2024 Water and Wastewater Rate Study
Santa Rosa Water – Public Hearing on Water, Recycled Water and Wastewater Rates
April 1, 2025
Jennifer Burke – Santa Rosa Water Director
Agenda
1) Project Objectives and General Rate Setting
2) Water and Wastewater Rate Recommendations
3) Value of Water Campaign
4) Prop 218 Procedures
5) Recommendation
6) Protest Hearing
2 3
Rate Setting Objectives
Legal compliance
Financial sufficiency and sustainability
Minimize rate increases
Public understanding
Affordability
Rate Study Overview
Compare the revenues of the water, wastewater,
and regional utilities to their expenses in multi-year financial plans to determine the overall level of
annual rate adjustments
Proportionately allocate revenue requirements
between the various customer classes based on
service and demand requirements
Design water and wastewater rates to recover
the revenue requirement from each customer
class and meet other rate setting objectives
Revenue Requirements
Cost-of-Service
Rate Design
4 Water and Wastewater Rate Study
Recommendations
5 Summary of Recommended
Water/Wastewater Rate Adjustments
6 Baseline Water Rate
Adjustments 2
Wastewater Rates
Adjustment
Change in a Typical Single
Family Utility Bill 3
July 2025 1 6.0% 5.0% 6.5%
July 2026 6.0% 5.0% 5.4%
July 2027 6.0% 5.0% 5.4%
July 2028 7.0% 5.0% 5.8%
July 2029 7.0% 5.0% 5.8%
3 Typical single family bill includes a 5/8" water meter, 7,000 gallons of monthly water use, and 4,500 gallons of wastewater.
2 The final adjustment to Water rates will be dictated by the pass-through of Sonoma Water wholesale water costs.
1 While the overall rate revenue adjustment for FY 2025/26 are reflected in the table above, actual changes to individual customers' utility bills may vary in FY 2025/26 due to adjustments to the rate structure.
Water
Financial Forecast & Proposed Rate Revenue Increases
7 Non Rate Revenue
Operating Expenses
Debt Service
Existing Rate Revenue
Cash Capital
Additional Rate Revenue
Debt Service
* Debt Coverage Ratio measures whether the Santa Rosa Water can afford its debt obligations. Minimum levels are 1.2 and target levels are 1.5.
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Water Rate Revenue Increases: 6.0% 6.0% 6.0% 7.0% 7.0% 4.0% 4.0% 4.0% 4.0% 4.0% Debt Coverage Ratio: 7.95 4.86 5.35 5.91 6.62 6.56 6.87 7.40 6.82 46.76 50.85 Capital Appropriations: $9.5M $15.5M $16.0M $16.5M $18.0M $20.0M $23.0M $26.0M $28.0M $31.0M $34.0M Proposed Forecast
$0M
$20M
$40M
$60M
$80M
$100M
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 $0M
$20M
$40M Ending Fund Balance Target Reserve Levels Minimum Reserve Levels 8 Water Cost Allocation Principles
Customer costs
Assigned to each customer on an equal basis
Capacity costs
Assigned to each customer based on meter size
Commodity costs
Assigned to each customer based on usage
• Tiered water usage rates based on differential water
supply and water conservation costs
Customer Costs
2.1%
Capacity Costs
23.7%
General Commodity Costs
32.1%
Sonoma Water
Purchases
38.9%
Groundwater Costs
0.6%
Water Conservation
2.6%
Water
Fixed vs Variable Revenue
9 Fixed Revenue
(25.8%)
Usage Revenue
(74.2%)
Recommended
FY 2025/26
Water Rate
Schedule
10 * This schedule no longer includes special rate for single family or duplex accounts with no outdoor usage Current July 2025
Water Usage Rates ($/TGAL) $ %
Single Family Residential & Duplex
Tier 1 Use up to Sewer Cap 1 $6.61 $7.21 $0.60 9.1%
Tier 2 Above Sewer Cap $7.49 $8.43 $0.94 12.6%
Multi-Family, Commercial, Industrial, and Institutional All water use $6.98 $7.66 $0.68 9.7%
Irrigation (potable water) 2
Tier 1 Use up to 125% of water budget $6.72 $7.33 $0.61 9.1% Tier 2 Over 125% of water budget $8.32 $9.36 $1.04 12.5% Irrigation (recycled water) 2
Tier 1 Use up to 125% of water budget $6.38 $6.96 $0.58 9.1% Tier 2 Over 125% of water budget $8.32 $9.36 $1.04 12.5% Monthly Service Charges (Potable Water)
5/8" & 3/4" meters $15.55 $15.38 ($0.17) -1.1%
1" meter $34.90 $35.78 $0.88 2.5%
1 1/2" meter $67.15 $69.78 $2.63 3.9%
2" meter $105.87 $110.58 $4.71 4.4%
3" meter $196.18 $205.78 $9.60 4.9%
4" meter $325.22 $341.78 $16.56 5.1%
6" meter $647.80 $681.78 $33.98 5.2%
Monthly Service Charges (Recycled Water)
5/8" & 3/4" meters $13.99 $13.84 ($0.15) -1.1%
1" meter $31.41 $32.20 $0.79 2.5%
1 1/2" meter $60.43 $62.80 $2.37 3.9%
2" meter $95.28 $99.52 $4.24 4.5%
3" meter $176.57 $185.20 $8.63 4.9%
4" meter $292.70 $307.60 $14.90 5.1%
6" meter $583.02 $613.60 $30.58 5.2%
Change
Notes:
1 The Sewer Cap is calculated for each customer based on the average billing period water use during November through March.
