Frequently Asked Questions
Why does the City need to increase water and sewer rates?
The City’s water and sewer pipes and equipment are over 50 years old and need repairs or replacement. Several major projects are needed to keep the system working safely and reliably. The rate increase will pay for day-to-day operations and maintenance, system improvements, and build up reserves to protect the system in case of an emergency, as required by the City’s Reserve Policy. It will also reduce reliance on General Fund money, so that money can be used for parks, buildings, and other community projects. These changes help ensure safe, reliable, and sustainable water and sewer service for the future.
What are the water and sewer rates increases?
The water and sewer rates would increase in phases over a period of five years, beginning in February 2026. View a detailed breakdown of proposed water rates in the presentation to the City Council on July 28, 2025.
View a detailed breakdown of proposed sewer rates in the presentation to the City Council on August 28, 2025.
What do water operations include?
Water operations include the cost for staffing, equipment, the City’s rights to pump water, and purchases of water. The City owns the rights to pump 4,680 acre-feet of water on an annual basis with the ability to lease an additional 4,463-acre feet of water annually. The Water Replenishment District (WRD) plays a key role in managing and protecting groundwater resources in Southern California. WRD actively recharges groundwater supplies by putting water back into aquifers, using imported water, recycled water, and captured stormwater. In short, WRD ensures there is enough clean groundwater now and in the future.
What water capital improvement projects (CIP) will these water increases support?
With new rates, the City will carry out the following critical projects over a five-year period. Factoring inflation into the total, the estimated total cost is $22,950,000*.
- Annual Valve Replacement Program
- C-1 Well Water Treatment
- C-4 Well Water Treatment
- C-5 Water Well (NEW)
- Well Desander Replacement
The above list includes only projects deemed critical to ensuring the continued safe delivery of water and supported by the proposed rate increases under Water Rate Scenario 2B. It does not include all necessary projects.
*Project totals will be reflected in the Capital Improvement Program section of the Fiscal Year 2025-2026 Adopted Combined Financial Program and available at cerritos.gov/budget upon publication.
What sewer capital improvement projects (CIP) will these rate increases support?
With new rates, the City will carry out the following projects over a five-year period. Factoring inflation into the total, the estimated total cost is $4,297,110.
- Biannual Rehabilitation/Replacement of Dewatering Stations
- Biannual Rehabilitation/Replacement of Sewer Lift Stations
- Annual Sewer Main Replacement/Upgrades
- Citywide Sewer Pipe CCTV Inspection
View page 10 of the August 28 agenda report for more details of sewer projects.
When will I see the proposed rates reflected on my bill?
The new rates will go into effect in February 2026.
Why are Water and Sewer Rates increasing again after increases from 2014-2020?
To address the Water and Sewer Enterprise Fund’s structural deficits, voters authorized 10% annual water rate increases from 2014 to 2020. By 2020, the water utility reached a break-even point for day-to-day operations but lacked any funding for capital maintenance or upgrades. No inflation (CPI) adjustments were included in the rate increases beyond 2020, which has caused revenue to again fall behind rising costs.
Since the City has not raised water rates since 2020, the water and sewer funds are now too low to cover operating costs, repairs, and needed upgrades. In October 2023, the City Council wrote off about $24.3 million in loans from the General Fund to these funds and decided that any future General Fund support would be treated as a one-time transfer, not a permanent solution. The Council also directed staff to develop rate options to address the deficits in the Water and Sewer Enterprise Funds.
Last year, the City’s budget was in a deficit, and there is not enough General Fund money to continue supporting water and sewer operations long term. The rate increases will make the funds self-supporting, pay for needed projects, and build reserves to protect the system in case of an emergency, ensuring safe and reliable service for the community.
When the City last increased water rates from 2014-2020, how was the increased revenue from those rates spent?
From 2014 to 2020, revenue from water rate increases was primarily used to cover the day-to-day operating costs of the water utility – and upon the full implementation of the rate increases, the water utility was in a break-even position and was able to cover day-to-day operation costs. However, the rate increases were not sufficient to fund needed infrastructure replacements or improvements and did not generate any surplus to establish a Water Fund reserve for future system needs.
