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Solana Beach
The city's current rate for single-family or equivalent dwellings will cover projected revenue requirements. File photo
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Solana Beach sewer rates will not increase despite city’s negative cash flow

SOLANA BEACH — Sewage service rates will remain the same for the next five years for the city of Solana Beach as voted by the Solana Beach City Council this week, but the city is projecting a negative cash flow by the fiscal year 2024 and will revisit a potential rate increase in the future.

The city currently has a rate of $682.31 per single-family household or equivalent dwelling unit and that rate is currently sufficient to cover projected revenue requirements as well as maintain reserves, according to the city.

However, by the fiscal year 2024, with projected increases in expenditures, the city projects a negative cash flow of around $54,000 at that time with an increase to about $235,000 and $432,000 in negative cash flow the following two fiscal years.

The consultants hired by the city, Raftelis Financial Consultants, did not recommend to city staff that a rate increase was necessary due to a loan repayment the city will be receiving through this time period which will help to offset the cash flow.

“It should be noted that the repayment of the loan will be completed in the fiscal year 2026 and this fund will be monitored continuously and at any point, should the actual results of the fund deviate materially from this plan then staff will address that deviation,” City Treasurer Ryan Smith said.

The concern is with the loan repayment coming to end, and the negative cash flow growing as it is projected to, that by the fiscal year 2027 the city will need to greatly increase rates.

“I’m a little worried based on what I’m seeing that if we go the last year or even the last two years with no rate increases, that we will have to do a seven or eight percent rate increase in an outlying year which would be a major hit,” Councilmember David Zito said. “I’d much rather spread that out over time.”

Any future increase will require another sewer rate study to be conducted by the city as any fee increase must be supported by a study that shows evidence that warrants an increase.

The recommendation presented to the council, which they ultimately agreed to unanimously, was to keep the rates at their current level for the next five fiscal years. Mayor Lesa Heebner posed the possibility of agreeing to increase the rates for only the next three years before revisiting.

“I’m actually OK just adopting the staff recommendation as approved as long as it’s brought back to us for an update in three years as to where we’re at,” Zito said. “If they can keep track of that over a three-year period. And I think they have to bring it back to us on an annual basis so as long as we’re looking at this chart every year with the current projected numbers and we can come in at a later date and fix this then I’m comfortable with it.”

As part of the rate study, the city has also updated its reserve sewer reserve policies to better support the operation and maintenance of the city’s sewer system.