A consultant’s financial analysis presented to the Melbourne City Council on Aug. 26 recommended multi-year increases to water and wastewater user rates to meet projected capital needs and debt-service requirements.

Reftellus Financial Consultants urged the council to consider a five-year plan calling for 10.5% annual increases in water rates and 7% annual increases in wastewater rates (each effective Oct. 1 of the fiscal year) to fund a growing $500 million capital-improvement program, preserve reserves and meet projected debt-service coverage requirements.

Why it matters: The study cited three main drivers: a substantially larger capital program compared with the prior plan (roughly $300 million previously versus about $500 million today), the planned loss of West Melbourne as a bulk water customer by Dec. 31, 2026 (reported as roughly $5.7 million affecting about 8% of total revenues and about 14% of water revenue), and rising operating and construction costs.

Key assumptions and impacts listed by the consultant (Trevor McCarthy):
- Capital plan growth and debt: The study assumes a 2026 line of credit of $46.5 million, a 2027 bond issue of about $107 million (30-year term at 4.8% assumed), WIFIA loans/tranches in 2027–29 (assumed 4.95% interest with 35-year amortization), and a 2030 issue of roughly $39 million. Projected debt service would rise from about $12 million today to roughly $26 million by 2030.
- Reserves and coverage: The plan targets operating reserves no less than 25% of rate revenues and a capital reserve of 1.5% of depreciable assets.
- Residential bill impact: For an average single-family customer using 4,000 gallons, the projected monthly increase in 2026 would be about $6.77; the average monthly bill is projected to be about $87.42 in 2026 under the study’s proposed rates.

Council discussion and next steps: Council members asked about impact fees and whether growing impact-fee revenue could offset rate increases. The consultant and staff said impact fees are assumed at current adopted levels based on conservative growth assumptions and that a separate impact-fee study will be prepared; impact fees are intended to fund growth-related capital and cannot be counted on to meet ongoing operational needs or debt-coverage requirements. The council gave unanimous consensus to prepare an ordinance for a five-year rate plan and directed staff to present the implementing code changes for council consideration.

No rate ordinance was adopted at the Aug. 26 meeting; staff will return with an ordinance and code amendments in the coming meeting cycle so council may adopt a multi-year schedule if it chooses.