒎 / ] ) As shown in Table 7, the total number of calculated EDUs is 338.11. For rate design purposes, the number of EDUs was reduced by 3% to equal 327.96 to account for contingency, unknowns, and customer variances. Concurrently with the rate study, the City conducted an audit of parcels to update its sewer billing records. Some parcels were found to be abandoned or vacant. Other parcels changed landuse or added dwelling units. Moreover, it is proposed that sewer generation factors, EDU assignments, and resulting rates for many non-residential customers be tabulated based square feet of building size. Building size data was collected from Mendocino County tax records. As the new rates are implemented, it is possible that some customers may present the City with additional landuse information to request lower assignment of EDUs. The City may also need to calculate suballocations of EDUs to mixed use parcels such as parcels that contain a restaurant, retail shop, and apartment, for example. To account for potential additional updates to sewer billing records, a 3% contingency factor was applied to the rate calculation.
Table 8 presents the cost per EDU over the next five years. The sewer service fee revenue from Table 5 is divided by the number of EDUs from Table 7 and then divided by 12 to equal the monthly cost. In the first year of the rate plan (FY2026/27), the total rate revenue is proposed to increase from $286,900 (current) to $361,500 (proposed), an increase of 26%. Because the revenue requirement of $361,500 is divided by a smaller number of EDUs when compared to current (327.96 EDUs compared to 345.85 EDUs), the rate increase is 33%. The rate increases for subsequent years match the proposed % increases shown in Table 5.
11 Table 7: Proposed Sewer EDU Allocation
Allocation 58% 21% 21%
Customer Class Billing Unit Count
Gallons
per day Total Flow
BOD
(mg/l)
TSS
(mg/l)
EDUs per
billing unit
Total
EDUs
Residential Dwelling Units 187 90 16,830 200 200 1.00 187.00 Non-residential
Auto shop 1,000 sq ft 11.66 90 1,049 200 200 1.00 11.66 Church/meeting hall 1,000 sq ft 13.20 60 792 200 200 0.67 8.84 Coffee Shop (no grease trap) 1,000 sq ft 0.52 50 26 200 200 0.56 0.29 Medical Office 1,000 sq ft 5.23 90 471 200 200 1.00 5.23 Professional Office 1,000 sq ft 30.28 35 1,060 100 100 0.31 9.39 Restaurant 1,000 sq ft 26.21 150 3,931 350 350 2.19 57.39 Retail 1,000 sq ft 12.11 35 424 100 100 0.31 3.75
Theater 1,000 sq ft 6.52 50 326 250 250 0.61 3.97
Hotel per room 38 50 1,900 200 200 0.56 21.28
School
Arena Elementary per student 239 5 1,195 200 200 0.06 14.34 High Schools per student 139 7 973 200 200 0.08 11.12
Pacific Community (K-8) per student 64 5 320 200 200 0.06 3.84 29,296 338.11
Less 3% contingency 327.96
Table 8: Rate per EDU
Current
FY2025/26 FY2026/27 FY2027/28 FY2028/29 FY2029/30 FY2030/31 Increase % in Rate Revenue 26% 20% 15% 10% 5%
Rate Revenue Requirement $286,900 $361,500 $433,800 $498,900 $548,800 $576,200 EDUs 345.85 327.96 327.96 327.96 327.96 327.96
Monthly Rate ($/EDU) $69.12 $91.85 $110.23 $126.77 $139.45 $146.41 % Rate Increase 33% 20% 15% 10% 5%
12 5.2 Rate Design Considerations
In California, sewer rates can be designed in a variety of ways. Public agencies across the state bill customers fixed charges, volume or flow rates, or a combination of both. Unlike water service, sewer service is unmetered and most customers are served by 4” or 6” sewer laterals. Public agencies with flow rates typically estimate sewer flows based on metered winter water usage. During the winter it is assumed that 100% of water consumption flows into the sewer system and no water usage is attributable to outdoor irrigation. Agencies with sewer flow rates most often also serve as the water utility provider and have direct access to water billing data including: usage, meter status (active, inactive, locked off) and meter location. Such agencies can validate water usage data and ensure its accuracy.
