Pleasanton residents can expect to see an increase in their water bill starting in January after the City Council voted to raise the rates over the next two years following a contentious discussion and an hour's worth of residents opposing the hikes Tuesday night.

While the decision to increase the rates by 30% for the average residential customer next year and by 12% in 2025 was not city staff's original recommendation of 62% in increases over the next three years, the council majority voted 3-2 to accept the modified alternative because not doing anything would hurt the city's ability to provide quality water.

"As the city manager said, nobody wants to be in the situation we're in right now to say there's a rate increase," Mayor Karla Brown said at the council meeting. "There's just not a lot of options. Bankrupting our Water Enterprise Fund is not a solution."

Councilmember Valerie Arkin, who dissented, said that while she did not necessarily agree with delaying the replenishment of the enterprise fund, she wanted the council to collaborate on a joint solution and mainly wanted to see the 30% increase be the same among all ratepayers, not just those who average using less.

"It's been transparent that an average single-family residence would be 30%. I think we need to be 30% across the board for all users. To me that's a little more fair," Arkin said. "I understand they're using more water, but ... users using more water, their 30% is going to be higher than somebody using less."

There hasn't been a water rate increase in Pleasanton since 2011, apart from increases based on the consumer price index in certain years. Back in 2019, the city was supposed to conduct a water rate study in order to begin the process of increasing its water rates, but the work was halted due to the pandemic. Staff also pointed out Tuesday that there was supposed to be an increase in 2017 that did not happen.

All of these years without overhauling the rates resulted in the city's Water Enterprise Fund reserves being depleted and the looming projection of a roughly $29 million deficit in the fund, according to city staff.

Norm Dorais, interim public works director, said that apart from replenishing the fund, the rate increases will help fund near-term essential water system upgrades, the water supply alternative project design work to construct two new wells, new positions in the public works department to help maintain the water distribution system and more importantly help purchase additional water from the Zone 7 Water Agency.

The city has had to -- and will continue to -- purchase additional water from Zone 7 as it works to address the PFAS in its groundwater wells, which typically provide 20% of the city's water supply before the dangerous contaminants were discovered in several of the wells a few years ago.

While the majority of the public who have spoken out during previous council meetings in the past months, who have taken part in recent community polls or who have spoken with council members and staff agree that something must be done to ensure that the Water Enterprise Fund does not go bankrupt and continues to help the city provide clean water, many have been critical of how the city is doing so with these now-approved, high-percentage rate hikes.

During Tuesday's debate, like the Sept. 19 meeting, residents detailed their grievances with how they felt the city was not transparent with the specific percent increases and how staff's original recommendation would have affected different ratepayers.

The council was actually poised to make a final decision to approve the original staff recommendation on Sept. 19 but because of the residents' concerns, the council decided to push pause on the decision so that staff could conduct more analysis.

Since then, Raftelis -- a water and utility consulting company that conducted a previous report to determine the water rates -- performed a sensitivity analysis that focused on replenishing the reserve in the near term while addressing ratepayers' concerns about the annual and compounded rate increases.

According to staff, that analysis led to the modified recommendation, which would prolong the city's goal of meeting its reserve target goal to a fourth year.

While staff also spent the last month updating its frequently asked questions page on its website regarding the water rates, one major development was that staff created a water rate calculator that allowed single-family homeowners to calculate what the rate increases would do to their particular situation.

That, however, only gave more fuel to residents on Tuesday who came with future water bill projections that they said were not fair.

"I'd like to thank staff for the water bill calculator. I ran our usage through it, and it found a mistake in my earlier estimate. When I told you last meeting, the increase would raise my rates 300% sorry, that was not accurate. The accurate number is 400%," Pleasanton resident Jon Krueger said.

Krueger said that his household uses the average amount of water a single-family residence uses every two months and that with the original staff recommendation, the increases were too high.

"That's a big ask. It needs a compelling reason, specifics and a plan and that has not been forthcoming," he said. "Stating that you have lots of needs is not a plan. Hiring three people is not a plan."

He also criticized the newly adopted two-year alternative saying it is only a minor reduction and that residents still have to bear the brunt of what many other residents said were years of the city overseeing the need to raise the rates.

"This is a massive rate increase without a plan, without a justification and without a credible search for alternatives. A slight reduction does not fix that," Krueger said.

The meeting room in the Operations Services Center, where the hearing was held with the council chambers under renovation, was so crowded that the fire marshal had to enforce the capacity limit, leading some residents to have to wait outside during the crisp night. City officials said no one was turned away from speaking, though they may not have been in the room the whole time.

After listening to dozens of residents bring up similar points of especially a 30% increase in the first year severely skyrocketing their water bills, Vice Mayor Jack Balch introduced a substitute motion to gradually increase the rates by 15% the first year and 15% the second year.

Even though City Manager Gerry Beaudin said anything under 30% the first year was not financially viable, Balch said a gradual increase and looking back at all the city's capital improvement projects -- particularly the proposed new skatepark at Ken Mercer Sports Park and the Century House renovation project -- would give city more time to review other long-term solutions to replenishing the water fund.

"I think we need to cut, immediately, discretionary funding for new amenities and use that money to stabilize the water fund," Balch said. "This problem did not start immediately and did not get caused immediately, and I can't believe we're thinking we're going to find a solution immediately."

That motion was seconded by Arkin but failed. Both Balch and Arkin voted no on the two-year rate increase that did pass by majority vote with Brown joined by councilmembers Jeff Nibert and Julie Testa.