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Prop 218 - Rate Increase Process

What is Proposition 218?

In 1996, California voters adopted Proposition 218 (Prop 218), which added article XIII D to the state Constitution.  Local government agencies such as the San Lorenzo Valley Water District (District) must comply with Prop 218 when proposing new or increased water charges.  The agency must mail a notice of the proposed charges to its customers, including the amount or basis for calculating the water charges.  No sooner than 45 days after mailing the notice, the agency must hold a hearing at one of its public meetings and consider any comments made by members of the community.  The agency also must consider the number of protests submitted by property owners and water account holders.  If valid protests are submitted for a majority (50% + 1) of properties served by the District, then the District cannot adopt the proposed water charges.   

Below is a list of the District's historic and current rate studies:

2023 Rate Study

At the April 6, 2023 Board of Director's meeting, the Board awarded contract to Raftelis for a Rate Study and Cost of Service Analysis. The water and sewer rate study will address the District’s key issues and provide solutions that work best for the District and its customers. The primary objectives and key deliverables of the study include the development of a:

  • 10-year financial plan that sufficiently funds operating, debt service, and capital program costs
  • Water and sewer rate structure that funds the District’s investments and repairs of its infrastructure, equitably allocates costs between customer groups, and enhances equity and customer understanding
  • Capital financing plan to fund required infrastructure maintenance and upgrades based on the 2021 Water Master Plan and one-time costs to repair damage from the CZU Wildfire and 2022-2023 winter storms
  • Water and sewer rate study report that clearly and comprehensively explains the rate study process to ensure that the study aligns with Proposition 218 requirements
  • Final water and sewer financial plan and rate model that the District can use as a robust planning, communication, and decision-making tool now and in the future

Additional information can be found here.

2017 Water Rate Increase

In 2017, the District adopted a water rate increase District-wide.  The rate schedule adopted in 2017 is still in effect. 

CZU Wildfire Recovery Surcharge

The District was severely impacted by the CZU Lightning Complex Wildfires (Wildfire). The entire District was under mandatory evacuation during the Wildfire. The District’s water system sustained approximately $20 million in damage, most significantly to raw water supply lines and storage tanks.  The damage was extensive and also impacted water treatment systems, pumps, water quality monitoring equipment, and long-distance water transmission pipeline.

The District anticipates receiving partial financial assistance through the Federal Emergency Management Agency (FEMA) to help cover the cost of emergency response, recovery, and permanent repairs. The District will be responsible to pay all of these costs (and other CZU Wildfire costs) up front and will submit eligible project costs for FEMA reimbursement, upon completion. The total net cost to the District after FEMA reimbursement is estimated to be about $5 million.

This estimated $5 million is an unplanned cost for which the District’s Board of Directors (Board) adopted a Wildfire Recovery Surcharge (Surcharge) on August 5, 2021. The Surcharge is added to each water customer’s bill for monthly water service.  It adds $9.67/month to most residential customers’ water bills.  The amount of the monthly Surcharge increases for larger water meters.  Without the Surcharge, Wildfire expenses will continue to deplete the District’s reserves and pull funds away from other critical infrastructure projects needed throughout the District.

The Surcharge will last for about 5 years.  It will automatically terminate once $5 million is collected by the District.  It could end earlier if the Board determines that the District’s new Wildfire costs will be less than the estimated $5 million.  

The Board has directed all Surcharge revenues received by the District will be tracked and maintained in a restricted fund or account from which only CZU Wildfire expenses will be payable.

For additional information, please see the FAQ, or call SLVWD at (831) 338-2153.

 

     

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