Wilmington proposes 6.5% water/sewer, 6% stormwater increases as part of $413M six‑year plan

Wilmington City officials proposed a multiyear financial plan on April 24 calling for a 6.5% increase to water and sewer rates and a 6% increase to stormwater rates for fiscal 2026 as the utility seeks to fund operating costs, rising debt service and a $413 million capital improvement program.

The six‑year plan, presented by Public Works and consultant Black & Veatch, projects FY2026 operating costs of roughly $80.5 million and total debt service rising from $22.9 million in 2026 to about $37.5 million by 2031. To manage the near‑term gap, the plan relies on state revolving fund (SRF) loans and principal forgiveness, bond financings, limited cash financing in later years and a partial draw from the city’s rate‑stabilization reserve.

Why it matters: The utility must balance regulatory mandates, aging infrastructure and emergent costs — including PFAS compliance and lead service‑line work — while limiting immediate rate shock. Commissioner of Public Works Kelly Williams said the plan is intended to “build long‑term financial resilience” while meeting required reserve and debt‑coverage metrics.

Black & Veatch summarized revenue and expense drivers: retail water, sewer and stormwater revenue under existing FY2025 rates would generate about $71.5 million annually from retail customers, while wholesale wastewater treatment revenues from New Castle County account for an additional material share and are projected to rise. The fiscal 2026 budgeted O&M and projected capital program together create revenue requirements that exceed FY2026 revenues under current rates.

To close the gap, the administration proposed the following package: 6.5% water/sewer and 6% stormwater rate increases in FY2026, no cash financing of capital in FY2026–27 (to reduce short‑term pressure), and continued reliance on SRF loans, including principal forgiveness where available. The plan also draws $3.1 million from the rate‑stabilization reserve in FY2025 and an additional $2.7 million in FY2026 to maintain the ordinance‑required operating reserve level (17% of the following year’s O&M) while revenues ramp up in later years.

“Even with the proposed increases, the fund will still need time to restore debt coverage and reserves,” said Prabhu Kumar of Black & Veatch. The plan anticipates modest additional increases through 2031 that would result in a cumulative additional revenue of about $32.3 million over the five‑year period beyond FY2026 levels. Rupa Jha, also with Black & Veatch, said the model assumes continued SRF availability and competitive grant opportunities; the plan’s affordability depends on securing that low‑cost financing.

Capital priorities: The six‑year capital program totals about $413 million, split roughly $249 million for water and $164 million for wastewater, according to the presentation. Water CIP priorities include treatment‑plant upgrades and projects tied to the revised Lead and Copper Rule and PFAS (emerging contaminants). Wastewater funding is concentrated on the regional wastewater treatment plant upgrades and collection‑system work; that plant is more than 65 years old and treats wastewater for portions of New Castle County in addition to Wilmington customers.

PFAS and lead: Black & Veatch and city staff said investments related to PFAS compliance and lead service‑line identification/replacement drive a sizable portion of early‑year capital spending. The city has secured SRF loans and principal forgiveness and a federal grant to support PFAS work, but presenters stressed the need to finalize funding awards and to continue coordination with state and federal agencies.

Customer impact: For a typical inside‑city residential account using 4,000 gallons per month, the combined water/sewer/stormwater bill would rise from about $72 under FY2025 rates to $76.80 under the proposed FY2026 rates — a $4.67 monthly increase. Outside‑city customers who receive city water or county sewer also would see increases depending on contract pass‑throughs.

Reserves and timing: The plan draws down the rate‑stabilization reserve from $5.9 million at the beginning of FY2025 to a small balance in FY2026, with the objective of rebuilding a modest stabilization balance by 2031 (projected ~$7.0 million) while meeting a 17% O&M reserve requirement annually. The administration told council that the FY2026 budget ordinance will identify any planned use of reserves, and that draws outside the annual budget process would require further council action.

Council questions focused on affordability and alternatives. Council Member Kathy Field asked whether specific non‑rate savings could be identified; Commissioner Williams said some capital and maintenance work could be deferred at the cost of later higher repairs and that much of the increased cost is driven by the age of the system and new regulatory mandates. Council Member Michelle Bass‑Knight asked about the legal and procedural steps to draw reserves and was told that reserve draws are disclosed in the budget ordinance and are subject to council approval.

Ending: City officials said the plan is a proposed framework to stabilize financial metrics and fund necessary upgrades while moderating near‑term rate increases. Final rates and the FY2026 budget will be set through the city’s ordinance process and council votes later in the budget cycle.