RESOLUTION NO. 26-29
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN CLEMENTE, CALIFORNIA, MAKING FINDINGS FOLLOWING PROTEST HEARING, AND ADOPTING WATER RATES AND CHARGES, WITH ANNUAL ADJUSTMENTS AND PASS-THROUGH RATES THROUGH JANUARY 1, 2030 WHEREAS, the City owns and operates approximately 230 miles of water lines, 15 reservoirs, 16 pump station and 56 pressure reducing stations; and WHEREAS, the City receives imported water from Metropolitan Water District from Northern California and the Colorado River Basin through its wholesaler Municipal Water District of Orange County; and WHEREAS, the City has local water resources from two wells and produces recycled water at the Water Reclamation Plant for irrigation purposes; and WHEREAS, the City provides water service meeting state and federal standards to approximately 17,600 service meters consisting of residential, multifamily, irrigation and commercial accounts; and WHEREAS, the City exercises its constitutional authority to establish, operate, and regulate a water service system, pursuant to California Constitution Article XI, section 7, and establish rates for providing those services to property owners and customers in accordance with San Clemente Municipal Code Chapter 13.04, subject to the requirements and limitations of California Constitution Article XIII D, Section 6 (a.k.a., “Proposition 218”); and WHEREAS, pursuant to the requirements of Proposition 218, prior to extending, imposing or increasing water rates (for a property-related service), the City must provide property owners notice at least 45 days before a public hearing regarding modifications to the water rates. The notice must contain an explanation of: (1) the amount of the propose rates, (2) the basis on which the rates are calculated, (3) the reason for the rate modifications, (4) the date, time and place of a public hearing to consider the rate modifications, and (5) the rights of property owners to submit written protests to the proposed rate modifications. The proposed rate modifications may not be imposed if, prior to the close of the public hearing, written protests are submitted by property owners or tenants representing a majority of the properties subject to the modified rates (“majority protest”); and WHEREAS, in order to evaluate the costs of providing service to City customers and maintain operation of the water system, the City Council hired Water Resources Economics, LLC on May 6, 2025 to conduct a cost-of-service study to evaluate the City’s costs of providing water services in comparison to water rate and other revenues; and WHEREAS, Water Resources Economics, LLC reviewed the City’s water finances, presented preliminary recommendations and received direction from the City Council on September 16, 2025; and WHEREAS, on October 7, 2025, the City Council adopted water rate setting procedures under Proposition 218 and Government Code sections 53750 through 53759.2 and 54354.5 to establish a process for property owner objections to proposed water fees; and WHEREAS, Water Resources Economics, LLC completed a cost-of-service study, as documented in the November 2025 Water Rate Study Final Report (“Water Rate Study”) that recommended changes in the rate structure, five-year rate adjustments, fixed and pass through of charges from the Municipal Water District of Orange County, and establishment of recycled water rates and demand manager rates in the event there is a required reduction in water use; and WHEREAS, on November 18, 2025, based on the Water Rate Study, the City Council directed staff to mail a Proposition 218 public hearing notice to all property owners served by City water, and that notice established a deadline to receive written objections by January 15, 2026 at 5:00 p.m., set a Public Hearing for February 3, 2026, at 5:30 p.m. to consider all timely written objections, and set a Public Hearing for February 17, 2026, at 5:30 p.m. to conduct a protest hearing under Proposition 218 and to consider proposed adjustments to and adoption of water rates and service charges; and WHEREAS, those Proposition 218 public hearing notices were mailed to all property owners receiving City water services (including tenants who are directly liable to pay water rates) on December 1, 2025, a minimum of 45 days prior to the requirement for objections to be received by the City on January 15, 2026 at 5:00 p.m.; and WHEREAS, the City Council conducted a duly noticed public objection hearing on February 3, 2026, to consider all written communications related to the proposed update to water rates that were received by the City prior to the January 15 deadline, as well as the responses to those communications prepared by City staff, and the City Council determined no such written communications met the definition of a written objection, and determined no clarifications, further review or reduction or abandonment of the proposed water rates, fees and charges were warranted in accordance with Government Code sections 53759.1 and 53759.2; and WHEREAS, the City Council conducted a duly noticed protest hearing on February 17, 2026, to consider all written protests and hear all oral comments, determine whether or not a majority protest was made and to consider setting rates in accordance with the Proposition 218 Notice.
NOW, THEREFORE, the City Council of the City of San Clemente does hereby find, determine and resolve as follows:
SECTION 1. The above recitations are true and correct and fully incorporated herein.
SECTION 2. The City Council determines that, at the time of closing the protest hearing, out of the total number of 26,397 parcels served by City water, the City had not received written protests from a majority of those parcels; and, therefore, there was no majority protest to the adoption of updated water rates as set forth in this resolution.
