AMENDED IN SENATE MAY 22, 2026
AMENDED IN ASSEMBLY MARCH 11, 2026
california legislature—2025–26 regular session
ASSEMBLY BILL No. 2180
Introduced by Assembly Member Ward
(Coauthors: Senators Arreguín, Becker, Blakespear, and Padilla) February 19, 2026
An act to add Section 53751.5 to the Go vernment Code, relating to local government finance.
legislative counsel’s digest
AB 2180, as amended, Ward. Local government: Proposition 218 Omnibus Implementation Act: proportional cost of service.
The California Constitution specifies v arious requirements with respect to the le vying of assessments and property-related fees and charges by a local agency. As part of those requirements, the California Constitution mandates that such fees or char ges that are e xtended, imposed, or increased satisfy certain requirements, including, b ut not limited to, that the amount of the fee or charge imposed upon any parcel or person as an incident of property o wnership not e xceed the proportional cost of the service attributable to the parcel.
Existing law, known as the Proposition 218 Omnibus Implementation Act (act), prescribes specific procedures and parameters for local jurisdictions to comply with these requirements and, among other things, authorizes an agenc y pro viding w ater, w astewater, se wer, or refuse collection services to adopt a schedule of fees or char ges authorizing automatic adjustments that pass through increases in wholesale charges
97 for water, sewage treatment, or w astewater treatment or adjustments for inflation under certain circumstances.
This bill w ould authorize a local go vernment to demonstrate the proportional cost of the service attributable to the parcel by any method that reasonably allocates the ascertainable cost of providing service to all parcels, if substantiated as pro vided. The bill w ould, ho wever, provide that for water or sewer service fee or charge impositions, a local government is not required to provide an exact measure of the cost of the service at each parcel and may instead impose uniform or tiered rates to parcel or customer classes that are defined based on common characteristics indicative of likely water or sewer use. The bill would provide that the proportional cost of service within each tier of w ater service may be substantiated by using any reasonable basis for allocating costs attrib uted to the tier , as described, and w ould pro vide a local government discretion to determine the costs allocated to each tier as long as the rate for each tier does not e xceed the proportional cost of service reasonably allocated to parcels subject to that tier. The bill would specify that its provisions do not apply to fees for water connections or sewer connections, or capacity charges, as specified.
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
line 1 SECTION 1. Section 53751.5 is added to the Government line 2 Code, to read:
line 3 53751.5. (a) For any fee or charge adopted under Section 6 of line 4 Article XIII D of the California Constitution, “the proportional line 5 cost of the service attributable to the parcel” may be demonstrated line 6 by any method that reasonably allocates the ascertainable cost of line 7 providing service to all parcels. That allocation shall be line 8 substantiated by historic, existing, estimated, or projected data that line 9 reasonably captures the cost of the service to be provided. line 10 (b) Notwithstanding subdivision (a), when imposing a fee or line 11 charge for w ater or se wer service, an agenc y is not required to line 12 provide an exact measure of the cost of the service at each parcel line 13 and an agenc y may impose uniform or tiered rates to parcel or line 14 customer classes that are defined based on common characteristics line 15 indicative of likely water or sewer use, including, but not limited line 16 to, the nature and size of impro vements to a parcel, land use, the 97 — 2 — AB 2180
line 1 nature or number of plumbing fixtures, meter size, or peak use line 2 characteristics.
line 3 (c) (1) When imposing a tiered rate for water service, an agency line 4 may substantiate the proportional cost of the service within each line 5 tier by using an y reasonable basis for allocating costs attrib uted line 6 to the tier, including, but not limited to, the following:
line 7 (A) The cost of water from various sources.
line 8 (B) Facilities operation, maintenance, or construction costs. line 9 (C) Contribution to systemwide peak demand projections. line 10 (D) Costs that an agency incurs as a result of the use of w ater line 11 at various tiers or to implement w ater conservation or demand line 12 management measures, or incremental costs, as that term is used line 13 in Chapter 3.4 (commencing with Section 370) of Di vision 1 of line 14 the Water Code.
line 15 (2) An agency is not required to have a cost-based, or any other, line 16 justification for establishing any tier breakpoint. For purposes of line 17 this paragraph, “tier breakpoint” means the point where a customer line 18 leaves one tier and enters another tier.
line 19 (3) An agency has discretion to determine the costs allocated line 20 to each tier, provided that the rate assigned to each tier does not line 21 exceed the proportional cost of service reasonably allocated to line 22 parcels subject to that tier.
line 23 (d) This section shall not apply to fees for water connections or line 24 sewer connections, or capacity charges, subject to Section 66013.
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