TO: Mayor and City Councilmembers
FROM: Robin Kampmann, City Engineer
SUBJECT:
title
A Resolution of the Red Bluff City Council Amending the Water and Sewer Rates for the City of Red Bluff pursuant to Proposition 218.
end
RECOMMENDED COUNCIL ACTION:
recommendation
That the City Council:
1) Conduct the Proposition 218 public hearing to receive public comments on the proposed water and sewer rate increases and receive any protest votes.
2) Adopt Resolution No. 30-2026, a resolution of the Red Bluff City Council amending the water and sewer rates for the City of Red Bluff pursuant to Proposition 218.
body
SUMMARY:
Staff seeks Council adoption of the attached Resolution approving the proposed water and sewer rates effective January 1, 2027, and thereafter as specified on January 1, 2028, January 1, 2029, January 1, 2030, and January 1, 2031. The City’s water and sewer utilities are supported entirely by user fees. The current rates no longer generate sufficient revenue to adequately fund ongoing operations, debt service obligations, capital improvements, and long-term system maintenance.
PREVIOUS COUNCIL ACTION:
The City Council adopted Ordinance 832 on February 1, 1997, establishing the sewer rates.
On May 20, 2008, the City Council approved an incremental increase of 5% to water consumption rates, beginning July 15, 2008. On June 2, 2009, the City Council postponed the increases to the water rates.
On August 7, 2010, the City Council directed Staff to postpone the CPI rate increase based on December 2008 and 2009 until FY2011/12, at which time staff will present the FY 2011/12 CPI rate increase to City Council.
On April 17, 2012, the City Council conducted a public hearing and directed staff to prepare the CPI rate increase for FY2012/13.
On July 21, 2026, the City Council directed staff to move forward with Scenario 3, a phased-in option, for the Water rate increase and Scenario 3, a cash-funded Low CIP option, for the Sewer rate increase.
On August 4, 2026 the City Council; 1) set the date of August 20, 2026, for mailing the public notice for Proposition 218; and 2) authorized LT Municipal Consultants (LTMC) to conduct the public notification process: and 3) held a Community Outreach Meeting for Proposition 218 on September 16, 2026, at the Red Bluff Community Center.
DISCUSSION:
The City of Red Bluff provides water and sewer service to a population of about 14,400 people via approximately 4,600 active water and sewer connections. Water and sewer services are funded entirely through monthly rates paid by customers. Water and sewer rates were last adjusted in July 2012 with a one-time increase. Prior to 2012, the water rates had not increased since 2008, and the sewer rates had not increased since they were established in 1997.
The City Council has the authority to approve rate changes when necessary to ensure the financial stability of the Water and Sewer Enterprise Funds. The rate change and rate study process is governed by Proposition 218, which was added to the California Constitution in 1996. All property-related fees, including water and sewer service fees, must meet Proposition 218’s requirements for calculating, documenting, and adopting fees. The proposed water and sewer rates will also be subject to a majority protest public hearing on October 6, 2026.
LT Municipal Consultants used projected operating costs and capital improvement plan projections to develop 5-year rate structures that would support the needs of each utility and maintain adequate debt coverage to qualify for future grants. Currently, the City is out of compliance with the rate covenant requirement associated with the California State Water Resources Control Board grants. All financial plan options include the minimum increases needed to meet debt service coverage requirements in the first year of the rate study period.
In addition to operating costs and debt service, the City must fund short- and long-term capital improvements necessary to keep the water and sewer systems operational and compliant with state requirements. The proposed water and sewer rate options would fund varying levels of capital improvements and offer different financing approaches, such as cash funding only or a combination of cash and loan proceeds.
The rate study also proposes rate structure adjustments to better comply with Proposition 218 requirements and recent court rulings.
Currently, water customers are charged a base fee by meter size with usage billed on a tiered system. It is proposed that tiered water usage be replaced with a uniform rate for all water usage.
Residential and Multifamily sewer customers are currently charged a flat monthly fee based on their residential type, and commercial customers are separated into three (3) classes: bakery, restaurant, and all others, with a base fee and allowable minimum usage and a use rate over the minimum usage for each class.
It is proposed that the sewer rate structure be simplified by grouping customers into categories based on typical usage and wastewater strength. Residential customers would be classified as single-family or multifamily. Commercial customers would be categorized as low-, medium-, or high-strength users based on business type and typical flow and pollutant characteristics. Under the proposed rates, residential sewer customers would continue to pay a fixed monthly fee. Commercial sewer customers would pay a base fee that includes the first 5,236 gallons of usage, with an excessive flow charge applied to usage above 5,236 gallons.