SECTION 3. The City Council hereby adopts the water rates set forth on Exhibit “A,” attached hereto and incorporated herein fully by reference (“Water Rates”). The City Council determines that the Water Rates have been established in accordance with the requirements of Proposition 218. At the corresponding effective dates identified in this resolution, the Water Rates hereby supersede and replace the previously adopted water rates that were effective as of January 1, 2022, as identified in San Clemente Municipal Code section 13.04.220. The Water Rates shall be implemented in accordance with the following paragraphs of this Section 3:
A. Effective Date of Water Rate Adjustments. The Water Rates identified on Exhibit “A” under columns labeled “Effective 3/1/2026” shall be effective on March 1, 2026. Thereafter, water rates set forth on Exhibit “A” in each column respectively labeled: 1/1/2027 through 1/1/2030 shall be effective on the date that is the later of: (1) January 1 of the year identified on each respective column, or (2) thirty days after the date that written notice of the adjusted water rates is mailed to customers in accordance with Government Code Section 53756(d). The Finance Director is directed to mail the written notice to each customer not less than 30 days before the effective date of each of the annual adjustments, including an identification of the effective date of the adjustment.
B. Pass-Through Water Rates. In addition to the annual adjustment to water rates identified in Section 3(A) of this Resolution, the City shall provide written notice of any annual adjustment based on a pass-through of increased costs of wholesale water from Metropolitan Water District of Orange County (“MWDOC”). The City shall calculate the amount of the pass-through rate in accordance with Rate Study Section 4.3, including Tables 4-1 and 4-14. The Finance Director is directed to mail the written notice to each customer not less than 30 days before the effective date of each of the annual adjustments, including an identification of the effective date of the adjustment.
C. Fixed Water Rates. Each customer to whom the City has issued a water meter shall pay a fixed rate based on the size of the water meter, at the rates identified on Exhibit “A,” TABLES 1 and 2. The Fixed Water Meter Rate shall include the City Portion (TABLE 1) and the MWDOC portion (TABLE 2), with the MWDOC portion subject to adjustment based on pass-through costs in accordance with Section 3(B) of this Resolution. Each year, the updated annual MWDOC Total Fixed Charge shall replace the amount identified in Rate Study Table 4-1, and the corresponding unit cost per water meter size shall be calculated in accordance with Rate Study Section 4.3.
D. Consumption Water Rates. Each customer to whom the City has issued a water meter shall pay a consumption water rate per “ccf” (100 cubic feet), as identified on Exhibit “A,” TABLE 4. The consumption rates are subject to adjustment based on pass-through costs in accordance with Section 3(B) of this Resolution. Each year, the updated per ccf cost from MWDOC will replace the projected MWDOC Supply Unit Cost shown in Table 4-14 of the Water Rate Study Report (shown on Exhibit “A,” TABLE 3) for 2027 through 2030, which will be added to the City Delivery Cost to result in a corresponding recalculation of the per ccf charge to All Customer Classes.
E. Recycled Water Rates. Each customer to whom the City has issued an irrigation water meter connected to the City’s non-potable recycled water system shall also pay the recycled water monthly fixed water service charge (identified on Exhibit “A,” TABLE 5) as well as the recycled water consumption rate per ccf (identified on Exhibit “A,” TABLE 6).
F. Demand Management Rates. In addition to the water rates identified in paragraphs A through E, above, each customer to whom the City has issued a water meter shall pay the Demand Management Rates (per ccf) identified on Exhibit “A,” TABLE 7. The Demand Management Rates shall only be in effect when the City Council has adopted a resolution declaring a water shortage emergency in accordance with the City’s Urban Water Management Plan. The amount of the Demand Management Rates shall be based on the relevant shortage level (Level 1 through Level 6) as identified in the water shortage emergency resolution.
SECTION 5. This resolution shall be effective immediately.
SECTION 6. The City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions.
PASSED AND ADOPTED this _____ day of February, 2026.
ATTEST:
___________________________ __________________________
City Clerk of the City of Rick Loeffler, Mayor of the
San Clemente, California City of San Clemente, California STATE OF CALIFORNIA )
COUNTY OF ORANGE ) §
CITY OF SAN CLEMENTE )
I, LAURA CAMPAGNOLO, City Clerk of the City of San Clemente, California, do hereby certify that Resolution No. 26-29 was adopted at a regular meeting of the City Council of the City of San Clemente held on the _______ day of February, 2026, by the following vote:
AYES:
NOES:
ABSENT:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Clemente, California, this _____ day of _____________, ______. __________________________
CITY CLERK of the City of
San Clemente, California
Approved as to form:
_____________________________
Elizabeth A. Mitchell, City Attorney
Resolution No. 26-29 Page 2
Attachment 1