Department of Finance
Reference: 2027 Rate & Fee Proposal
To: Mayor Gregory Mills and Members of City Council
Through: Michael P. Martinez, City Manager
Prepared By: Catrina Asher, Finance Director
Date Prepared: September 8, 2026
PURPOSE
To provide Council with information regarding proposed utility rate and impact fee updates to be included in the proposed 2027 Fee Resolution.
BACKGROUND
Staff reviews utility fees and impact fees annually and partners with consultants for rate and fee studies periodically to ensure rates and fees reasonably reflect the cost of service provided. All fees are included in the annual fee resolution proposed to City Council as part of the budget adoption process. This report will provide information on various types of fees, how they are set, and what the proposed rates are for 2027.
Impact Fees
Impact fees are charged on new development at the time of permit issuance and are used to expand City infrastructure to be able to serve that new development. Impact fees are very restricted and must be used on capital projects that expand service. They may not be used on operations, repairs & maintenance, or staffing.
Impact fees are set through rate studies that are conducted every 5-10 years, or sooner if there are significant changes to financial models. When proposing rates, staff uses the following philosophy:
Residential – Development pays its own way though impact fees. Therefore, impact fees are set at or near full cost recovery while also considering affordability.
Nonresidential – Development pays its own way through job creation and sales tax generation. Therefore, impact fees are set to incentivize development and may not be set with cost recovery as the goal.
Inflationary Impacts
Many impact fees are set to increase with inflation. This ensures that the fees continue to track similarly to the costs they are intended to cover and reduces the risk of large rate changes when a new rate study is completed in the future. ...
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