Stormwater Rate Study
Council Water Committee
April 10, 2025
Agenda Item No. 25-0437
Stormwater Fee Background
Current rate ($2.10/ERU) established in 1992
Commercial, Industrial and Institutional charged a calculated fee This fee was established to meet the National Pollutant Discharge Elimination System (NPDES) permit requirements, not Operations & Maintenance (O&M) Stormwater monitoring, site inspections, reporting
Since 1992, NPDES requirements have grown, the City has grown, and our infrastructure has aged
Current Rates
Residential
Based on equivalent residential units (ERUs).
Single family residential is equal to one ERU (2,347 square feet of impervious area).
Multi-family and apartments are charged for each dwelling unit
Current Rates - continued
Non-Residential
Commercial, Industrial and Institutional are based on a density of development factor, which results in the estimated amount of impervious surface area on a given parcel Commercial – 90%
Institutional – 62%
Industrial – 79%
The amount of impervious area is then divided by the average amount of impervious area per ERU to determine the number of ERUs for non-residential customers, which are then multiplied by the rate per ERU
Purpose of a Rate Study
Provide an adequate level of rate revenue to operate and maintain the City’s stormwater utility Develop cost-based and proportional stormwater rates to meet intent and requirement of Proposition 218 Based on stormwater billing units (ERUs)
Reflect prudent financial planning criteria
Prudent rate funding of capital
Meet target reserve balances
Developed using generally accepted methodologies tailored to the City’s system and customer characteristics
Proposition 218 – Establishing Cost Based Rates
Proposition 218 is a California constitutional amendment designed to protect taxpayers by limiting the methods by which local governments can create or increase taxes, fees and charges without taxpayer consent Proposition 218 is not prescriptive in defining a “cost-based” rate In part, Proposition 218 requires:
Fees shall not exceed the reasonable cost of providing the service Fees shall not exceed the proportional cost of providing the service Cost of service analysis results (unit costs) are the foundation of the proposed rates
Developing Cost-Based Stormwater Rates
Revenue Requirement Assumptions
Stormwater O&M expenses based on recent adopted budgets Projected based on annual inflationary factors
Capital Funding Plan based on City’s current stormwater Capital Improvement Plan (CIP) Target annual rate funding of capital
Target increasing rate funded capital annually to fund necessary capital improvement projects Annual debt service
No current debt service
Reserve minimums
Target: 6 months of O&M expenses
Cost of Service Assumptions
Provides the basis to meet Proposition 218 requirements Proportional distribution of costs between customer classes of service Customer classes reviewed and current rate schedules were maintained Level of rates were adjusted based on cost-of-service results Revenue requirement distributed on a cost per equivalent residential unit:
Cost divided by total number of ERUs
Cost of service average unit costs provide basis for proposed rate designs
Next Steps
Finalize technical analysis
Present findings and proposed rates
WAG/CWC presentations
City Council briefing
Set Public Hearing
Adoption/Implementation Process
Hold Protest Hearing
If >50% protest, cannot move forward
If <50% protest, proceed to next step
Hold Ballot Hearing
Review / count ballots
The City Council may adopt rates if a majority of returned votes are affirmative