Santa Monica residents face steep water bill increases over the next five years under a proposal the City Council will consider at a public hearing Tuesday, with rates set to jump 20% in the first year alone.
The council will vote on a five-year rate schedule that calls for water increases of 20% in fiscal year 2025-26, followed by 16%, 9%, 9% and 6% in subsequent years through 2029-30. A separate wastewater rate proposal would increase sewer bills by 7% annually for three years, then 6% for the final two years.
For the average single-family home, the water rate hike would mean paying an additional $29 every two months, or roughly $15 per month, each year over the five-year period. The typical homeowner would see sewer bills increase by $8 bi-monthly, or about $4 monthly.
Commercial customers would face larger increases, with average water bills rising $119 bi-monthly and sewer costs climbing $31 every two months.
"Rate adjustments are needed to invest in system reliability and resiliency as well as keeping pace with escalating costs," staff wrote in the council report.
The city's water fund has hemorrhaged money over the past five years, experiencing an $18.5 million revenue shortfall due to the COVID-19 pandemic's impact on commercial water usage and climate-driven changes in consumption patterns. Severe drought conditions followed by extremely wet winters disrupted typical usage forecasts.
Meanwhile, construction and operational costs have soared beyond projections. Inflation in the water sector reached 6-16% after the pandemic, compared to about 4% before 2020, driven by supply chain shortages and rising material costs.
Despite the financial challenges, the city's Water Resources Division successfully completed major projects outlined in the 2018 Sustainable Water Master Plan, including the Olympic Well Field Restoration and Advanced Metering Infrastructure Project. Staff bridged funding gaps by securing a $10 million state grant and issuing a $78 million water revenue bond.
The proposed rate increases would fund critical infrastructure projects, including rehabilitation of the city's four aging water storage reservoirs that hold a combined 40 million gallons—roughly four days of the city's total water supply. The reservoirs range from 60 to over 100 years old and are essential for meeting peak daily demands and emergency fire needs.
The city also plans to replace its 60-year-old water operations center and water quality laboratory, described as "the brain of the City's water system" that monitors and controls the entire drinking water treatment and distribution network.
Water Resources Director Rick Valte said the rate structure includes a drought emergency provision that would be implemented if state conservation mandates are imposed. The city would also maintain its low-income assistance program, funded by the general fund rather than other ratepayers, benefiting approximately 360 customer accounts.
The wastewater fund faces similar pressures, with Santa Monica paying a proportionate share of operations and capital costs for the City of Los Angeles' Hyperion Treatment Plant, which typically accounts for 30-50% of the annual wastewater budget.
Both rate proposals comply with Proposition 218 requirements that utility charges not exceed the proportional cost of service. Property owners received notification notices in mid-April and can submit written protests before the hearing.
City Council will meet on Tuesday, June 10 at 5:30 p.m. at City Hall, 1685 Main St.