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Budget officer flags two large water-fund balloon payments; staff to propose reserve options
Summary
Alex Campbell told the Talent Budget Committee that the city—s water fund faces two roughly $1 million balloon payments in 2030 and 2035, that Medford Water Commission bulk rates and lost BRIC grant funding affect costs, and that staff will bring options to create a debt reserve or capital line item.
Budget officer Alex Campbell told the Budget Committee that the water fund faces two mid-term balloon payments of about $1,000,000 each in 2030 and 2035 and that the city currently does not have a reserve adequate to cover those payments.
Campbell said the Medford Water Commission sets bulk-water charges that the city cannot control and that the commission—s loss of a BRIC grant will affect its capital program and potentially future wholesale rates. He also described a prior rate study that assumed setting rates adequate to collect funds for future balloon payments.
Why it matters: the water fund operates on dedicated rate revenue; large scheduled debt repayments and wholesale rate changes can materially alter available funds for capital and operations. Campbell told the committee the budgeted water-fund balance for 2025—1 is projected to be a little over $400,000 and that the city is currently paying roughly $200,000 annually on ongoing debt service.
Campbell said staff considered two practical ways to address the balloon payments: creating a separate debt-reserve fund or establishing a designated line item in the capital fund. He said staff had not completed a recommendation in time for the packet but would return with options and a revised presentation that more explicitly shows debt-service schedules and proposed reserving approaches.
Committee members asked whether current rates are sufficient. Campbell said the last rate study planned to collect for the future balloon payments but that recent increases in Medford—s wholesale charges suggest the city should review its rate model annually. He also noted staff is seeking bond counsel or bond-management-company input on whether prepaying the balloon debt would reduce future interest costs.
Next steps: Campbell said he and finance staff will propose options for reserving or segregating funds to ensure the city can meet the 2030 and 2035 balloon payments and will include debt-service schedules as an informational exhibit in the revised budget material.
