Committee recommends 20% sanitary sewer rate increase; cites MMSD charges and rising debt costs

The committee recommended that the City Council approve a 20% increase in sanitary sewer rates, citing large and unpredictable cost increases levied by the Madison Metropolitan Sewerage District (MMSD), recent increases in the city’s debt service, and the need to meet a required debt-service coverage ratio.

Mark, the presenter on the item, told the committee that MMSD charges have been rising and that the city must keep revenues at least 1.25 times its debt-service requirement to meet bond covenants. Mark said MMSD’s recent bills “are killing us right now,” noting a year-over-year jump that contributed to a loss in the sewer fund. He said staff expect annual increases from MMSD on the order of roughly $80,000–$100,000 in the near term and that the city’s recent capital projects and higher interest costs have increased principal-and-interest obligations.

Staff presented a multi-factor rationale: (1) elevated MMSD charges (billing and flow allocations beyond the city’s control), (2) higher principal-and-interest payments after recent borrowing for pump-station and other upgrades, and (3) flat or slightly declining local usage (which reduces revenue growth). To preserve the utility’s debt-service coverage and to maintain sewer-fund solvency, staff proposed a 20% rate increase and suggested the committee consider deferring certain capital projects if MMSD charges come in higher than projected.

Committee members asked for clearer itemization of MMSD charges, and staff said city administrators are actively following MMSD budget documents and regional discussions; staff offered to provide additional billing and flow data for committee and council review. The committee voted to recommend that the City Council adopt the 20% sanitary sewer rate increase and directed staff to prepare public information explaining the drivers of the increase, including MMSD charges.