Sebastopol may charge water and sewer funds $468,000 less for city hall costs

By The Downspout · Posted Oct 27, 2026 · 4 min read

Sebastopol city staff proposed that the city charge its water and sewer funds $467,779 less for city hall costs in the 2026-27 budget year. The City Council took up the proposal on October 20, 2026. Sources do not say whether bills change, and the Council's vote is not yet posted.

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What this is

Sebastopol runs its own water and sewer service. The city bills customers for water and sewer service.

The city tracks water and sewer in two separate funds, the Water Enterprise Fund and the Wastewater Enterprise Fund. They are apart from the city's main budget, the General Fund.

The city charges those two funds for part of the cost of central services. These are the City Council, City Manager, City Clerk and Administrative Services offices. Those offices do some work that supports water and sewer service. That charge is called a cost allocation. In plain terms, it is a share of city hall costs charged to water and sewer.

On the water side, the city owns the system. It draws water from wells throughout the city and has two storage reservoirs. On the sewer side, the city owns the pipes. All of its sewage goes by pipeline to Santa Rosa's treatment plant on Llano Road. Our page on where wastewater goes in Sonoma County covers what happens there.

What happened

On October 20, 2026, the Sebastopol City Council took up a staff proposal to lower those shares for the 2026-27 budget year. It was one item on the Council's agenda. This is a proposal. I could not find a record of the Council's vote, so the outcome is not confirmed here.

Each office has a yearly cost. The city charges a set share of it to water and a set share to sewer. Staff want to change those shares. Here is each office, with its old and proposed shares of its cost.

City Council: water from 24.3 percent to 17 percent, sewer from 26.9 percent to 13 percent.
City Manager: water from 22.0 to 17 percent, sewer from 24.3 to 13 percent.
City Clerk: water from 11.1 to 12 percent, sewer from 19.3 to 8 percent.
Administrative Services: water from 20.2 to 12.5 percent, sewer from 23.2 to 12.5 percent.

Staff say this would cut the charges to the two funds by $467,779 for the year. Water would be charged $159,069 less. Sewer would be charged $308,710 less.

The General Fund would bear the $467,779 instead. The change is for 2026-27 only. There would be no refund of past years.

Staff estimated the new shares from time logs and from Council meeting recordings, plus their own judgment. They say the records do not allow an exact split between water and sewer.

Why the city is looking at this

A Sonoma County Grand Jury report asserted that the water and sewer funds had been overcharged. In November 2025 the Council created the Enterprise Fund Oversight Committee to review the two funds. Staff say the committee made recommendations about the cost allocation.

Staff list steps the Council has already taken.

June 29, 2026: ordered requests for proposals for a new cost allocation plan and a water and sewer rate study. A request for proposals is a public call for outside firms to bid on a job. A rate study is a review of water and sewer rates.
July 7, 2026: paused the water rate increases set for 2026-27 and paused tiered water rates.
July 21, 2026: forgave a $1.1 million loan the General Fund had made to the sewer fund.
August 4, 2026: refunded $350,354 in City Attorney charges to the two funds.
October 6, 2026: added a certified public accountant seat to the oversight committee.

Two other questions on the same item

The first is who pays part of a yearly loan payment. In December 2021 the Council approved about $4.9 million in financing for energy equipment from Syserco Energy Solutions. About $2.2 million of it paid for new water meters. The city repays $374,650 a year. The water fund pays $288,480 of that.

The oversight committee recommended that the General Fund pay the water fund's share instead. Staff recommend the water fund keep paying it.

The second is the utility counter, where customers can come in about their bills. It is open 7:30 a.m. to 5:00 p.m., with a 30-minute lunch closure. The Council was asked whether to keep those hours or have staff return with shorter walk-in hours. Staff say shorter hours would not cut staffing costs. Customers could still make appointments and use the drop box.

What it means for you

Your bill: if you pay a Sebastopol water and sewer bill, the staff report does not say whether it will go up or down. It does not tie this change to any rate.

What the proposal does is move $467,779 of city hall cost from the water and sewer funds to the General Fund for one year.

To ask how your own bill is figured, call Administrative Services at 707-823-7863 or email customerservice@cityofsebastopol.gov.
To follow the Council's decision, watch the city's meeting calendar for this item.
If you want to know whether rates change, watch for the rate study. It is a review of what water and sewer rates should be.

For how water reaches taps across the county, see where your tap water comes from.

What happens next

The city issued the request for proposals for the new cost allocation plan on September 23, 2026. Bids were due October 14. Staff list these dates:

November 17, 2026: proposed Council vote to hire a firm.
December 1, 2026: work starts.
February 16, 2027: final report and presentation to the Council.

Staff say the new plan would take effect by July 1, 2027. The shares in this proposal would apply to 2026-27 only. The new plan would set shares after that. The dates may change.

Where this came from

The Sebastopol City Council's staff report for its October 20, 2026 meeting on this topic, the city's agenda highlights for that meeting, and the city's Water & Wastewater and Utilities pages. All are listed below.

Sources

Checked 2026-10-27. Rules and programs change. If something here is out of date, the source above wins. Spot an error? See our corrections policy.