Auburn consultant review recommends small annual water and sewer increases; no new borrowing proposed for 2026

Seth Jensen, Auburn director of municipal utilities, presented results of a GHD water and sewer rate evaluation to the City Council on Feb. 27 and recommended a strategy of modest annual rate increases to stabilize utility fund balances and enable more cash-financed capital investment.

Jensen said staff and consultant GHD modeled several scenarios, including a do-nothing option with no rate increases, a scenario with 3% increases in several years, and a staff-preferred model that applies a 2% increase annually. "The staff recommended" model, he said, "would stabilize revenue, grow our fund balance, and allow us to potentially start to cash flow projects instead of bonding and borrowing." Jensen emphasized the recommendation was developed with input from other staff members.

Jensen summarized recent rate history and modeling outputs: an earlier water rate adjustment had moved a prior rate to $3.35 (from $2.62 in earlier years, as presented) and the sewer rate was adjusted last year from $4.78 to $4.92 (the presentation did not specify units or billing basis). He said the consultant used a conservative assumption of flat consumption for the five-year planning horizon rather than forecasting uncertain new large customers into the model.

Jensen said the short-term outlook for both funds is positive: GHD's models and staff projections show operating expenses trending back toward a normal 2%–5% annual inflation range, and the sewer fund benefited last year when debt from a treatment-plant upgrade decreased. For 2026 specifically, Jensen said the staff does not propose any new borrowing for the water or sewer funds. He added that the models do build in long-range cash needs for projects such as a raw water intake extension and a transmission main replacement between the upper pump station and the water filtration plant; those projects and potential combined sewer overflow (CSO) separation work would increase capital needs in later years.

On the sewer side, Jensen highlighted the city's recent biosolids project and said it should produce savings starting this year; overall, he said, the sewer model shows room for reinvestment but warned that a no-rate scenario produces fund-balance erosion in the later years. Jensen also noted that wholesale water customers account for a significant share of utility revenue (he cited "20 to 30% of our total revenue") and that wholesale pricing negotiations underway could materially affect future revenues.

Jensen presented comparative data showing Auburn's combined quarterly water and sewer bills are low compared with similar upstate cities used for benchmarking. He said national averages can be much higher and noted the city's integrated single-rate approach covers capital and operating costs without a separate district tax.

Councilors asked questions about raw-water intake concerns, benchmarking and wholesale negotiations. Jensen and staff signaled follow-up work: further wholesale-rate discussions, continued capital planning, and possible re-evaluation of rates again next year depending on wholesale outcomes and other changes.

No rate ordinance or formal rate vote was taken on Feb. 27; Jensen said the models and staff recommendation will inform upcoming budget and capital-plan hearings.