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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.

These include the construction of flood control berms, expansion of the plant's disinfectant capacity, improvements to the ability to remove nitrogen and phosphorus and seismic upgrades.

Major projects on the water supply side include drilling emergency wells and upgrading to meters that can be read automatically.

The city's residents already pay some of the highest water and sewer rates in the region. The increases would be far smaller than the 9 percent annual increases seen for most of the previous decade.

The new rates would be of a similar size and structure to those passed for 2012 and 2013. They would continue a pattern of increasing the fixed charges, which are the same every month, relative to the rates for usage, which fluctuate monthly based on how much water is used.

After water restrictions during drought years of 2009 to 2011 saw water revenue plunge, the city has sought to stabilize its revenue stream by increasing the fixed charges.

The board's goal has been to push the fixed charges closer to 25 percent of the average bill, with 75 percent coming from usage.

The committee considered a sharper increase in fixed rates to get the city closer to that 25 percent level more quickly. But it recommended a more modest increase in part because of concern about the fixed charge increases hitting lower water users at a higher rate.