2 The landscape water budget varies for each customer each billing period and is determined using the site's square footage for the types of plants and the evapotranspiration rate for the billing period.
Proposed SCWA Pass-Through Provision
11 • All Usage Rates increase based on the proposed schedule… • … however, a portion of the Usage Rates will be adjusted based on actual changes in wholesale water costs
• Adjustments occur each July, following Sonoma Water rate action (with 30-day notice provided to customers)
Example Calculation of SCWA Pass-Through Provision
12 Santa Rosa Water Rate Increase
Proposed 2027 Change: 6.00% Example Change: 10.0%
Current
Rates
Current
Santa Rosa
Costs
Current
SCWA Costs
Santa Rosa
Rate
Adjustment
SCWA
Adjustment
Final Usage
Rates Change
Water Usage Rates ($/TGAL)
Single Family
Tier 1 $7.21 $3.36 $3.85 $0.20 $0.39 $7.80 8.2%
Tier 2 $8.43 $4.01 $4.42 $0.24 $0.44 $9.11 8.1%
Commercial/Industrial/Multifamily
All Water Use $7.66 $3.60 $4.06 $0.22 $0.41 $8.28 8.1%
Irrigation (potable)
Tier 1 $7.33 $3.34 $3.99 $0.20 $0.40 $7.93 8.2%
Tier 2 $9.36 $4.95 $4.41 $0.30 $0.44 $10.10 7.9%
Irrigation (recycled)
Tier 1 $6.96 $3.17 $3.79 $0.19 $0.38 $7.53 8.2%
Tier 2 $9.36 $4.95 $4.41 $0.30 $0.44 $10.10 7.9%
(No change to service charges due to changes in SCWA costs) Notes:
1 Rates charged by SCWA for water from the Santa Rosa Aqueduct. Rates for the upcoming fiscal year are typically adopted in April of each year.
SCWA Santa Rosa Aqueduct Rate Change 1
Local Wastewater
Financial Forecast & Proposed Rate Revenue Increases
13 Non Rate Revenue
Reg. Operating & Capital
Debt Service
Existing Rate Revenue
Local Cash Capital
Additional Rate Revenue
Debt Service (Local & Reg.)
* Debt Coverage Ratio measures whether Santa Rosa Water can afford its debt obligations. Minimum levels are 1.2 and target level s are 1.5.
Local Operating Exp.
