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Bentonville officials to consider steep water-rate increases after consultants flag $10.4M shortfall and widespread leaks
Summary
City consultants and staff told the City Council that Bentonville faces large near-term costs to find and fix water leaks and to fund a $230 million 10-year capital plan; staff were directed to return two rate scenarios and supporting documents within weeks.
Bentonville City Council members spent more than two hours on a deep-dive of the city’s water finances, hearing from outside consultants and city staff that addressing high “non‑revenue” water (lost or unbilled water) and funding a newly updated master plan would require substantial revenue increases.
Consultants from Raftellus and city utility staff told the council that current budgeted revenues leave the utility about $10.4 million short of covering 2025 operating costs plus the additional work needed this year to continue leak‑finding contracts. Staff said an additional $6 million of IDIQ (indefinite delivery/indefinite quantity) work is needed in 2025 to keep contractors identifying and repairing leaks through the remainder of the calendar year; the existing IDIQ funding will cover only a few more weeks.
The consultants presented the master‑plan estimate for water system capital needs at roughly $230 million over a 10‑year horizon, up from prior planning numbers in the tens of millions. They described the near‑term picture as a transition: an elevated operating expense to chase down non‑revenue water and then a ramp‑up of capital spending once leakage is reduced. Staff said they are budgeting a 30% contingency on engineering estimates and applying an annual escalation (about 5%) for long‑range costs.
City staff and the consultants outlined one revenue path that would bring annual water revenues near what is necessary over the next five years: an immediate, sizeable increase in rates (consultants described the modeled percentage as roughly doubling billed consumption revenue compared with today) to cover the shortfall and fund the accelerated leak‑repair program. Staff said a rate adjustment could be effective as soon as April 1 if the council approves an increase and that bills printed in the next cycle could reflect the change. The consultants also modeled longer‑term annual adjustments to support debt service on planned capital projects.
Council members questioned assumptions behind the master plan and asked about alternatives: financing timing, the possibility of regional projects with neighboring utilities, contract terms with the wholesale supplier referred to in the presentation as Beaver (Beaver Water District), and whether some costs could be covered by impact or capacity fees rather than routine rates. Staff said purchased water costs from the wholesale provider were included using that supplier’s five‑year projection and that wholesale rates historically have risen faster when their capital plans escalate.
The council gave staff direction — not a formal vote — to produce two rate scenarios (at least one lower‑optics phased option and one that covers the modeled shortfall) along with the detailed workbook, appendices, a five‑year cash‑flow, and the consultant memo. Staff committed to providing those options and the supporting workbooks and assumptions; the council requested the materials as soon as possible, with two‑week and near‑term follow‑up deadlines discussed in the meeting.
Next steps: staff will deliver the requested scenarios and the full supporting workbook and appendices, and will return with rate‑setting options and clearer timing for any effective date. The council did not take a formal rate vote at this meeting.
