Santa Rosa water and sewer rates are on track to rise by 3 percent over each of the next two years to fund higher water costs and major improvements to the city's wastewater treatment plant.
The increases received broad support Thursday from the Board of Public Utilities, which will make a formal recommendation to the City Council later this month.
The City Council isn't expected to vote on the increases until January, but it typically follows the recommendations of the powerful utilities board.
"I think nobody likes to have to recommend to our ratepayers that we need some more money," said board member Dick Dowd, who served on the budget subcommittee that recommended the increases. "On the other hand it is the responsibility of this board to provide a well-funded, structured utility department."
If approved, the increases would leave the average single family homeowner paying about $4.12 more per month next year, or $144.10, and $4.40 more per month in 2015, or $148.49.
The increases are necessary to keep up with the rising cost of labor, materials and energy; to pay for the higher cost of water charged by the Sonoma County Water Agency; and to fund several large capital improvement projects at the city's Llano Road treatment plant, officials said.
The higher rates are being recommended even though the department's financial reserves in the water account stand at $22 million, their highest point in more than a decade and well above the $8 million target.
That's because the department saw just how quickly a change in the economy and the weather can impact revenues, Utilities Director David Guhin said.
From 2007 to 2011, the department dipped into reserves to help it ride out sharply lower revenues, and the department wants a buffer to protect it against a repeat of that scenario, Guhin said.
The city plans to sell $40 million in bonds next year to fund a variety of upgrades to the treatment plant.