Finance staff tells council enterprise funds will fund major FY26 capital work; $3.5 billion projected debt through 2060

At a council workshop, Dennis O'Hara, the city’s chief financial officer, told members the city’s enterprise funds — water, wastewater, solid waste, parking and golf operations — are being used to finance a large capital program and that borrowing will be paced to project schedules rather than taken as a single large issuance.

O'Hara said, “Enterprise funds, again, for those at home or those watching who may not know, are those agencies that we mandate operate, similar to a business. Everything they charge must be spent on their services. You know, you can't charge water rates for for the police, things like that.” He added that staff will avoid “borrow[ing] and start[ing] paying interest on any money that we're not putting to use.”

Why it matters: The enterprise funds hold most of the city's utility and user‑fee‑supported infrastructure. Decisions about when and how to borrow affect ratepayers, bond markets and long‑term operating budgets. Council members pressed staff for details on fund‑balance rules, reserve minimums and the likely timing of bond issues.

The most notable figures in the presentation: staff showed an anticipated FY26 capital improvement program (CIP) for enterprise funds near $300 million and roughly $1.3 billion over five years. For water and wastewater, staff presented an anticipated future principal need of about $764 million and projected total system principal of about $1.7 billion with roughly $1.8 billion in interest — a combined anticipation of about $3.5 billion of principal and interest through 2060 under conservative assumptions (the slide used a 5% interest rate and 30‑year terms for planning purposes).

Solid waste: staff described two short‑term borrowings that are intended to be rolled into a single 30‑year bond for solid waste, and presented an estimated future principal need of about $270 million for that fund. O'Hara said the solid waste fund has been building fund balance to meet repair and renovation subreserves and debt‑covenant requirements; he noted those subreserves include a 90‑day operating reserve that staff estimated at roughly $21 million and that comprises part of the fund's roughly $44–45 million balance now in the presentation.

Water and wastewater: staff showed water and wastewater fund balances rising and then being drawn down as the CIP accelerates. Rory Jones of the Water Department and Eric Weiss of Wastewater described major projects and operating‑cost pressures. Jones said higher chemical and electric costs have pushed operating expenses higher and that the department is exploring on‑site generation options (including limited hydroelectric and solar) but that payback periods are long.

Rates and bond feasibility: Mike Perry, with revenue and finance, said the city obtains financial feasibility reports from an external rate consultant before issuing bonds for water and wastewater. “Every time we issue a bond deal for water and wastewater, we have a financial feasibility report done by our rate consultant to ... answer questions to the ... potential buyers of our bonds that we have enough revenues coming in at the rate sufficient to support those future debt issuances,” Perry said. He said current rates and the city's AAA ratings support the next planned issues, subject to updated operating‑cost projections.

Parking and other enterprise funds: staff showed parking revenues increasing but also said parking is spending down fund balance to pay for modernization projects (license‑plate readers and garage work). The presentation flagged the arena parking agreement that guarantees a minimum — staff cited a $1,500,000 guaranteed payment under the arena arrangement — and noted renegotiation is underway and will affect future parking revenues.

Timing and approach to borrowing: O'Hara and staff repeatedly emphasized they expect to borrow as needed and not all at once. O'Hara told the council that the water/wastewater debt plan likely will be issued in multiple transactions over several years and that staff do not expect an immediate large single borrowing in FY26. Several council members asked for sensitivity analyses and for the administration to present long‑range scenarios showing how operating cost changes and different interest‑rate environments would affect rates and affordability.

What was directed: Council asked staff to provide more granular materials — breakouts of principal vs. interest on debt schedules, the subreserve percentage calculations for solid waste, the total outstanding debt for solid waste (short‑term and long‑term combined), project‑level CIP cost histories and a refreshed water/wastewater master plan and financial feasibility update. Staff indicated they have those analyses in progress or scheduled.

Bottom line: enterprise funds are financing large capital programs. Staff presented conservative debt projections to give council a planning envelope, said issuing will be timed to cash needs, and pledged more detailed feasibility and sensitivity work before future bond sales.