The City of Point Arena provides sewer service and does not provide water service, which is provided by the Point Arena Water Works. The City does not have direct access to water consumption data. Due to this limitation, it is recommended that the City bill for sewer service based on industry standard flow estimates, observed general trends of the community, and observed trends of comparable communities such as the City of Fort Bragg, which is both a water and sewer purveyor. Customers within each class may have different flows such as a home occupied by one person versus a home occupied by a large family or a vacation home that is rarely occupied versus a home that is occupied year around. The proposed fixed sewer rates reflect the City’s fixed costs to maintain infrastructure and the capacity to serve each customer’s maximum flows at any time. It is proposed that any customer with an active water meter be billed the proposed sewer rates as an active water connection indicates that the customer could discharge into the sewer system.
5.3 Proposed 5-Year Rate Plan
The proposed five-year rate plan is provided in Table 9. As described in previous sections, the rates have been calculated in this study to produce rates that will be necessary to recover only the actual cost of sewer service per parcel under the proposed rates. The first rate change is proposed to take effect on July 1, 2026, with subsequent increases each July 1 through 2030. For any additional connections built out in the City, the rates for the sewer service fees will also apply to them. It is proposed that the City bill most non-residential customers based on the square footage of their building size using County tax records. Businesses such as restaurants have higher sewer flows on a square foot basis when compared to low flow businesses such as offices or retail shops. Hotels are proposed to be billed based on the number of hotel rooms and schools are proposed to be billed based on the number of students. 13 Table 9: Proposed 5-Year Rate Plan
CURRENT PROPOSED
Customer Class Billing Unit Monthly Rate Billing Unit Jul 1, 2026 Jul 1, 2027 Jul 1, 2028 Jul 1, 2029 Jul 1, 2030 Residential Dwelling Unit $69.12 Dwelling Unit $91.85 $110.23 $126.77 $139.45 $146.41 Non-residential
Auto shop
Current non-residential rates
vary based on land use
1,000 sq ft $91.85 $110.23 $126.77 $139.45 $146.41
Church/meeting hall 1,000 sq ft $61.54 $73.85 $84.94 $93.43 $98.09 Coffee Shop (no grease trap) 1,000 sq ft $51.44 $61.73 $70.99 $78.09 $81.99 Medical Office 1,000 sq ft $91.85 $110.23 $126.77 $139.45 $146.41 Professional Office 1,000 sq ft $28.47 $34.17 $39.30 $43.23 $45.39 Restaurant 1,000 sq ft $201.15 $241.40 $277.63 $305.40 $320.64 Retail 1,000 sq ft $28.47 $34.17 $39.30 $43.23 $45.39
Theater 1,000 sq ft $56.03 $67.24 $77.33 $85.06 $89.31
Hotel per room $51.44 $61.73 $70.99 $78.09 $81.99
Elementary School per student $5.51 $6.61 $7.61 $8.37 $8.78 High School per student $7.35 $8.82 $10.14 $11.16 $11.71 14 5.4 Bill Impacts
Table 10 provides bill impacts for single family residential customers. Under the proposed rates, the monthly sewer bill for a single family residential customer will increase from $69.12 to $91.85, an increase of $22.73. Figure 2 compares the City’s current and proposed average single family residential bill with those of surrounding agencies. The City’s current rates are on the low end of agencies surveyed and will move towards the middle of surveyed agencies following the proposed rate adjustment.
Although sewer rates are billed annually through the tax roll, monthly rates are shown in the survey for comparison purposes.
