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ADOPT A RESOLUTION TO AUTHORIZE A PUBLIC HEARING TO CONSIDER ADJUSTMENTS TO STORMWATER RATES AND CHARGES AND AUTHORIZING AND DIRECTING THE CITY MANAGER TO MAIL THE REQUIRED PUBLIC HEARING NOTICE
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution to:
1. Authorize a public hearing to be held on March 31, 2026, to consider adjustments to the City’s stormwater rates and charges; and
2. Authorize and direct 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. The public hearing shall be held at least 45 days after the notice of the public hearing has been mailed.
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) includes the Water, Wastewater, and Stormwater utilities that are supported by user fees and regulated for the protection of public health and the environment. The Stormwater Utility operates 77 pump stations, over 600 miles of pipeline, and 22,500 drain inlets that move stormwater from streets to local basins and waterways. Regular maintenance prevents flooding, and the utility also manages compliance with the National Pollutant Elimination System storm-sewer permit, including monitoring and public outreach to protect Delta water quality.
The proposed actions would implement the Council Water Committee’s recommendation to begin the notice and public hearing process required under Article XIII D of the California Constitution (Proposition 218) for consideration of the proposed stormwater rates and charges. These actions will notify stormwater customers and affected property owners of the proposed rates and explain how to submit written protests before the close of the public hearing.
DISCUSSION
Background
The Stormwater Utility was first established in 1991 in response to the Porter Cologne Clean Water Act (CWA). The CWA governs water quality regulation in California and was established to protect the beneficial uses of water and water quality including surface water bodies, groundwater, and wetlands.
The stormwater rate structure is based on the estimated impervious area of a property such as roofs, pavement, and other hard surfaces. It is measured using Equivalent Residential Units (ERUs). Under this system, all residential dwelling units, including single-family homes, multi-family units, and apartments, are each assessed as one ERU and charged a flat fee. Non-residential customers are charged based on the total number of ERUs assigned to their parcel.
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 discharge requirements for stormwater, program management responsibilities and expenditures 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 requires 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.
Present Situation
The Stormwater Utility has expanded extensively since the approval of the stormwater fee in 1992. The stormwater rate set more than 30 years ago is insufficient to fund the maintenance and project improvements necessary to sustain an aging system and meet State and Federal regulatory compliance requirements.
The 2023 Stormwater Master Plan (SWMP) was adopted by Council in March 2023. The SWMP updated the 2008 Conceptual Storm Drain Master Plan in accordance with 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 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 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 Stormwater Utility’s 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.
To determine the appropriate level of revenue for the utility, HDR completed the Draft Stormwater Rate Study (Attachment A) to evaluate potential adjustments to stormwater rates between FY 2024-25 and FY 2028-29. Three analyses were used to address the adequacy and equity of the proposed utility rates including:
• The revenue requirement analysis, which compares the revenues to the expenses of the utility to determine the overall rate adjustment required and establish the cost basis of the rates.
• The cost-of-service analysis, which allocates the revenue requirement of the utility to the various customer classes of service in a proportional manner.
• The rate design analysis, which considers both the level and structure of the rate design to collect the necessary amount of revenue as outlined in the prior two analyses.
The proposed stormwater rates were developed based on a detailed analysis to comply with Proposition 218. Under this law, stormwater rates cannot exceed the cost of providing the service. The proposed rates are based on the rate study, are consistent with the City’s goals, cost-based, and equitably distributed among all customer types.
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.
If adopted by the City Council, the proposed resolution will authorize a public hearing to consider the proposed stormwater rates and charges. A public hearing notice will be mailed to all Stockton Stormwater Utility customers, and to the record owners of property upon which the proposed rates and charges are recommended. Although both billed customers and property owners will receive notice, only one protest per parcel will be counted.
At the close of the public hearing on March 31, 2026, the City Council will review all written protests. If fifty percent plus one or more protest, the rate adjustment cannot proceed. If fewer than fifty percent plus one customers or property owners submit valid protests, the City Council may proceed with Proposition 218 process. The City would mail ballots to all affected customers, who can vote to approve or reject the proposed rate adjustments. At the public hearing on June 9, 2026, if most of returned ballots support the proposed stormwater rate adjustments, the City Council may formally adopt them.
The proposed stormwater rates and charges for each customer class and the effective dates are shown in the residential and non-residential tables below:
|
Residential Charges (Per Dwelling Unit) |
|
FY 2027 |
FY 2028 |
FY 2029 |
FY 2030 |
FY 2031 |
|
|
Present Rates |
Proposed Rates |
Proposed Rates |
Proposed Rates |
Proposed Rates |
Proposed Rates |
|
Single-Family & Condo (City) |
$2.10 |
$3.85 |
$5.60 |
$6.85 |
$7.85 |
$8.10 |
|
Multi-Family (City) |
$2.10 |
$3.85 |
$5.60 |
$6.85 |
$7.85 |
$8.10 |
|
Multi-Family (Non-City) |
$2.10 |
$3.85 |
$5.60 |
$6.85 |
$7.85 |
$8.10 |
|
Apartments (City) |
$2.10 |
$3.85 |
$5.60 |
$6.85 |
$7.85 |
$8.10 |
|
Apartments (Non-City) |
$2.10 |
$3.85 |
$5.60 |
$6.85 |
$7.85 |
$8.10 |
|
Non-Residential Charges (Per Dwelling Unit) |
|
FY 2025 |
FY 2026 |
FY 2027 |
FY 2028 |
FY 2029 |
|
|
Present Rates |
Proposed Rates |
Proposed Rates |
Proposed Rates |
Proposed Rates |
Proposed Rates |
|
Commercial (90% Density Factor) |
$2.10 |
$3.85 |
$5.60 |
$6.85 |
$7.85 |
$8.10 |
|
Institutional (62% Density Factor) |
$2.10 |
$3.85 |
$5.60 |
$6.85 |
$7.85 |
$8.10 |
|
Industrial (79% Density Factor) |
$2.10 |
$3.85 |
$5.60 |
$6.85 |
$7.85 |
$8.10 |
Along with mailing the official public hearing notice, the public outreach team will take several steps to actively inform and engage the community. Staff will host a community meeting-held no sooner than 45 days after the notice is mailed-to walk community members through the proposed stormwater rate adjustments.
The meeting will be recorded and posted on the City’s website for anyone who cannot attend. In addition, the team will launch an online open house in January 2026, available 24/7, where community members can learn more about Stockton’s stormwater system and easily reach the team through a dedicated phone line, email, and Ask Stockton. These efforts will help ensure residents have multiple convenient ways to get information and ask questions.
FINANCIAL SUMMARY
There are sufficient funds available in the Stormwater Utility Outreach Division accounts for postage, special services and reprographics (6517-000-630006-620-000-00-65-000-000, 6517-000-630007-620-000-00-65-000-000, 6517-000-630010-620-000-00-65-000-000) for the related printing and postage fees to mail the notice and ballots for the public hearings.
The existing stormwater rate set in 1992 no longer reflects inflation or the increasing costs of providing all services. The funding shortfall will completely deplete the Stormwater Utility’s reserves to levels that will soon fall below policy requirements and threaten its ability to meet ongoing operations and maintenance needs. If stormwater rates are not adjusted, the City will eventually have to seek other funding sources to support the stormwater program and provide the necessary services to protect the public, property and the environment.
This action has no impact on the General Fund or any other unrestricted funds.
Attachment A - Draft Stormwater Rate Study Report