Gloucester County staff urge borrowing, propose 14% water-rate increase to fund aging system

Miss Legg, county staff assigned to utilities, told the Gloucester County Board of Supervisors on March 24 that the utilities unassigned fund balance is nearly exhausted and borrowing will be required in fiscal 2026 to pay for needed capital repairs and replacements. “Borrowing needs to occur in FY 26 if we're going to address some very much needed capital needs,” Legg said.

The nut graf: County staff presented a FY26 plan that pairs proposed debt financing with a public hearing on April 1 for a 14% water-only rate increase. Staff said without borrowing and rate increases, the county’s ability to respond to unplanned major repairs would be limited and, in a catastrophic event, the general fund would be the fallback payer.

Legg summarized the financial drivers: the county’s 10-year capital plan identifies roughly $60,000,000 in utilities needs, and the utilities unassigned fund balance is projected to fall to about $27,000 by fiscal-year end. Staff said each 1 percentage point increase in rates now would raise roughly $36,000; the FY26 budget needs about $500,000 in additional revenue just to cover operating costs.

On capital priorities, Legg listed $2,095,635 in projects proposed to begin in FY26, including delayed work on a motor control center, water line replacements on Gloucester Street and Clements Avenue, design for Pump Station 13 replacement and collection-line upgrades for pump stations 11 and 13, design of a million-gallon storage tank at the water treatment plant, a two-year Tillage Heights water-line replacement, and acquisition of generators or permanent bypass pumps for two of nine pump stations currently without them.

Staff presented two revenue scenarios to the board. The advertised scenario tied to the 14% first-year water-only increase (followed by 13%, 11%, 10% and 8% in subsequent years in the projection) would cause a typical 5,000-gallon residential water-only customer to see a $35.06 monthly increase after five years (a cumulative 70% increase under the staged-rate assumption). Water-and-sewer customers at that consumption level would see a $53.02 increase under the same assumptions. An alternative scenario using $813,000 of development-fund balance to pay down reverse-osmosis (RO) debt would reduce first-year increases and produce a smaller five-year increase (about $21.39 per month for a 5,000-gallon water-only customer; ~43% cumulative in five years under that staged-raise assumption).

Board members asked for clarifications on outside charges and the longevity of system pipe. Legg said that 86% of water-only customers use 5,000 gallons or less and 94% of those are residential; for combined water-and-sewer customers, 80% use 5,000 gallons or less. She also said the system includes very old pipe in sections near the courthouse and Gloucester Point and that staff had little confidence in how long some older sections would last. “I would not want to wait at all,” Legg said when asked about the risk of doing nothing.

On external fees, board members raised the Hampton Roads Sanitation District surcharge (HRSD). Legg estimated HRSD’s additional fee to be in the “$45 and some change” range and said she would confirm whether HRSD’s fee is tiered.

Staff emphasized monitoring revenues and the new AMI (advanced metering infrastructure) efficiencies expected to come into clearer effect after FY26, which could change the revenue picture. Legg closed by asking the board whether they wanted additional research or adjustments prior to the April 1 public hearing.

Ending: The board scheduled the advertised public hearing for April 1; staff will post the packet and stand ready to provide follow-up details on HRSD charges, AMI savings, and project phasing if the board requests them.