West Basin advances $7.6M standby charge for recycled water debt amid settlement caps

West Basin advances $7.6M standby charge for recycled water debt amid settlement capsThe California district will maintain capped property charges for FY 2026-27 to support its water recycling infrastructure, adhering to a 2022 legal settlement that mandates a phased reduction of the fees.

The standby charge is projected to generate $7.6 million to fund debt service for West Basin's water recycling treatment plants and 100-mile pipeline network.

Rates are capped by the 2022 Rastegar v. West Basin settlement, limiting single-family residential charges to $19.20 per parcel and non-residential to $96.00.

The Board of Directors will hold a public hearing on June 22, 2026, to formally adopt the resolution.

Recycled water sales for May 2026 reached 3,204 acre-feet, tracking 192 acre-feet ahead of budget.

The Finance & Administration Committee of the West Basin Municipal Water District (WBMWD) recommended advancing the fiscal year 2026-27 standby charge on June 16, securing a critical funding mechanism for the district's water recycling program. The charge is projected to generate approximately $7.6 million in revenue, which will be used to partially fund debt service obligations for capital improvements. Eligible assets supported by the charge include a 5-million-gallon-per-day (MGD) satellite nitrification facility, an 8.2 MGD nitrification and microfiltration/reverse osmosis plant, and an approximately 100-mile pipeline distribution network. However, the district's revenue generation remains strictly constrained by an April 2022 settlement agreement in the class-action lawsuit Rastegar v. West Basin. The settlement mandates a phased reduction and eventual elimination of the standby charge by June 30, 2030. For FY 2026-27, the capped rates remain unchanged from the previous year. Single-family and duplex properties will be charged a maximum of $19.20 per parcel, multi-family properties are capped at $12.80 per dwelling unit, and non-residential parcels will pay $96.00 per acre. Pursuant to the settlement, properties within the City of West Hollywood are entirely exempt from the charge, as their phase-out period expired in 2024. Chief Financial Officer Wendy O'Kelley confirmed during the meeting that the rates and projected revenue mirror the current fiscal year. The district has already mailed notifications to eligible property owners regarding low-water use reductions and exemptions for undevelopable land, with applications due by July 6 to allow time to remove them from the tax roll. The Board of Directors is scheduled to hold a public hearing on June 22, 2026, to formally adopt the resolution imposing the charge. Separately, the committee reviewed the district's monthly financial reports, noting $100.6 million in total cash and investments. Staff also reported strong performance in the district's recycled water program, with May sales reaching 3,204 acre-feet—192 acre-feet ahead of budget and 483 acre-feet higher than the same period last year.