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Utilities section: staff proposes 3% rate increase, tighter deposit rules after unpaid commercial accounts
Summary
Staff proposed a 3% water and sewer rate increase and said it will seek higher customer deposits for high-usage commercial accounts after several unpaid balances (notably a vacated restaurant and a retail property) created losses; council asked staff and the city attorney to review lien and collection practices at property sale/closing.
Staff proposed a 3% increase in water and sewer rates in the FY2026 draft and said the utility team will pursue higher customer deposits for commercial accounts whose usage exceeds their deposit levels.
Finance Director Adam Thompson told councilors the city lost several thousand dollars when businesses changed ownership while utility balances remained unpaid. He used an example where a restaurant’s low deposit ($175) coincided with an $8,000 unpaid balance during bankruptcy proceedings and said bankruptcy protections had prevented shutoff; another commercial account tied to a property sale also left the city with unpaid charges while ownership changed.
Councilors asked whether the city’s lien and closing‑search processes could have captured the unpaid balances at sale. Staff said title companies and closing agents commonly request payoff and lien information; the city indicated it would review whether that process was properly executed in those instances and directed the city attorney to advise on timing and lien mechanics. Thompson said staff will propose revised deposit rules tied to measured usage and will pursue collection avenues identified by legal counsel.
Ending: Staff will draft revised deposit and billing procedures and return with legal guidance on lien procedures for the council to review before finalizing utility rate and deposit policy changes in the FY2026 budget.
