1 City Council
Meeting
Item #6: RTC 26-465
Public Hearing: Action on
Resolutions Approving
Water, Sewer, and Recycled
Water Amended Rates to be
Effective July 1, 2026
June 9, 2026
Agenda
1. Rate Setting Timeline
2. Proposed Rates
3. Utilities Overview
4. Water Sources 2025
5. Water Capital Improvement
Projects
6. Sewer CIP Improvement
Projects (CIP)
7. Proposed Rates
8. Average Residential Water and
Sewer Bills
9. Rates Pass-Through
10. Water and Sewer Rates
Comparison
11. Utility Rate Assistance
Programs
12. Recommendations
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2 Item 6
2 Rate Setting Timeline
• April 25, 2026 – Proposition 218
Notice Arrived in Mailboxes
• May 7, 12, and 18 – Council
Briefings
• June 9, 2026 – Rate Hearing
• July 1, 2026 – If Approved by
Council, Rates Become Effective
3 Proposed Rates
• Food/Kindred Products: 33%
• Restaurants: 31%
• Industrial Chemicals: 29%
• Metal Plating: -17%
• Electrical/Electronic Equipment: -10%
• Churches: -7%
4 • Water: 12.2%
• Sewer:
– Single Family: 12%
– Multi-Family: 10%
– Commercial: -17% to 33%
• Recycled Water: 11.4%
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3 Utilities Overview
• Water
– ~27,000 connections, 335 miles of mains, 21 active groundwater wells, and 7 storage tanks (28 million gallons of storage)
• Sewer
– ~27,000 connections, 288 miles of mains, 7 pump stations, and City is 20% co-0wner of Regional Wastewater Facility (RWF) with San José • Recycled Water
– 350 connections, 33 miles of mains, and recycled water accounts for approx. 20% of total water sales during the summer months 5 Water Sources 2025
*
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Water CIP
• $5.57 million budgeted for FY 26/27 and FY 27/28
• City’s largest expenditures the next 2 years
include:
– Water Main Replacement Projects
• Annually City crews replace ~10,000 ft. of main
– Well Improvement Projects
• Well rehabilitation and new disinfection systems
• The CIP budget has been carefully managed to
minimize the need for rate increases beyond 12.2%
City Crews Replacing Water Main
7 Water CIP
• Key projects include:
– Dam Seismic Retrofits and Improvements
($3.4B)
– Rinconada Water Treatment Plant
Improvements ($720M)
– Pure Water Silicon Valley ($2.6B)
Pure Water Silicon Valley
• Santa Clara Valley Water District’s 5-year infrastructure investment plan • Focuses on reliable water supplies, improving environmental stewardship, and modernizing critical infrastructure
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Sewer CIP
• $30.33 million budgeted for FY 26/27
– $21.86 million is the City’s contribution to RWF
• $29.55 million budgeted for FY 27/28
– $23.43 million is the City’s contribution to RWF
• City key projects include:
– Condition Assessment includes pipe inspections
– System Improvements includes replacement of pipes
– Capacity Improvements includes upsizing of pipes
City Crews Repairing Sewer Pipe
9 Sewer CIP
• FY 26/27 rate impacts are primarily borne by
commercial costumers
• RWF key projects include:
– Aeration Basins Upgrades ($319M)
– Digester Facility Upgrades ($213M)
– Primary Clarifier Rehabilitation Phase 1 ($163M)
– Pump Station Improvements Phase 1 ($144M)
Digester Facilities Upgrades
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Proposed Rates
11 • The adopted water rates for the purchase of water includes the Operations and Maintenance (O&M) and CIP costs for each supplier • Santa Clara Valley Water (Valley Water)
– 9.1% rate increase for both treated surface water and groundwater sources • San Fransico Public Utilities Commission (SFPUC)
– 7.4% rate increase
Proposed Rate Changes
• Food/Kindred Products: 33%
• Restaurants: 31%
• Industrial Chemicals: 29%
• Metal Plating: -17%
• Electrical/Electronic Equipment: -10%
• Churches: -7%
12 • Water: 12.2%
• Sewer:
– Single Family: 12%
– Multi-Family: 10%
– Commercial: -17% to 33%
• Recycled Water: 11.4%
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7 Proposed Rates
• Commercial sewer rate increases explained
– RWF CIPs are the primary driver in the commercial rate increases – Customers are charged based on how much they discharge (flow) and how difficult that discharge is to treat (treatment)
– Flow (Conveyance): Is the amount of sewer discharged into the sewer system (more flow requires larger pipes, pumps, and infrastructure capacity) – Strength (Treatment): Is the concentration of pollutants in the sewer water, such as biochemical oxygen demand and total suspended solids 13 Proposed Rates
• Why Water and Sewer Rates Do Not Match the Consumer Price Index (CPI)?
