City finance and operations staff described rising operating costs, a multi-million-dollar capital improvement need and a proposed rate package as the City of Llano considers how to pay for water-system upgrades.
Cara (interim city manager) told the council that over the past three fiscal years the city has seen about a 38 percent increase in water-plant operating expenses and a 66 percent increase in distribution operating expenses, while cumulative rate increases totaled roughly 16 percent. “At a minimum, there would have to be some sort of a rate increase to meet this obligation,” she said, noting the city currently fails a bond covenant and that the water capital improvement plan (CIP) identifies roughly $14 million in needs, with about $4 million prioritized as most critical in the near term.
As presented, one component of the proposed rate package is a base-rate increase (a cited $10 across-the-board base hike) intended to cover a foundation loan repayment, potential dam-height work and a contract to increase firm water yield. Ritter and staff also described a tiered rate element intended to fund priority CIP projects and a possible new water/wastewater position; that position was included in the draft budget model as a placeholder but had not been formally approved or filled.
Residents at the meeting pressed the council on affordability and communication. Julie Ireland, a resident, said, “Transparency establishes trust,” and multiple speakers noted the large share of retirees and households on fixed incomes in Llano, warning that big increases could be hardship-inducing. Several commenters urged the council to pursue grant funding and other revenue sources first; Betsy Scholtes offered volunteer assistance to pursue state and federal infrastructure grants.
Other locals proposed alternatives and technical solutions. Marion Bishop urged the council to revive discussion of micro-hydro generation tied to the dam project as a potential local revenue stream; another speaker recommended exploring horizontal wells and other water sourcing options. Staff and council described a planned town hall on Sept. 6 (time to be determined) to discuss rates and to provide more public detail.
No final rate ordinance was adopted at the meeting; the council and staff debated options, and several agenda items that would change collection-station or dumping fees were tabled pending further work. Staff emphasized that the budget and organizational-chart changes discussed during the budget season drove the need for more council direction and public outreach.
Next steps: staff will continue drafting the rate model, schedule the town hall and return to council with clearer budget impacts and proposed ordinances for rates and organizational changes.