1 Proposed Wastewater Services Rates for FYs 26-30
Public Hearing May 5, 2025
2 Rate Setting Timeline
Analyze
Capital
Needs
Spring 2024
Commission
Rate Study
Fall 2024
Finance
Committee
Meeting
1.22.2025
City Council
Meeting
3.3.2025
Sent Prop.
218 Notices
3.17.2025
Prop. 218
Notice
Period
March –
May 2025
Public
Hearing
5.5.2025
Rates
Effective
7.1.2025
3 Rate Study Objectives
Financial Sufficiency
• Fund all costs while maintaining prudent reserves
Legal Compliance (Prop. 218)
• Rates don’t exceed the cost of service
• Rates are proportional Prop. 218 states that a customer’s rates “must not generate revenues in excess of the
cost of service for which the fee is charged.”
Cal. Const., art. XIII D, § 6, subd. (b).
4 Financial Drivers for Increase
• Aging infrastructure & capital improvement needs
• Sewer system upgrades, repairs & replacements needed to maintain safe & reliable operations
• Approximately $55 million over the next 5 years
• Nutrient Optimization Project for new regulatory compliance $10M • Debt service
• Operating cost inflation
• Maintain Prudent Reserves
5 Proposed Rates
6 Summary
• The City has historically provided good financial stewardship, leaving the sewer enterprise fund in good shape.
• Rate increases are needed to support rising operating costs, debt service and capital needs.
• Updated commercial rate structure to reflect industry norms. • Proposed rates updated to reflect the cost of service to each customer class. 7