Table 10: Single Family Residential Bill Impacts
Current Jul 1, 2026 Jul 1, 2027 Jul 1, 2028 Jul 1, 2029 Jul 1, 2030 Residential Monthly Bill $69.12 $91.85 $110.23 $126.77 $139.45 $146.41 $ Change $22.73 $18.38 $16.54 $12.68 $6.96
% Change 33% 20% 15% 10% 5%
Figure 2: Monthly Sewer Bill Survey
$61 $65 $69
$83 $86 $91 $92 $96 $97
$118
$151
$207
$0
$50
$100
$150
$200
$250
Single Family Residential Monthly Sewer Bill Survey
(fixed rates or 90 gallons per day of flow)
1 City of Point Arena
PO Box 67 Point Arena, CA 95468
(707) 882-2122
NOTICE OF PUBLIC HEARING REGARDING PROPOSED
ADJUSTMENTS TO SEWER RATES UNDER PROPOSITION 218
June 16, 2026 at 6:00 pm
at 451 School Street, Point Arena, CA 95468
CUSTOMER OUTREACH MEETING TO DISCUSS THE PROPOSED RATE ADJUSTMENT May 27, 2026 at 5:30 pm
at 451 School Street, Point Arena, CA 95468
AVISO DE AUDIENCIA PÚBLICA RELATIVA A LOS AJUSTES PROPUESTOS A LAS TARIFAS DE ALCANTARILLADO EN VIRTUD DE LA PROPOSICIÓN 218 Para consultar la traducción de este aviso al español, visite la siguiente página:
https://pointarena.ca.gov/
You are receiving this notice as a resident receiving sewer (wastewater) service from the City of Point Arena (City). The City Council will hold a public hearing on June 16, 2026 to hear public input and to consider and potentially approve sewer rate changes for the next five years.
Background
The City of Point Arena provides sewer service to about 155 active connections including homes, businesses, and other non-residential land use types. The City’s Sewer Fund is self-supported from rate revenues and does not receive tax revenues. Customers are billed annually through the Mendocino County tax roll. The City last increased sewer rates in 2021. Point Arena is pursuing cost savings for residents wherever possible and has secured a grant of $841,000 to conduct sewer pipeline improvements. As part of the funding package, the City is required to complete a rate review to show that it can fund operations and maintenance costs that are not covered by the grant.
Why is an increase needed?
The City has not raised sewer rates in five years and is not able to fully fund the cost of service resulting in a deficit. To continue to provide service, the Sewer Fund has borrowed about $66,000 from other City funds that it is required to pay back. Rate increases are needed to reverse the deficit to fully fund operating costs, pay back the amount borrowed, and to fund infrastructure improvements that are not covered by grants such as pond dredging, a backhoe, and chlorine injector. Without a rate increase, the Sewer Fund will not be able to cover costs and make needed improvements. 2 What are the Proposed Rates?
Table 1 on the next page shows current and proposed wastewater rates over the next five years. Rates are calculated so that each customer pays charges that are proportional to his or her estimated flows and pollutants discharged into the sewer system. If adopted, the first adjustment for residential customers will consist of an increase from $69.12 (current) to $91.85 per month beginning July 1, 2026, an increase of $22.73 per month. The rates for other customer groups are also proposed to increase.
How are the Rates Calculated?
It is proposed that the City bill most non-residential customers based on the square footage of their building size using County tax records. Businesses such as restaurants have higher sewer flows on a square foot basis when compared to low flow businesses such as offices or retail shops. Hotels are proposed to be billed based on the number of hotel rooms and schools are proposed to be billed based on the number of students. This method of billing is appropriate for the City as it is industry standard practice, the City does not have easy access to reliable water usage data, and it covers the City’s fixed cost of providing service to customers throughout the high and low tourist seasons.
Undeveloped (raw land) parcels will not be billed for sewer service. Parcels without active water service connections such as locked off water meters will not be billed for sewer service. If you would like to review your parcel’s status in the City’s billing records, please call (707) 882-2122.
What Happens if the Rate Increase is Not Approved?
If the proposed rate adjustments are not approved, the City will not have sufficient revenue to operate and maintain the wastewater system at required standards. This may result in continued and increasing financial deficits within the Sewer Fund and limit the City’s ability to complete critical repairs and improvements. Over time, this could lead to:
1. Deferred maintenance and deterioration of essential infrastructure
2. Increased risk of system failures or service disruptions
3. Potential violations of State wastewater regulations and permits
4. Exposure to regulatory enforcement actions, fines, or mandated corrective measures
5. Loss of eligibility for current or future grant funding The City’s wastewater system is a critical public health and environmental service. Maintaining compliance with regulatory requirements and ensuring reliable operation requires adequate and stable funding.
How can Residents Participate?
