City staff told council during the budget workshop that two large industrial customers—identified in the presentation as MFS and Walmart—are expected to begin operations this year and will increase water and wastewater throughput and revenues. Staff said the new customers are not expected to generate a full year of charges this fiscal year but that projections were incorporated into the utility fund budget.

Staff reported higher utility fund revenues tied to the customers coming on line and said overall utility fund expenses increased about 3.6% in the proposed budget. Staff noted an improved reserve level (presented as roughly 283 days of operating expenditures in the utility fund) after incorporating the new customers’ usage and the recent debt issuance affecting the utility system.

Officials flagged a capacity constraint in wastewater: staff said the system’s permitted daily flow is about 1,570,000 gallons and that at full production the new customers will materially increase daily flows. Staff advised council that state law governs daily discharge limits and that the city will likely need to proceed to design and build expansion to avoid exceeding permitted capacity once full production is reached. Staff said Walmart expects to place a first production line into service in late February with an expectation of full production by about May (as presented) and that staff used the company’s projected phased production schedule to estimate water and wastewater charges for the budget.

Because of the expected increase in commercial wastewater demand, staff said council should expect to evaluate rate structure changes for commercial customers next fiscal year. Council members referenced the city’s prior decision to set commercial rates lower than residential rates historically and asked staff to consider whether that approach still makes sense given higher commercial usage by large industrial customers and the need to pay for capacity expansion.

Operational notes in the presentation included a mid‑year hire that staff said was funded for a full year in the proposed budget: a water‑plant operator position the city intends to fill (staff hoped to have a person on board by Oct. 1, as presented). Staff also described recent and ongoing capital projects such as a pipe replacement and use of rental bypass pumping during repairs.

Council directed staff to continue work on modeling capacity, to present timing and cost estimates for wastewater expansion, and to return with rate options to address commercial cost shares prior to final budget adoption.