– Water and sewer utilities are infrastructure-intensive services, and their costs do not increase at the same rate as the CPI
– CPI measures changes in the cost of common consumer goods and services – Utilities are primarily driven by infrastructure, regulatory, and construction- related costs, which increase faster than CPI
– Rate adjustments typically exceed CPI when needed to maintain the integrity and reliability of the water and sewer utility systems 14 13 14
8 Average Residential Water Bill
• Residents will see an increase of $14.40/month
– $118.68 to $133.08
– 12 HCF (8,976 gal) is considered a high-end user
– The best way to lower your bill is to conserve!
City Owned Well 15
Average Residential Sewer Bill
• Single Family Residents will see an increase of $6.90/month – $57.56 to $64.46
• Multi-Family Residents will see an increase of $5.11/month – $53.15 to $58.26
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Rates Pass-Through
• Water rate increase covers:
– Water purchases which account for 53.6% of the proposed rate increase – The remaining 46.4% covers the City’s O&M and CIP costs • Sewer rate increase covers
– Regional Waste Facility O&M and CIP costs which account for 70.1% of the proposed rate increase
– The remaining 29.9% covers the City’s O&M and CIP costs of the sewer collection system
17 Breakdown of Rates
$7 to Valley Water & SFPUC $3 to W&S
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Utility Rate Assistance Programs
• City Low Income Rate Assistance Program
(Water Rate Assistance Program)
– Funded by Water & Sewer Cell Tower Revenues
• Utility Low Income Rate Assistance (Help Your
Neighbor Program)
– Funded by customer utility bill donations
• Sacred Heart Community Services Assistance
Program
– Funded by Valley Water
19 Recommendations
• At the close of the Public Hearing, if the protests from property owners are not a majority:
– Adopt the Resolution Approving Water Rate Schedule 2026-01 and Recycled Water Rate Schedule 2026-02 for City Water Service Rates to be Effective July 1, 2026
– Adopt the Resolution Approving Sewer Rate Schedule S-26 for City Sewer Service Rates to be Effective July 1, 2026 20 19
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QUESTIONS?
21 Tap Water Versus Bottled Water
• Cost per gallon comparison
– City tap water cost 1.4 cents per gallon ($0.014 per gallon) – Bottled water cost an average wholesale price of $1.44 per gallon* • Regulatory Agencies
– Tap water is regulated by the US EPA and State Water Resources Control Board
– Bottled water is regulated by the US Food and Drug Administration • Tap water undergoes comprehensive monitoring, reporting, and public notification requirements 23
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12 Landscape Rebate Program
• Residential Landscape Conversion
Rebates
– Single-family and multifamily
residences under 5 units can receive
up to $5,000 per site
– Landscape conversion:
is converting turf to a vibrant
garden
24 Landscape Rebate Program
• Commercial Landscape Rebates (Commercial,
Industrial, Institutional, multifamily with 5
units or greater) can receive up to $110,000 per
site
– Landscape conversion: is converting turf to a
vibrant garden
– Lawn to mulch conversion: is replacing lawn
with 3 inches of mulch
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Landscape Rebate Program
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