Staff outlines 9% baseline utility-rate option for 2026; advisory committee to review

City staff presented an internal rate study recommending a 9% baseline increase in both water and sewer rates for 2026, saying the boost is intended to rebuild reserves to a 30% target and to cover known capital needs if projected growth remains low.

The study, which staff described as an internal document rather than a commissioned outside rate consultant, models multiple scenarios. The staff presentation said a 9% increase in 2026, if repeated in subsequent years at similar levels, would keep the utility on a trajectory to avoid a projected multi‑year deficit the group estimated could appear in roughly five years under current assumptions.

The recommendation matters because the utility is balancing catch‑up capital work — including force main projects, planned tank work and inflow‑and‑infiltration (I&I) repairs — with customer affordability. A staff member said, “We did commit with the ordinance that we would do these calculations sooner and so we can get everything kind of locked in place, hopefully by the end of the year and, so the public has a regular, reliable cycle.”

Staff said the study uses a 1% growth assumption in its baseline but that a 2% growth outcome would materially reduce rate pressure. The presentation noted there are two plausible growth scenarios: one in which commercial and residential developments deliver roughly 2% system growth and one that remains closer to 1%. Staff said they have two active commercial development discussions and are pursuing state funding requests that, if successful, could reduce the need for larger rate increases.

On design of the rate change, staff recommended applying a unified 9% to both water and sewer so rates remain consistent across customer bills. Staff also compared peer actions, noting Springfield’s multi‑year increases around 8% per year as context for regional competitiveness.

Several advisory committee members and residents raised concern about public perception and timing: the utility enacted significant increases in 2024 and earlier in 2025, and some members asked how staff would explain another increase so soon. One advisory member said customers might ask why rates rise again when a prior increase has not produced a full year of revenue; staff replied that billing start dates and one‑time implementation delays had limited revenue collection this year.

Staff emphasized process steps: staff plans to finalize numbers and bring a formal proposal to the board and the city budget process in October, followed by public hearings required by ordinance. The staff member said the intent is to give the public a reliable, 12‑month cycle for future rate discussions.

The advisory committee did not take a formal vote on rates during this meeting; staff asked the committee to absorb the information and return questions and feedback. Staff said they will bring a formal ordinance and budget materials timed for the city budget cycle so the board can consider a recommendation and the required public hearings.