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Wastewater Rate Increases: 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 3.0% 3.0% Combined Debt Coverage Ratio: 5.19 5.26 5.50 5.75 6.02 6.42 8.24 4.58 5.03 4.44 4.65 Local WW CIP: $3.3M $14.3M $14.7M $15.1M $18.0M $21.0M $25.0M $29.0M $34.0M $37.0M $42.0M Regional Cash CIP: $7.8M $8.5M $9.2M $9.9M $10.6M $11.3M $12.0M $12.7M $13.4M $14.2M $14.9M Debt Proceeds: $35.0M
Recommended Projected
$0M
$20M
$40M
$60M
$80M
$100M
$120M
$140M
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 $0M
$20M
$40M
$60M Ending Fund Balance Target Reserve Levels Minimum Reserve Levels 14 Wastewater Cost Allocation Principles
Customer costs
Assigned to each customer on an equal basis
Capacity costs
Assigned to each customer based on meter size
Wastewater treatment costs
Assigned to sewer usage rates based on flow and strength Wastewater
Fixed vs Variable Revenue
15 Fixed Revenue
(30.2%)
Usage Revenue
(69.8%)
Recommended
FY 2025/26
Wastewater
Rate
Schedule
16 Current July 2025
Wastewater Usage Rates ($/TGAL) 1
$ %
Single Family and Multi-Family 2
$16.04 $16.86 $0.82 5.1%
Commercial, Industrial, and Institutional
Low Strength $13.18 $13.87 $0.69 5.2%
Standard Strength $16.04 $16.86 $0.82 5.1%
Medium Strength $17.88 $18.77 $0.89 5.0%
High Strength $22.30 $23.39 $1.09 4.9%
Monthly Service Charges
Single Family $27.65 $29.77 $2.12 7.7%
Multi-Family, Commercial, Industrial, Institutional
5/8" & 3/4" meters $27.65 $29.77 $2.12 7.7%
1" meter $63.83 $69.80 $5.97 9.4%
1 1/2" meter $124.12 $136.53 $12.41 10.0%
2" meter $196.47 $216.60 $20.13 10.2%
3" meter $365.28 $403.42 $38.14 10.4%
4" meter $606.46 $670.32 $63.86 10.5%
6" meter $1,209.38 $1,337.56 $128.18 10.6%
Notes:
Change
2 Multifamily accounts include duplex, and triplex accounts. 1 Wastewater usage charge applies to the estimated wastewater generated. For single-family residential accounts and multi-family accounts that don't have a separate irrigation meter for landscaping the esimated wastewater is based on the lower of current water use or the Sewer Cap. The Sewer Cap is calculated for these residential accounts based on the average water use from complete billing periods within the months of November through March. For all accounts with separate irrigation meters (whether multifamily or non-residential) the wastewater generated is based on actual water usage during the billing period.
17 FY 2025/26 Bill Impact Analysis
Meter Water Use WW Use Bills With Current Water/WW Rates Change in Total Bill Size (TGAL) (TGAL) Water Wastewater Total Water Wastewater Total $ % Single Family Residential
Low Water Use 5/8" 4 4 $41.99 $91.81 $133.80 $44.22 $97.21 $141.43 $7.63 5.7% Median Water Use 5/8" 7 4.5 $64.02 $99.83 $163.85 $68.90 $105.64 $174.54 $10.69 6.5% High Water Use 5/8" 12 6 $100.15 $123.89 $224.04 $109.22 $130.93 $240.15 $16.11 7.2% Very High Water Use 5/8" 20 7 $159.19 $139.93 $299.12 $175.44 $147.79 $323.23 $24.11 8.1% Duplex 5/8" 8 6 $70.19 $123.89 $194.08 $75.50 $130.93 $206.43 $12.35 6.4% Small Apartment (4 DUs) 1" 15 12 $139.60 $256.31 $395.91 $150.68 $272.12 $422.80 $26.89 6.8% Large Apartment (24 DUs) 2" 80 80 $664.27 $1,479.67 $2,143.94 $723.38 $1,565.40 $2,288.78 $144.84 6.8% Very Lrg. Apart. (100 DUs) 4" 320 320 $2,558.82 $5,739.26 $8,298.08 $2,792.98 $6,065.52 $8,858.50 $560.42 6.8% Small Retail 5/8" 6 6 $57.43 $106.73 $164.16 $61.34 $112.99 $174.33 $10.17 6.2% Large Retail 2" 80 80 $664.27 $1,250.87 $1,915.14 $723.38 $1,326.20 $2,049.58 $134.44 7.0% Office Building 1 1/2" 40 40 $346.35 $651.32 $997.67 $376.18 $691.33 $1,067.51 $69.84 7.0% Car Wash 2" 60 60 $524.67 $987.27 $1,511.94 $570.18 $1,048.80 $1,618.98 $107.04 7.1% Mixed Comm. w/ Food 1" 35 35 $279.20 $844.33 $1,123.53 $303.88 $888.45 $1,192.33 $68.80 6.1% Hotel w/ Restaurant 3" 200 200 $1,592.18 $4,825.28 $6,417.46 $1,737.78 $5,081.42 $6,819.20 $401.74 6.3% Restaurant 1 1/2" 50 50 $416.15 $1,239.12 $1,655.27 $452.78 $1,306.03 $1,758.81 $103.54 6.3% Supermarket 2" 160 160 $1,222.67 $3,057.27 $4,279.94 $1,336.18 $3,219.80 $4,555.98 $276.04 6.4% Mortuary 1" 20 20 $174.50 $509.83 $684.33 $188.98 $537.60 $726.58 $42.25 6.2% Small Winery 1" 10 10 $104.70 $286.83 $391.53 $112.38 $303.70 $416.08 $24.55 6.3% Sm. Irrig. (Wtr Budg.=18 tg) 1" 20 18 $172.50 (na) $172.50 $186.44 (na) $186.44 $13.94 8.1% Lrg. Irrig. (Wtr. Budg.=250 tg) 4" 300 250 $2,421.22 (na) $2,421.22 $2,540.78 (na) $2,540.78 $119.56 4.9% Bills With Proposed Water/WW Rates
Comparison to Other Local Agencies – Combined
for single family homes with ¾” meter, 7,000 gallons of water usage and 4,500 gallons of winter water usage
18 Summary of Recommended
Water/Wastewater Rate Adjustments
19 Baseline Water Rate
Adjustments 2
Wastewater Rates
Adjustment
Change in a Typical Single
Family Utility Bill 3
July 2025 1 6.0% 5.0% 6.5%
July 2026 6.0% 5.0% 5.4%
July 2027 6.0% 5.0% 5.4%
July 2028 7.0% 5.0% 5.8%
July 2029 7.0% 5.0% 5.8%
3 Typical single family bill includes a 5/8" water meter, 7,000 gallons of monthly water use, and 4,500 gallons of wastewater.
