Consultants recommend 15.5% water and wastewater increases to fund capital plan

At a City of Apopka budget workshop, Henry Thomas, senior vice president and financial consultant, presented a rate study recommending a front-loaded increase in water and wastewater user rates to fund a large capital improvement plan and rebuild operating reserves. Thomas said the consultant team would provide two of three final reports after the workshop and that the third would follow before any adoption hearing. The study recommends raising rates 15.5% in 2026 and 2027 and then moving to smaller annual increases (about 3.5% thereafter) to achieve targeted financial metrics. Thomas said the goal is to reach operating reserves near the consultant target and to meet debt-service coverage requirements for assumed borrowing. “We would recommend you adopt the proposed adjustment plan,” Thomas told the mayor and commissioners. Thomas walked the council through the key drivers: a $188 million capital improvement plan, an assumption of new debt (modeled as State Revolving Fund–type loans), increases in operating costs and inflationary pressures, and planned staffing additions. The study shows the combined water and wastewater system serving roughly 29,000 water accounts, 24,000 wastewater accounts and 10,800 reclaimed-water accounts in fiscal 2025. Under existing rates and projected customer growth, combined system revenues would rise modestly from about $33.7 million to about $36.6 million over five years; the plan assumes impact-fee receipts in high-growth years could be as much as roughly $20 million in the first year and average near $10 million annually thereafter. The forecast includes an operating-expense increase from about $24.7 million to approximately $33.9 million over the five-year window, and eight new full-time positions over the period that add roughly $600,000 in annual personnel cost by 2029. The consultant modeled new annual debt beginning in fiscal 2026 of about $3.2 million, bringing total debt to about $8.1 million by 2027 to fund expansion projects. The consultant illustrated bill impacts using a 6,000-gallon combined water and wastewater customer. That bill would rise from $71.38 to $82.46 under the proposed rate path, an increase of $11.08 per month for that consumption example. Staff and consultants noted procedural next steps: notices to ratepayers must be issued in advance of any public hearing, and the consultant said staff would include the proposed rates in the city’s October budget package and return to the council with formal adoption hearings (the consultants identified a hearing in September as the likely adoption meeting). At the workshop the council gave consensus to proceed with the public-notice process for utility rates; staff said the notices must meet the August 1 deadline for inclusion in the hearing schedule. The discussion was limited to the study and implementation timing; no final rate ordinance was adopted at the workshop.