Mineral Wells — City Manager Jason Weeks told the council that the city’s proposed water and sewer rate plan represents a “worst case scenario product” from the city’s consultant and warned that large increases may be required to cover new debt and water-purchase obligations. Using NewGen Strategies’ draft, residents with an average in-city winter usage (5,000 gallons of water and 4,800 gallons of wastewater) would see a combined water and sewer bill increase from $189.78 to $246.34 — a $56.56 or 29.8 percent increase in the monthly bill under the scenario presented.

Why it matters: The water and sewer fund is structurally stressed in FY2026. The city manager reported the water fund would end the year with a 17.8 percent fund balance (about 53 days of working capital), below the city policy target of 25 percent (90 days). Staff told councilors that nearly half of the water and sewer budget (49.3%, about $14 million) is payments to the water district for water purchases; other major costs include debt service related to capital-improvement projects and depreciation.

Details and debt plan: Weeks said the long-term capital plan includes a substantial Texas Water Development Board (TWDB) loan of about $49 million for the Hilltop water treatment project and additional open-market borrowing of roughly $13 million; combined new issuances and scheduled CIP work drive the higher revenue requirements in the rate model. Weeks said NewGen Strategies prepared the draft rate options and will present the full study at the Sept. 2 council meeting to explain methodology and offer alternative scenarios to the “worst case” numbers.

Impact on customers and timing: Based on the draft, the city would have to spread increases over multiple years to avoid immediate cash shortfalls; the long-range model in the presentation showed the water fund reaching positive excess fund balance only in year five of the plan under the current assumptions. Weeks also told the council that NuGen’s and the city’s model assumptions differ slightly but are within about a $1 million margin, and that staff will review alternative rate structures and potential grant or EDC contributions to reduce the burden on ratepayers.

Other actions and constraints: Staff described funding strategies that include staged rate adjustments (staff noted some modeled outer-year increases of roughly 8 percent in certain years), use of loan proceeds for capital purchases, potential EDC or TIF assistance for economically beneficial water projects, and a search for cost efficiencies (fleet leasing, internal audits, and contract reviews). Weeks emphasized that the presented numbers are conservative worst-case projections and that NewGen will present options that “would be less than what you see” later this month.

Ending: The water and sewer fund’s condition — low fund balance, planned debt issuance for major treatment projects, and large payments to the water district — put pressure on rates. The council will hear NewGen Strategies’ full presentation on Sept. 2 before making any rate decisions; staff and the consultant will present alternative scenarios and a capital and rate plan for council consideration before Sept. 16 public hearings.