Mokelumne Hill Sanitary District
Prop 218 Notice and Information of Public Hearings
Regarding Proposed Changes and Increase in Rates
Proposition 218 Requirements
The implementation of public agency utility rates in California is governed by the substantive and procedural requirements of Proposition 218 the “Right to Vote on Taxes Act” which is codified as Articles XIIIC and XIIID of the California Constitution. The District must follow the procedural requirements of Proposition 218 for all utility rate increases. These requirements include:
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Noticing Requirement – The District must mail a notice of the proposed rate increases to all affected property owners. The notice must specify the amount of the fees, the basis upon which they were calculated, the reason for the fees, and the date/time/location of a public rate hearing at which the proposed rates will be considered/adopted. The Proposition 218 Notice to Property Owners in the District was mailed on February 27, 2026 and available here.
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Public Hearing – The District must hold a public hearing prior to adopting the proposed rate increases. The public hearing must be held not less than 45 days after the required notices are mailed.
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Rate Increases Subject to Majority Protest – At the public hearing, the proposed rate increases are subject to majority protest. If more than 50% of affected property owners submit written protests against the proposed rate increases, the increases cannot be adopted.
Proposition 218 also established substantive requirements that apply to sewer rates and charges, including:
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Cost of Service – Revenues derived from the fee or charge cannot exceed the funds required to provide the service. In essence, fees cannot exceed the “cost of service”.
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Intended Purpose – Revenues derived from the fee or charge can only be used for the purpose for which the fee was imposed.
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Proportional Cost Recovery – The amount of the fee or charge imposed upon any parcel or person as an incident of property ownership shall not exceed the proportional cost of service attributable to that parcel.
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Availability of Service – No fee or charge may be imposed for a service unless that service is used by, or immediately available to, the owner of the property.
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General Government Services – No fee or charge may be imposed for general governmental services where the service is available to the public at large.
Charges for sewer service are exempt from additional voting requirements of Proposition 218, provided the charges do not exceed the cost of providing service and are adopted pursuant to the procedural requirements of Proposition 218.
Rate Study Process
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Revenue Requirement – Revenue requirements are analyzed via a cash flow projection based on the best information currently available such as the District’s historical operating results, budgets, audits, and input from District staff. The cash flow serves as a roadmap for funding future operating costs and capital expenditures while maintaining long-term fiscal stability, all of which is calculated in this study to produce rates that will be necessary to recover only the cost of the sewer service per parcel under the proposed sewer rates.
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Cost of Service Allocation – The cost of service process builds on the revenue requirement analysis and assigns costs based on wastewater flow where one equivalent dwelling unit is 200 gallons per day of flow.
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Rate Design – Rate design involves developing a rate structure that fairly recovers costs from customers but does not exceed the proportional cost of the service attributable to the parcel. Final rate recommendations are designed to fund the District’s short- and long-term costs of providing service and fairly allocate costs to all customers.