2014-2020 rate adjustments were originally anticipated to help offset operating costs and fund capital improvements and maintenance. However, rate adjustments during this period proved insufficient to fully fund annual operating costs, let alone provide adequate funding for capital improvements. This is due in part to two primary factors: 1) Operating costs across all aspects of the system continued to increase. 2) Water consumption declined significantly during this period due to prolonged drought conditions, resulting in corresponding reductions in water revenue.
What causes have led to the City’s deficit Water Enterprise Fund?
Causes of this deficit fund can be traced back to 2012, when the State of California dissolved redevelopment agencies, resulting in the loss of $30M annually for Cerritos. These funds had supported major capital improvements, including water infrastructure, which allowed the City to use General Fund proceeds to support resident services – including reduced fees for water, sewer and recreation classes. The loss eliminated the City’s ability to use Redevelopment Funds to support capital infrastructure improvements and placed a significant burden on the General Fund.
Can the rate of increases be spread out over a longer period of time?
Proposition 218 requires water rates to be supported by a cost-of-service study. Most cities, including Cerritos, use a 5-year study period because it aligns with the City’s 5-year Capital Improvement Program (CIP) and allows for planning repairs and upgrades.
Rates can be spread out over a longer period, such as 7 years, but this requires a new study. A longer period would also delay the availability of funding to pay for critical projects and could result in more infrastructure failures. Delays combined with rising project costs will also require the City to spend more in the future.
Did the City consider issuing bonds instead of raising rates?
Yes, but this was not recommended for multiple reasons: 1) Issuing bonds requires borrowing money and paying back over time with interest. 2) Fluctuating market conditions could result in higher interest rates and larger payoff amount. 3) Bonds do not replace a rate increase, as bonds must be backed by a new or enhanced revenue source. Therefore, a rate increase would still be required to support issuing bonds.
What happens if new water and sewer rates were not approved and rates were unchanged?
The continued water and sewer utility deficits are not sustainable and place the City at increasing financial and operating risk. Without corrective action, both the Water and Sewer Enterprise Fund deficits will grow, reducing the City’s ability to properly maintain, repair, and replace aging infrastructure which will lead to service disruptions to residents. As revenues fall short of covering ongoing expenses, the City will face deferred maintenance, rising emergency repair costs, and greater vulnerability to system failures. Over time, this will compromise service reliability, increase health and safety risks to the community, and ultimately require more costly interventions if not addressed proactively. Furthermore, should the City continue to subsidize the Water and Sewer Enterprise Funds from the General Fund, other City services may be negatively impacted.
What will the water and sewer rate studies do?
The rate studies look at how much it costs the City to provide safe and reliable water and sewer services. They review daily operations, long-term maintenance needs, and future projects to keep the system in good condition. The studies also make sure that rates are fair, based on actual costs, and set at a level that will cover operations, repairs, and reserves so the system stays reliable for many years. The studies will give the Cerritos City Council and the community a clear picture of what it will take to keep the water and sewer systems safe, reliable, and financially stable for the future.
Who is assisting the City with the water and sewer rate studies?
The City is working with Water Resource Economics (WRE), a consulting firm with over 25 years of experience helping water and wastewater utilities set fair and accurate rates. WRE provides independent analysis to make sure rates cover costs, support system reliability, and are easy to understand. The City hired an outside firm because rate studies are technical, and using an independent expert ensures accuracy and transparency.
What is Proposition 218?
Proposition 218, or the "Right to Vote on Taxes Act," is a California ballot proposition approved by voters in 1996 that sets requirements for local governments regarding the imposition, increase, or extension of various taxes, assessments, and fees.
Proposition 218 aims to increase transparency and accountability in local government finance by giving voters more control over tax and fee increases and ensuring that property owners have a say in the imposition of assessments and fees related to property services. Any adjustments to the City’s water or sewer rates requires Prop 218 to be implemented.
How many Proposition 218 notices did the City have mailed?
The City mailed 21,607 Proposition 218 notices. Each notice was sent to the property owner of record and the utility customer of record. In instances where they are the same person, they received one notice.
What is the total number of property owners/utility customers? How many are residential and how many are commercial accounts?
