The Pleasanton City Council is expected to make a final decision Tuesday on whether to increase the city's water service rates, which city officials have said is long overdue to effectively operate the municipal system but vocal residents have argued is too steep and too muddled of a proposal.

Mayor Karla Brown told the Weekly last week that she is still weighing out public discourse against the increase and the necessity of raising the costs in order to properly fund the city's water enterprise fund. She said that while the city doesn't agree with the "handful of residents who are challenging the new rates using creative extrapolation," she remains open to hearing out residents' concerns.

"I have met with some of the residents and received emails from others," Brown said. "At this time, I have not decided on my vote for Sept. 19, and I will remain open minded as I continue to hear from our Pleasanton residents."

If approved at Tuesday's council meeting, the water rates would go up by 30% beginning Nov. 1, followed by another 20% increase beginning Jan. 1, 2025 and a 12% increase the following year, according to the Sept. 19 staff report. The proposed rate structure was advanced by the council in July with a 4-1 vote, with Vice Mayor Jack Balch in dissent, to initiate the public notification process ahead of final consideration two months later.

The city had previously looked at the prospect of raising water rates back in 2019, but the ensuing water rate study was paused due to the COVID-19 pandemic. Since then, city officials have said that three years of no rate increases have put the city in a difficult position of having to make up for a loss of funding in the city's water enterprise fund through these new hikes.

"While the sewer enterprise is adequately funded, funding for the water distribution system is inadequate which has necessitated the use of reserves to both operate the water system and make necessary infrastructure improvements to have the pressure and capacity to deliver sufficient water supply during peak demand periods," according to the staff report.

"Depletion of the water reserves is unsustainable for the operation of the enterprise fund, to the point of insolvency," the staff report added. "This situation is problematic because it creates operational risk when reserve funds are not available to do necessary repairs or larger projects and from a policy perspective because it does not meet the city's approved reserve target of 35%."

If approved on Tuesday, the rate increases would help accomplish several goals, according to the report.

Those goals, according to city officials, include executing immediate city infrastructure system upgrades, increasing funding for the water supply alternative project design work, increasing funding to purchase water from the Zone 7 Water Agency for the next couple of years, increasing staffing to help implement solutions for the water distribution system and restoring the water enterprise fund.

According to the staff report, the first proposed rate increase would raise the average homeowner's bimonthly bill by $33, which equates to an approximately 30% increase in the total water portion of the utility bill, or about a 13% increase to the overall utility bill.

After that, residents would see a $25 increase upon the second year and a $17 increase upon the third year, according to city staff.

"The city supports these rates as correct and necessary to meet the increasing expenses of our water enterprise fund, to address our aging water infrastructure, to help replace the lost revenue from lower water usage during the recent drought, to fund cost-of-living increases that have not fully covered actual increasing expenses for this fund, and to pay for our future water distribution infrastructure needs that were identified in our two-year capital improvement plan," Brown said.

This would also mark the first rate structure overhaul since 2011 -- according to the staff report, water rates have only been adjusted for inflation since 2011, except for 2017, 2020, 2021 and 2022 when there weren't any increases at all.

That all led to the water fund becoming unsustainable, which needs to be addressed in order to move forward with future water-related projects and operations in the city, according to city staff.

"This fund has been insufficiently funded for eight of the last 12 years, with no rate increases over four years," Brown said. "It is clearly time to adjust the rates and begin our capital improvement programs to sustain the system. We've fallen behind and are operating the water fund/program at a deficit."

But while most of the residents who have spoken at recent council meetings agree that increased water rates are necessary for future capital improvement projects, many have been voicing their concerns about how the city has communicated the information regarding the rates.

According to the staff report, the city has received 80 validated protests as of Sept. 8 in regards to the water rate increases. If the city garners enough written protests – a majority of property owners – by 5 p.m. on Tuesday, then the council will not be able to accept the rate increases as recommended by staff.

"Per the requirements of Proposition 218, if more than a majority of parcels receiving water services protest any proposed rate increase, the City Council may not move forward with implementing the increases," the staff report states. "A final number of protests will be reported at the City Council meeting, and if there is not a majority protest totaling 11,243, then the City Council may proceed with adopting the noticed rates."

Water ratepayers and property owners can either submit their written protests to the city clerk's office or they can bring their protests to the meeting during the public hearing portion of the item.

A recent petition on change.org, which cites just over 1,900 signatures as of Wednesday morning, has also been gaining traction as it claims that city officials have not done a good job communicating accurate information about their proposal.

About a dozen residents also recently spoke out during the Sept. 5 council meeting to voice those concerns.

"If the city came to me and said they need to increase my Pleasanton water charge by 300%, but here are the specific things it will buy and here's why we have to have those things, I could support it. I wouldn't be happy about it, but I could support it. But that's not what's happening," Pleasanton resident Jon Krueger told the council at last week's meeting during the non-agenda comment period.

"The city is not giving accurate figures, there's no specifics on what the money will go for and the whole thing is far from clear. In fact, it's completely confusing," he added.

A lot of the public's disappointment with the city's communication stemmed from a state-mandated public notice brochure that the city sent out a few weeks ago, which many said was very confusing to read and understand.

"This brochure is not worth the money you spent to print it and mail it," said longtime resident Vicki LaBarge as she ripped up a copy of the brochure during her opening remarks to the dais on Sept. 5.

"There's a total lack of transparency for the residents and ratepayers in this community," she added. "How can anyone make an informed decision when there's zero comparison to what someone is paying today?"

But according to the staff report, that level of detail was necessary and even required by law.

"As required by Proposition 218, the public hearing notice must disclose information at a detailed level, serving to highlight the complexity of a rate increase with multiple changes associated with fixed and variable costs further complicated by changes to Zone 7 charges," the report states.

And while Brown said that she and other council members have been meeting and speaking with several residents individually in order to understand some of their concerns, she said that "city staff members stand by the city's figures as true and accurate," and that the city's water rates will continue to be lower than other cities in the region.

"Pleasanton residents have only been paying $497 per year for eight units of water per month, which is almost half of the Livermore rate," Brown said. "After the rate increase, our water rates will be $658 per year for eight units/month. Even with the rate increase, Pleasanton water rates are still at the bottom of the chart."

The council meeting is set to start at 7 p.m. this Tuesday (Sept. 19) and will be held in the Remillard Conference Room at the city's Operations Services Center at 3333 Busch Road in Pleasanton. Read the full agenda here.

As part of the agenda item, the council will also consider whether to increase sewer service rates based on "inflation as defined by the consumer price index," effective Nov. 1.

Later in the meeting, the council will receive an update on the water supply alternatives study, including preliminary results indicating two new wells as the preferred project to address supply concerns due to PFAS contamination locally.