Smithville officials back outside rate study as utilities costs rise

Smithville city staff told the Board of Aldermen at a work session that mounting project costs and aging water and wastewater infrastructure mean the city will need debt financing and rate increases, and recommended hiring an outside consultant to update the city's rate study.

The recommendation matters because staff projections show the combined water/wastewater fund could dip below reserves by 2029 under the current revenue scenario and sooner under lower-rate scenarios, increasing pressure to identify a sustainable path for capital projects and maintenance.

City staff said project costs continue to rise and many projects identified in the water and sewer master plans (some dating to 2018 and earlier) have been carried into the capital improvement program. "We have been talking every meeting about the aging infrastructure and how costly it is to maintain," a staff presenter said, noting that "debt financing will be required to do everything that needs to be done within the next 9 to 10 years, and rate increases will be required."

Staff showed cash-flow scenarios that assume a series of rate changes tapering to a steady level. In one scenario that reduces increases to 10% and holds there, staff said the fund would fall below reserve levels around 2029; in a 5% scenario that stress point moves to 2028. Staff also noted a recent $1 million escalation on the "Hundred 40 Fourth Street" station line item and project timing that depends on federal grants and developer-driven schedules.

"So staff's discussion at this point in time would be to recommend to the board that we move forward with a rate study," the city's staff presenter said, adding that staff would issue an RFQ and hoped to have results back in time to inform the fiscal 2026 budget process. Aldermen voiced general support: "I believe that it is necessary," Alderman Atkins said when asked to respond.

Staff warned that running repeated modest increases without the study risks larger spikes later: an outside review would examine the capital program, existing rates, master-plan projects and debt needs and return recommendations about the level and timing of rate changes.

The conversation included suggested next steps: staff will prepare an RFQ/RFP for a rate-study consultant and will aim to have findings to the board before finalizing the fiscal 2026 budget. No formal vote was taken at the work session; staff framed the action as a recommendation for the full board to consider going forward.

The discussion also covered related operational issues—project sequencing, grant timing and the interaction of rate decisions with smaller, cash-funded projects scheduled for 2026—so staff and aldermen agreed to continue work-session review of the master plans and the CIP alongside the rate-study procurement.