The proposed rates selected by the City Council in prior meetings include a phased-in option for the Water rate increase and a cash-funded Low Capital Improvement Plan (CIP) option for the Sewer rate increase summarized below:
Water Rates - Phased-in to Fund Half CIP:
• Rates fund $9.2M water CIP
• No debt
• Initial 1st year increase on average for a single-family residence is from $28 to $42 with consistent increases year 2 through year 5
• Will provide positive operating revenue in year 2 and positive net revenues in year 4
• Estimated ending fund balance after year 5 will be $2.64M
Sewer Rates - Cash Fund Lower CIP:
• Rates fund $8M sewer CIP
• Full repayment of the sewer fund deficit of $2.8M in approximately 10 years
• No new debt
• Initial 1st year increase on average for a single-family residence is from $34 to $86 with additional smaller increases in years 2 through 5 compared to Options 1 and 2
• Estimated ending fund balance after year 5 will be $3.78M
The attached presentation expands the selected scenarios showing the proposed rates for the next 5 years.
CITY FISCAL IMPACT:
There is no fiscal impact to the General Fund as a result of this action.
ATTACHMENTS:
1. Red Bluff Prop 218 Presentation_10.6.26
CITY COUNCIL RESOLUTION NO. 30-2026
A RESOLUTION OF THE RED BLUFF CITY COUNCIL AMENDING THE WATER AND SEWER RATES FOR THE CITY OF RED BLUFF PURSUANT TO PROPOSITION 218
WHEREAS, the City of Red Bluff Code of Ordinances provides for the implementation of water and sewer rates by resolution of the City Council; and
WHEREAS, the City contracted with the firm LT Municipal Consultants to review current water and sewer operational and capital needs, make recommendations on possible rate adjustments, and to prepare a report entitled “Water and Sewer Rate Study” dated August 18, 2026; and
WHEREAS, the City Council conducted study sessions reviewing the potential rates on July 21, 2026 and August 4, 2026; and
WHEREAS, a Community Outreach meeting was held on September 16, 2026, to discuss the Proposition 218 process and water and sewer rate increase; and
WHEREAS, the California Constitution, Article XIIID, Section 6 (Proposition 218) requires the City to hold a public hearing on any proposed water and sewer rates, and to mail written notice at least forty-five days prior to holding the public hearing; and
WHEREAS, in accordance with the requirements of Proposition 218 and Government Code section 53750 et seq., notice of the proposed water and sewer rates was mailed to all property owners and ratepayers of the City at the time the notice was given on August 20, 2026; and
WHEREAS, a public hearing to consider the proposed rates and all oral and written testimony and protests to such rates was held on this date, October 6, 2026, which is more than forty-five days after the notices were mailed; and
WHEREAS, in accordance with Proposition 218, the public notice provided instructions on how to file a written protest relative to the proposed water and sewer rates; and
WHEREAS, written protests to the proposed water and sewer rates were not presented by a majority of affected parcels; and
WHEREAS, the City Council determined the proposed water and sewer rates established in the water and sewer rate study are required to cover the cost of providing the various services, including but not limited to providing funds for operations, repair and maintenance, and to meet financial reserve needs, and to obtain funds for capital projects necessary to maintain service within existing service areas; and
WHEREAS, the City Council further determined the proposed rate schedules do not exceed the estimated amounts required to provide the services for which the rates are imposed, the revenues derived from the rates will not be used for any purpose other than that for which the charges are imposed, and the charge imposed upon each consumer will not exceed the proportional cost of the water and sewer service attributable to each parcel.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Red Bluff hereby approves the water and sewer rates, to become effective January 1, 2027; and thereafter as specified on January 1, 2028; January 1, 2029; January 1, 2030; and January 1, 2031, as set forth below in Exhibit “A” attached hereto.
NOW THEREFORE, BE IT RESOLVED ON OCTOBER 6, 2026, BY THE CITY COUNCIL OF THE CITY OF RED BLUFF:
MOTION:
SECOND:
AYES:
NOES:
ABSENT/NOT VOTING:
ATTEST: ___________________________
Mayor’s Signature
___________________________
Deputy City Clerk
EXHIBIT “A”
Current and Proposed Monthly Water Rates
Current and Proposed Monthly Sewer Rates