2 The final adjustment to Water rates will be dictated by the pass-through of Sonoma Water wholesale water costs.
1 While the overall rate revenue adjustment for FY 2025/26 are reflected in the table above, actual changes to individual customers' utility bills may vary in FY 2025/26 due to adjustments to the rate structure.
Capital Project Delivery
20 Proposed Capital Delivery Program
21 • Two current Master Professional Services
Agreements for Project Management
• Allow for additional project delivery while rate update process is underway
• Issue Project Management RFP Prepared and
issued after rate public hearing
• Issue Design Services RFP for package of projects
early FY25-26
• Deliver projects during FY26-27 and FY27-28
• Prepare next cycle during FY27-28 at increased
scale
Value of Water Campaign
22 23
Value of Water Campaign
Outreach Plan:
• May – Nov. 2024: Value of Water
Service and the Need to Invest
• Dec. – July 2025: Proposed Water
Rates, Prop 218 Noticing, and
Adopted Rate Schedule
Advertising:
• srcity.org/ValueOfWater
• City Connections eNewsletter
• QuenchCA Campaign
• Water Bill Messaging
• Digital, Print, and Radio
• Social Media
24 Value of Water Campaign
Digital Campaign
using Google Ads for
Sept. 2024 – March 2025
• 2.48M Impressions
• 50.8K Clicks to
srcity.org/ValueOfWater
Social Media Campaign
May 2024 – March 2025
• 110K Impressions
• 4K Engagement/Link Clicks
Prop 218 Procedures
25 26
Legal Requirements
for Setting Water Rates In California
Proposition 218 (Article XIIID, Section 6 of California Constitution) • Revenues shall not exceed funds required to provide service; nor used for another purpose
• Amount shall not exceed the proportional cost of the service attributable to the parcel
• Service must be actually used or immediately available • Approval process includes 45-day notice, public hearing, and written majority protest. Does not require a voting process (unlike taxes).
New Legislation Related to Prop 218
• SB 323 (2022) - Establishes a 120-day statue of limitations for challenging adoption of water or sewer service charges
• Language was included in Prop 218 notice
• AB 2257 (2025) - Requires would-be challengers to “exhaust administrative remedies” prior to filing a lawsuit
• Objections were considered in the previous Council item Amendments to City Code Title 14
• Rates and Charges for potable and recycled water and City maintained meters on private systems previously adopted by ordinance
• Rates and Charges for sewer previously adopted resolution • City Charter provides for water and sewer rates and charges to be set by resolution of the City Council
• Recommend setting both water and sewer rates and charges by resolution • It is recommended by the Board of Public Utilities and Santa Rosa Water that the City Council:
• 1) after conducting a protest hearing pursuant to Proposition 218, by resolution, approve 5 years of water, recycled water and wastewater fixed and usage charge rate increases to go into effect on July 1 of each year, 2025-2029; and • 2) introduce an ordinance amending Title 14 of the Santa Rosa City Code by amending Chapter 14-04 and 14-08 to allow fixed monthly service charges, potable and recycled water service and delivery charges, and charges for City maintained meters on private systems to be established by resolution of the City Council as prescribed by the City Charter and amend Chapter 14-08 to establish potable and recycled water rates and charges policy, rules and standards. • Open Public Hearing
Recommendation