Local government: Proposition 218 Omnibus Implementation Act: proportional cost of service

The law clarifies how local agencies may show that water, sewer, and other property-related fees do not exceed the proportional cost of service. It expressly permits class-based and tiered water and sewer rates without calculating an exact cost for every parcel.

What the law does ​

• Allows proportional service costs to be shown through any reasonable allocation of ascertainable costs among parcels, supported by historical, current, estimated, or projected data.
• Allows uniform or tiered water and sewer rates for parcel or customer classes based on characteristics indicating likely use, such as land use, property size, fixtures, meter size, or peak demand.
• Allows water-rate tiers to allocate costs using factors including water-source costs, facility costs, peak-demand contributions, conservation or demand-management costs, and incremental costs.
• Does not require a cost-based justification for where a water-rate tier begins or ends, but requires each tier's rate to stay within its reasonably allocated proportional cost of service.
• Excludes water or sewer connection fees and capacity charges from these rules.

Who it affects ​

• Cities, counties, special districts, and other local agencies that impose property-related service fees.
• Water and sewer customers and property owners.