The proposed rate increases are governed by section 6 of Article XIII D of the California Constitution (Proposition 218), Government Code sections 53751 et seq. and 53759 et seq., and related laws. More information and the Sewer Rate Study Report are on the City’s website at https://pointarena.ca.gov/ or you can call (707) 882-2122. A Community Outreach meeting will be held to discuss the proposed rates on May 27 at 5:30 pm at 451 School Street, Point Arena, CA 95468 to hear public input and answer questions. The City Council will hold a public hearing on June 16, 2026, to receive public comment, including any written protests to the proposed rates, and potentially adopt rate increases. Page 4 provides information regarding how to submit a written protest.
3 Table 1: Current and Proposed Monthly Sewer Rates
CURRENT PROPOSED
Customer Class Billing Unit Rate Billing Unit 1-Jul-26 1-Jul-27 1-Jul-28 1-Jul-29 1-Jul-30 Residential Dwelling
Unit $69.12 Dwelling Unit $91.85 $110.23 $126.77 $139.45 $146.41 Non-residential
Auto shop
Current nonresidential rates vary
based on land use
1,000 sq ft $91.85 $110.23 $126.77 $139.45 $146.41
Church/meeting hall 1,000 sq ft $61.54 $73.85 $84.94 $93.43 $98.09 Coffee Shop (no grease trap) 1,000 sq ft $51.44 $61.73 $70.99 $78.09 $81.99 Medical /dental Office 1,000 sq ft $91.85 $110.23 $126.77 $139.45 $146.41 Professional Office, Fire Station 1,000 sq ft $28.47 $34.17 $39.30 $43.23 $45.39 Restaurant 1,000 sq ft $201.15 $241.40 $277.63 $305.40 $320.64 Retail 1,000 sq ft $28.47 $34.17 $39.30 $43.23 $45.39
Theater 1,000 sq ft $56.03 $67.24 $77.33 $85.06 $89.31
Hotel per room $51.44 $61.73 $70.99 $78.09 $81.99
Elementary School per student $5.51 $6.61 $7.61 $8.37 $8.78 High School per student $7.35 $8.82 $10.14 $11.16 $11.71 If you would like to confirm your property’s customer class or sewer charges with the City’s records, please call (707) 882-2122.
Rates will continue to be collected annually on the property tax bill. Governmental parcels and/or other parcels that do not receive a tax bill will be directly billed by the City for sewer service.
Please see the next page.
4 How do I file a protest?
Proposition 218 provides that “Property Related Fees” such as these proposed rates are subject to a “majority protest” process. Any property owner may submit a written protest of proposed rates; provided, however, that only one protest will be counted per property. If protests are filed on behalf of a majority of the properties subject to the rates, the City cannot adopt the proposed rates.
Every written protest MUST include ALL of the following to be counted:
1. A statement that it is a protest against the proposed wastewater rates;
2. Name of the property owner who is submitting the protest;
3. Identification of the assessor’s parcel number (APN) of the property for which the protest is made*; and
4. An original signature of the property owner who is submitting the protest.
Written protests may be submitted by:
1. Mail to: Prop 218 Protest, 451 School Street, Point Arena, CA 95468; or
2. In-person delivery during normal business hours to the same address; or
3. In-person at the public hearing, before the end of the public hearing. *service address can also be submitted to identify the parcel; the City requests that the APN be provided for ease of reviewing and tabulating protests.
Regardless of how the written protest is submitted, it must be received by the Clerk before the end of the public hearing to be held on June 16, 2026, beginning at 6:00 p.m. at 451 School Street, Point Arena, CA 95468. (Postmark dates will not be accepted.) To ensure protests are genuine, they will not be accepted by e‐mail or other electronic means. Please identify on the front of the envelope for any written protest, whether mailed or submitted in person to the City, that the enclosed protest is for the public hearing on the Proposed Wastewater Rate Increases. Oral comments at the public hearing will not qualify as formal protests unless accompanied by a written protest, but the City Council welcomes that input.
At the end of the public hearing, protests will be counted in public view. If protests are not submitted as to a majority of the properties subject to the fees, the City Council may adopt the proposed rates. The first rate change, if approved, will take effect on or after July 1st, 2026.
Pursuant to California Government Code 53759, a 120-day statute of limitations applies to any legal challenge to a new, increased, or extended fee. If you challenge this proposal in court, you may be limited to raising only those issues you, or someone else raised at the public hearing described in this notice, or in written correspondence delivered to the City Clerk at, or prior to, the public hearing.