Yuba City advances first water and wastewater rate hikes in a decade to fund $16M annual CIP

Yuba City advances first water and wastewater rate hikes in a decade to fund $16M annual CIPFacing depleted reserves and failing 1970s-era treatment equipment, the California municipality is advancing a Black & Veatch-designed financial plan to secure funding for critical infrastructure and regulatory compliance.

The City Council directed staff to initiate the Proposition 218 process for new rate schedules, ending a 10-year period without rate adjustments.

Water and wastewater capital improvement plans require approximately $8 million and $7.9 million annually, respectively, to rehabilitate aging pipelines and treatment facilities.

Wastewater debt service is projected to double from $3.4 million to $6.9 million by fiscal year 2031 to fund upcoming revenue bonds and State Revolving Fund (SRF) loans.

The proposed five-year schedule will raise single-family wastewater rates from $65.23 to $93.36 by 2030, while 1-inch water meter base rates will climb from $42.59 to $65.59.

Yuba City, California, is advancing its first water and wastewater rate increases since 2016, with the City Council directing staff on March 3 to finalize rate studies and initiate the state-mandated Proposition 218 protest process. Developed by Black & Veatch, the proposed five-year financial plans address a 45% regional inflation increase over the past decade, stricter surface water and NPDES permit requirements, and a backlog of deferred maintenance. Utilities Director Phil Marler warned the council that current revenues are failing to recover operational and capital costs, forcing the city to draw down reserves and heightening the risk of service disruptions. The city's infrastructure is showing significant signs of age. The water system, which treats up to 36 million gallons per day, relies on a treatment plant originally built in 1969. The utility requires approximately $8 million annually in capital improvements for treatment plant rehabilitation, pump station upgrades, and the replacement of 50-year-old distribution pipelines. Similarly, the wastewater system, anchored by a 1972 treatment facility, requires $7.9 million annually. Marler highlighted a recent emergency in January where a 1975 wastewater grid clarifier failed, underscoring the urgency of the capital infusion. To support these capital programs and maintain target reserves—including 90 days of operating expenses and 25% of the five-year average CIP—overall utility budgets will expand significantly. Water operations and maintenance (O&M) expenses are projected to grow from $13.9 million to $16.5 million by FY 2030. Wastewater O&M will increase from $16.1 million to $19 million by FY 2031, with wastewater debt service expected to double from $3.4 million to $6.9 million as the utility pursues new revenue bonds and State Revolving Fund (SRF) loans in FY 2028. Under the proposed schedule, single-family wastewater rates will increase from $65.23 to $93.36 by 2030, while base water rates for a 1-inch meter will rise from $42.59 to $65.59. Commodity water charges will also increase from $2.14 to $3.05 per hundred cubic feet (HCF). During the meeting, the council discussed the potential financial burden on large industrial users, who face proposed wastewater volume rate increases from $3,763.63 to $10,748.86 per million gallons. City Attorney Shannon Chaffin advised that the adopted rate study establishes a legal maximum cap for the next five years, granting the council flexibility to adopt lower, phased-in rates for specific customer classes if necessary. The council will formally vote to launch the 45-day Prop 218 public notice process on March 17.