There are 15,148 water service connections of which 14,215 are residential water service connections. The remaining are commercial water service connections.
There are 14,998 sewer service connections of which 14,212 are residential sewer service connections. The remaining are commercial sewer service connections.
How can I provide feedback and cast a formal vote for/against these rates?
Customers can provide feedback by attending public hearings or contacting the Public Works Department at (562) 916-1220 to share their thoughts. To formally vote against the rate increase, customers can submit a written protest. Instructions for submitting a protest are included with the Proposition 218 notice mailed to property owners. Each property is allowed one protest, and if a majority of affected properties submit protests, the rate increases can be prevented from being adopted. This process ensures all customers have a voice in decisions affecting their utility rates.
If you have misplaced your Proposition 218 notice and need another copy, please contact the Public Works Department at (562) 916-1220.
What is the minimum number of written protests needed to prevent the rate increase adoption?
A 50%-plus-one majority of signatures would prevent the City Council from being able to adopt the rate increases. The 50%-plus one written protest threshold for the proposed water rate adjustment is 7,575. The 50%-plus one written protest threshold for the proposed sewer rate adjustment is 7,500.
Could the minimum number of written protests needed change if the number of property owners changes?
The protest threshold is based on the number of active service connections at the time the Proposition 218 notices were mailed out. This count is fixed for the current Proposition 218 process and will not change if the number of parcels or account holders changes between now and the public hearing on January 26, 2026.
What’s the significance of a self-sustaining Water Enterprise Fund?
The Water Enterprise Fund is intended to operate like a business, with user fees covering all operations and maintenance expenses. The Fund is not designed to generate profit, only to be self-sustaining. All revenues received are restricted for use on water operations and infrastructure and may not be used for any other purpose. By continually subsidizing this fund, the City’s ability to fund other priorities like public safety, street infrastructure, and community services are reduced. The City’s auditors have consistently noted that the Water Enterprise Fund’s deficit position and subsequent subsidy from the General Fund is not best practice in municipal finance; rather, the auditors have noted the Water Enterprise Fund should be self-sustained by user fees.
Are financial assistance programs available for customers on a fixed/limited incomes?
On January 26, the Cerritos City Council approved a resolution adopting a low-income water and sewer utility assistance program that provides a fixed bimonthly discount of $40 for eligible residential customers. Visit cerritos.gov/waterbilling for more information and to complete an application.
In the first year of the new rates, eligible customers receiving the bimonthly discount would be billed approximately $10 more per month or $20 more per bimonthly bill. The program is subject to resident eligibility criteria.
What is a Capital Improvement Project (CIP)?
A Capital Improvement Program, or CIP, is a plan for building, repairing, and upgrading the City’s major facilities and infrastructure. For water and sewer, this includes projects like replacing old pipes, fixing pumps, building new water wells, and improving treatment systems. The CIP helps make sure the system stays safe, reliable, and is able to meet the community’s needs now and in the future.
Has the City pursued state or federal funding to support the infrastructure improvements instead of increasing rates?
The City continuously works with state and federal partners to identify grants and funding opportunities that can help offset the cost of critical infrastructure projects. While these funds can reduce the total cost of projects, they are limited and cannot fully cover the cost of operating, maintaining, and upgrading the water and sewer system. As a result, rate adjustments are still necessary to ensure the system remains safe, reliable, and financially sustainable.
Are there other needed water projects not supported by increased water rates that the City will look to fund in the future?
Projects noted below have been identified in the Water Master Plan and will need funding in the future to complete and ensure the continued safe delivery of water to the residents of Cerritos. These projects total approximately $19,250,000.*
- Annual Water Main and Appurtenances replacement
- C-2 East and West Reservoirs – Perimeter roof handrail system
- C-2 Well Chlorine Room Modifications
- City Reservoir Refurbishment
- Well Booster Rehabilitation
- Citywide Replacement of Water Service Laterals
- Water System GIS Database Upgrade
* The initial unfunded project listing was developed prior to the Water Master Plan being completed; thus are not reflected in the Fiscal Year 2025-2026 Preliminary Combined Financial Program. These projects will be reflected in the Fiscal Year 2026-2027 Combined Financial Program.
