CITY COUNCIL REGULAR MEETING AGENDA PACKET 7-21-26

Page 1 of 10 Item #11 CITY COUNCIL AGENDA REPORT July 21, 2026 Public Works - Utilities Division TITLE: ACCEPT THE FINAL SEWER RATE STUDY REPORT AND AUTHORIZE PROPOSITION 218 NOTICING FOR SEWER RATE CHANGES SUMMARY In September 2024, the City contracted with Water Resources Economics, LLC (WRE) to perform a comprehensive sewer rate study to establish cost-based, fair, and legally defensible rates and connection fees that support the long-term financial sustainability of the City's sewer program. The study evaluates a four-year financial plan for fiscal year (FY) 2026/27 through 2029/30 to determine revenue needs, conduct a cost-of-service analysis, develop four-year sewer rate schedules for calendar years 2027 through 2030, and update sewer connection fees for 2027 that will be adjusted annually by the consumer price index (CPI). The 2026 Sewer Rate Study report presented here documents the proposed rate development process and demonstrates the nexus between the City's costs and the rates charged to customers. The proposed four-year sewer rate and connection fee schedules are included in the 2026 Sewer Rate Study report. Under Proposition 218, the City must notify all property owners or customers of record of proposed changes to sewer rates and hold a public hearing before adopting those rates. If a majority of customers submit written protests, the proposed rate changes cannot be adopted. If a majority protest is not received, the City Council may adopt the proposed changes, but is not obligated to do so. Attached to this staff report is the proposed Proposition 218 notice, with rates effective January 2027. Although changes to connection fees are not subject to Proposition 218 requirements, the attached notice includes these proposed fees for informational purposes. Approval of this item will initiate the public review process required under Proposition 218. The next steps include issuing the Proposition 218 notice in September 2026, followed by a public review period from September through November 2026, with a public hearing scheduled for November 17, 2026 to consider adoption of the proposed rates and connection fees. If approved, the updated rates and connection fees will take effect on January 1, 2027. RECOMMENDATION 1. Accept the 2026 Sewer Rate Study Report; and 2. Authorize Proposition 218 noticing for sewer rate changes. BACKGROUND The City of Pleasanton owns and operates a sewer collection system comprising approximately 253 miles of gravity sewers, approximately 4.9 miles of force mains, eight siphons, 11 active pump stations, and approximately 21,000 service connections. The average Page 137 of 923