City officials told the Rowlett City Council on July 12 that the city’s water and sewer finances have tightened after the City absorbed multi‑year wholesale price increases from the North Texas Municipal Water District and treatment cost increases from Garland. Finance staff said the rating agency Standard & Poor’s treats the District’s take‑or‑pay water charges as debt in its “all‑in debt service coverage” calculation; that metric slipped to about 1.12 for fiscal 2024 and, if left unaddressed, could put pressure on Rowlett’s double‑A‑ (AA‑) rating. Finance director Wendy (Finance director) briefed the council that the shortfall is driven mainly by large purchased‑service cost increases, principally wholesale water and wastewater treatment. She showed that operating expenses have been growing faster than operating revenues in recent years and that the city used transfers and fund balance to smooth rate impacts for residents. Willdan Financial Services vice president Dan Jackson presented updated rate plans the firm prepared for the city and said the options fall into three paths: (1) a plan that holds the city’s M&O rate steady and passes through District increases only (smaller near‑term household impact but leaves the city’s coverage near the current score); (2) a middle plan that funds required water projects (including an additional $7 million in sewer pipe work) and brings the fund nearer to break‑even; and (3) a larger increase that both pays planned construction and builds extra coverage to improve the all‑in ratio. Jackson said the middle option would increase the combined average residential (7,500‑gallon) water and sewer bill by about $9 per month and move the all‑in coverage measure back above the level S&P views as pressured. Council members said they preferred not to push all of the increase onto the general operating rate and asked staff to pursue a compromise. Council gave preliminary direction matching a middle path — an increase short of the largest scenario but enough to stabilize the all‑in metric — and asked staff to return with final rate language and the ordinance schedule for fall approval. Council also heard that a three‑year debt issuance plan will include roughly $47 million in general obligation bonds (projects from the 2023 bond program and other priority projects), about $9.9 million in certificates of obligation for parks, street and public safety equipment, and approximately $14 million in water‑sewer revenue bonds (the city’s normal annual issuance plus the additional sewer pipe program). Staff said the council would be asked to adopt a parameter bond ordinance at the next business meeting to permit pricing of the first tranche. Council members stressed they want to avoid a rating downgrade and asked staff to show how the chosen rate path changes the S&P coverage calculation next year.