CaliforniaLocal governments may use cost-based methods to set service fees
Local governments may use reasonable cost-allocation methods for property-related fees, with specific rate-setting rules for water and sewer service.
What it does
Local governments may use reasonable methods to allocate the cost of a service among parcels when setting property-related fees. The allocation must be supported by data that reasonably captures those costs.
Water and sewer agencies may charge uniform or tiered rates to groups with traits linked to likely use, without measuring each parcel's exact service cost. Connection fees and capacity charges are excluded.
For tiered water rates, agencies may use a reasonable basis to allocate costs to each tier, but each rate must stay within the cost reasonably allocated to parcels in that tier.
Argument forLocal governments could set fees using past, current, or projected costs, giving them practical ways to match charges to the services they provide.
Argument againstWater customers could face tier rates based on broadly allocated costs, even when the agency does not justify where one tier ends and another begins.
More detail
A local government may use a reasonable method to show how much of a service's cost is attributable to each parcel. This applies to fees or charges adopted under the state Constitution's rules for property-related fees. The allocation must be backed by historic, existing, estimated, or projected data that reasonably captures the cost of the service.
For water or sewer service, a local government may use uniform or tiered rates for customer or parcel classes without measuring the exact cost for each parcel. This applies to local agencies charging for water or sewer service. Classes must be based on shared traits that indicate likely water or sewer use, such as property improvements, land use, plumbing fixtures, meter size, or peak use. These rules do not apply to water or sewer connection fees or capacity charges covered by the cited state law.
For tiered water rates, a local government may reasonably allocate costs to each tier and choose the costs assigned to it. This applies when a local agency sets tiered rates for water service. The rate for each tier must not exceed the service cost reasonably allocated to parcels in that tier. An agency does not need a cost-based or other justification for where one tier ends and the next begins.
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Where it stands
- Introduced
- Passed Assembly
- Passed Senate
- To Governor
- Became Law
Looking ahead
No hearings or votes scheduled.
History
- 2026
- Sep 27Chaptered by Secretary of State - Chapter 587, Statutes of 2026.Latest
- Sep 27Approved by the Governor Gavin Newsom.Became Law
- Aug 25Enrolled and presented to the Governor at 4 p.m.To Governor
- Aug 19Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 53. Noes 17. Page 6255.).Major
- Vote recorded AB 2180 Ward Concurrence in Senate Amendments. Result: pass.Lower
- Aug 18In Assembly. Concurrence in Senate amendments pending.
- Vote recorded 3rd Reading AB2180 Ward et al. By Arreguín. Result: pass.Upper
- Aug 18Read third time. Passed. Ordered to the Assembly. (Ayes 29. Noes 9. Page 5520.).Passed Senate
- Jun 11Read second time. Ordered to third reading.Minor
- Jun 10From committee: Do pass. (Ayes 5. Noes 2.) (June 10).Minor
- Vote recorded Do pass. Result: pass.Upper
- May 22From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on L. GOV.Major
- May 6Referred to Com. on L. GOV.Minor
- Apr 9In Senate. Read first time. To Com. on RLS. for assignment.Minor
- Vote recorded AB 2180 Ward Assembly Third Reading. Result: pass.Lower
- Apr 9Read third time. Passed. Ordered to the Senate. (Ayes 46. Noes 18. Page 4555.)Passed Assembly
- Mar 26Read second time. Ordered to third reading.Minor
- Mar 25From committee: Do pass. (Ayes 7. Noes 2.) (March 25).Minor
- Vote recorded Do pass. Result: pass.Lower
- Mar 12Re-referred to Com. on L. GOV.Minor
- Mar 11From committee chair, with author's amendments: Amend, and re-refer to Com. on L. GOV. Read second time and amended.Major
- Mar 2Referred to Com. on L. GOV.Minor
- Feb 20From printer. May be heard in committee March 22.
- Feb 19Read first time. To print.Introduced
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