DATE: November 5, 2025
TO: Honorable Mayor and City Councilmembers
FROM: Water Utilities Department
TITLE: ADJUSTMENTS TO CUSTOMER RATES FOR WATER, RECYCLED WATER, AND WASTEWATER
RECOMMENDATION
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Staff recommends that the City Council adopt resolutions approving rate adjustments for calendar years 2026 and 2027 for water, recycled water and wastewater.
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BACKGROUND AND ANALYSIS
On October 1, 2025, the City Council held a public hearing to consider adjusting the rates customers are charged for Water, Recycled Water and Wastewater. The public hearing was closed, City Council deliberated, and the item was continued until November 5, 2025, to allow staff additional time to gather information in response to public comment and Council inquiries regarding the possibility of pursuing rate increases lower than initially recommended by staff. The staff report from that hearing is included as Attachment 2.
Staff believes that the initial rate increases presented on October 1 remain the most prudent option as the rates presented on that date would ensure that capital project delivery remains fully funded and without disruption to current and planned staffing levels. As noted later in this staff report, reducing the rate increases below the initially recommended levels will likely impact service delivery to the City's rate payers. However, in light of the inquiries received at the October 1 meeting, staff has revisited the financial models and developed an option for Council consideration that would halve the increases previously suggested for Year 1 of the two-year plan. Year 2 increases would remain as originally proposed. Under this revised option, the City-controlled rate increases would be reduced from 6% for water and 4% for wastewater to 3% for water and 2% for wastewater in Year 1, with 6% increases for water and 4% increases for wastewater in Year 2. The revised proposed water and wastewater rates are reflected in the resolutions included ...
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