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ADOPT A RESOLUTION DIRECTING THE SUBMISSION OF PROPOSITION 218 BALLOTS FOR CITY-OWNED PARCELS AND CASTING AFFIRMATIVE VOTES IN SUPPORT OF THE PROPOSED STORMWATER RATE ADJUSTMENTS
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RECOMMENDATION
It is recommended that the City Council adopt a resolution to:
1. Direct the submission of Proposition 218 ballots for parcels owned by the City of Stockton, consistent with the City’s rights as the record owner of those parcels under Article XIII D, Section 6 of the California Constitution (Proposition 218).
2. Direct that ballots for City-owned parcels be cast in favor of the proposed stormwater rate adjustments.
It is also recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of this resolution.
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Summary
The Municipal Utilities Department (MUD) Stormwater Utility operates 77 pump stations, over 600 miles of pipeline, and 22,500 drain inlets that convey precipitation from streets and other hard surfaces to flood basins and local waterways.
The Stormwater Utility rate set in 1992 no longer keeps pace with inflation. capital improvement demands or rising service costs. As a result, reserves will be depleted below required levels, threatening the utility’s ability to sustain ongoing operations and maintenance. If stormwater rates are not adjusted, the City will eventually have to seek other funding methods to support the stormwater program and provide the necessary services to protect the community, property and the environment.
If approved, the proposed actions would authorize the submission of Proposition 218 ballots for parcels owned by the City of Stockton, consistent with the City’s rights as the record owner. The ballots would be cast in favor of the proposed stormwater rate adjustments, ensuring that City-owned properties contribute to necessary system upgrades.
DISCUSSION
Background
The MUD Stormwater Utility was established in 1992 as a separate enterprise fund. Prior to this, the stormwater program functioned under the Wastewater Utility. With the establishment of state and federal discharge requirements for stormwater, program management responsibilities and continued capital improvement costs grew significantly, which created a need for a separate fund and rate. The stormwater service fee was approved by Council Resolution No. 91-0866 and implemented a $2.10 per month fee starting January 1992 for all residential dwelling units. The original stormwater fee of $2.10 was designed to fund the operation, maintenance, and administration of the utility’s FY 1991-92 appropriations.
In 1996, California voters approved Proposition 218, which required local agencies to follow strict public process to adjust property-related fees like water, sewer, and stormwater utility rates. In 2011, the most recent attempt to adjust stormwater fees was not approved by Stockton property owners.
In March 2023, by Resolution 2023-03-07-1501, the City Council adopted the 2023 Stormwater Master Plan (SWMP) prepared in support of the Envision Stockton 2040 General Plan Update. The SWMP included an updated stormwater infrastructure assessment, development of a computer model of the City's stormwater system, assessment of system deficiencies for existing and buildout conditions based on the 2040 General Plan Update and development of a Stormwater Capital Improvement Plan (CIP) with initial cost estimates. The model identified areas of concern and outlined 12 CIP projects ranging in cost from $4.5 million to $75 million, which formed the basis for the advancement of the current Stormwater Rate Study.
On August 22, 2023, the City Council adopted Resolution 2023-08-22-1214 authorizing a professional services contract with HDR Engineering, Inc. (HDR) to evaluate the MUD Stormwater Utility revenue requirements, prepare a cost-of-service analysis, and design rates that are proportionately distributed among the customer classes and customers within each class. Customer classes include residential (including single family), multi-family, apartments, commercial, institutional, and industrial.
On November 13, 2025, the Draft Stormwater Rate Study and proposed rate adjustments were presented to the Council Water Committee. The Council Water Committee approved forwarding the proposed stormwater rate adjustments to the City Council for consideration.
On January 27, 2026, the City Council adopted Resolution 2026-01-27-1601 authorizing a public hearing on March 31, 2026, to consider adjustments to the City’s stormwater rates and charges; and directing the City Manager to mail a notice of the public hearing to all City of Stockton Stormwater Utility customers and the record owners of property upon which the rates and charges are proposed.
On February 10, 2026, staff mailed the required Proposition 218 notice to property owners and stormwater utility customers explaining the proposed rate adjustments, the date and time of the public hearing, and the procedures for submitting written protests.
At the close of the public hearing, held on March 31, 2026, the City Council reviewed all written protests. Fewer than fifty (50) percent of property owners submitted valid written protests. Therefore, the City Council adopted Resolution 2026-03-31-1503 directing staff to mail ballots to all property owners within the stormwater service area. If a majority of returned ballots support the proposed adjustments at the public hearing on June 9, 2026, the City Council may adopt the new rate structure.
Present Situation
As the owner of substantial impervious surfaces-including roads, parking lots, infrastructure and rooftops-the City must pay its proportional share to the stormwater utility. Submitting ballots for City-owned parcels ensures the City participates in the election on the same basis as other property owners and that publicly owned property contributes equitably to the stormwater system. Investing in stormwater infrastructure improvements now is more cost-effective than addressing damage from future system failures and flooding. In addition, stable funding, addressed in the Stormwater Rate Study, is essential to maintain reliable flood protection services and regulatory compliance (Attachment A).
The MUD Stormwater Rate Outreach Team is conducting comprehensive outreach to inform the community about the proposed rate adjustments, including local community meetings, an online open house on the City’s website, a dedicated phone line to take calls from the public, and dedicated Ask Stockton topic to provide the community with ample opportunity to review information and offer input.
Staff recommend that the City Council approve the proposed actions to authorize submission of Proposition 218 ballots for City-owned parcels, consistent with the City’s rights as the record owner, and to cast those ballots in favor of the proposed stormwater rate adjustments, ensuring that City-owned properties contribute to necessary system improvements. If no action is taken, the City Council will have an opportunity at the subsequent Council meeting on June 9, 2026, to consider authorizing a different vote or directing that no ballot be submitted.
FINANCIAL SUMMARY
The stormwater rate, established in 1992, has not been adjusted to reflect inflation or the rising costs of providing basic operations, infrastructure and maintenance services.
The Stormwater Rate Study (Attachment A) indicates that, without additional revenue, the utility will face an estimated $5 million annual deficit beginning in Fiscal Year 2027-28, jeopardizing critical flood protection infrastructure. In addition, continued funding shortfalls are projected to deplete reserves below policy-required levels, threatening the utility’s ability to meet ongoing responsibilities. Absent a rate adjustment, reserves are expected to fall below policy thresholds, resulting in a growing structural deficit in the Stormwater Utility fund.
This action has no impact on the General Fund or any other unrestricted funds.
Attachment A - Final Stormwater Rate Study Report