The Arcata City Council unanimously approved a long-discussed water and wastewater rate increase Wednesday. It also supported the first pass of an ordinance that would legalize cannabis consumption lounges in city limits.

The rate increase is required for costs to replace old infrastructure in the municipal system totaling $36 million over the next five years.

Because wastewater fees will soon shrink, the increase for the average single family home will pencil out to 39% over the five years, or a $54 increase, said Finance Director Tabatha Miller. The rate jumps will begin July 1, 2026, and end fiscal year 2029-30.

Water and wastewater fees are billed together. Water rates will increase by 23% this year, followed by 18% in 2027, 12% in 2028, and 10% in both 2029 and 2030. Possibly larger hikes to wastewater were offset with a grant for the city’s wastewater treatment plant upgrade. Three years of 5% yearly increases would begin in 2028.

Just 70 residents contested the increase in writing, with 2,521 responses required to halt the hike under California law.

Councilmembers repeated their concern of how residents would be affected before voting in favor of the increase. The city’s poverty rate is 27.2%, according to the U.S. Census.

“There wasn’t one person on council or staff that was excited about doing this,” said Councilmember Stacy Atkins-Salazar.

Affordability concerns prompted most of the council to opt for gradual rate increases in one of many recent discussions on the topic.

Councilmember Sarah Schaefer emphasized the city cannot charge rates beyond what is needed to provide services and fix infrastructure.

“It’s landed on our laps because it’s been pushed down the road,” she said.

When asked by Schaefer about setting up a program to help low income people with their bills, Miller said the process isn’t easy.

She said municipalities typically piggyback on PG&E’s California Alternate Rates for Energy program to determine low income discounts. CARE offers discounts for people on public assistance programs, or who make below $42,300 for 1-2 person household.

But about half of Arcata residents qualify for the program, said Miller, so even at a 10% reduction of rates, it would cost the city $550,000 a year.

And she said the city doesn’t have many revenue sources to pay to subsidize the program. The city can’t legally use other people’s rate revenue to pay for it, and using late fees for unpaid bills to subsidize bills is counterintuitive as the people who need the discount are often paying for late fees.

But Miller said they could raise the question again during the city’s budget process. She noted the rates establish the maximum rates, which could be adjusted down if the city’s financial situation changes.

Weed Lounges

The council unanimously approved a new ordinance that creates a permitting pathway for cannabis consumption lounges in Arcata.

The amendments are long-deferred changes to the code that were rehashed after two local businesses recently expressed interest in opening lounges, said city staff.

One interested party was Arcata dispensary Pacific Paradise.

Arcata resident Misha Blacker said the ordinance would be great for the economy and the community by providing “much needed third spaces,” during public comment.  [CORRECTION: This article originally identified Blacker as a co-owner of Pacific Paradise, which he no longer is.]

Michael Bettencourt, a partner of Pacific Paradise, said customers are asking for a place to smoke, and said tourists would be more likely to stay in a city with consumption lounges.

Eureka legalized this kind of business in 2019, and city staff pointed to cities like Ukiah, Sacramento and San Francisco that offer weed smoking lounges.

Jennifer Henson, general manager of Pacific Paradise, said the ordinance would allow a safe space for weed consumption, with many Arcata residents barred from smoking inside their home.

She said tourists staying in hotels often ask her where they can smoke, and she doesn’t have a real answer.

“We usually point them towards the alley and suggest that they keep a low profile,” she said.

The council was eager to approve the amendments.

Atkins-Salazar said she had concerns at first before reading the ordinance, notably provisions for employees and for odors affecting passerby, but said she found these concerns addressed.

The permit would go through the planning commission with an appeal process.

In this draft, the language concerned lounges staying in enclosed areas located in (or attached to) licensed cannabis businesses. Some council members were interested in more explicitly allowing outdoor consumption lounges.

Development Director David Loya said staff are looking into the possibly of explicitly allowing outdoor lounges. He said this would be appropriate for spots like Humboldt’s Premium, where few people are nearby that would be offended by odor.

“The reality is that people are smoking on our sidewalks all over the place,” he said.

The aims include enhancing public safety by providing regulated consumption locations, reducing conflicts from public cannabis smoking and supporting local businesses, according to a staff report.

The amendments would also allow temporary cannabis consumption at events like Cannifest, with smoking previously outlawed in city code.

The ordinance needs to be voted on again before becoming code, which Loya indicated would be at the next meeting.