Boulder utilities present 2026 capital improvement plan; staff proposes higher rates to fund projects

City utilities staff advised the Utilities Advisory Board on June 3 that a multi-year push to repair and replace aging water, wastewater and stormwater infrastructure will require higher utility rates and continued use of bond financing.

The presentation, led by Joe Tadayuchi, director of utilities, and senior staff including Chris Douglas and Steph Klingemann, summarized a six-year capital improvement program that targets major projects such as the Barker gravity pipeline relining, monitoring and follow-up work at Barker Dam, the 60th Street treated-water transmission pipeline, reservoir and tank work, a wastewater relining program that began after the 2013 floods, and flood projects including South Boulder Creek and Gregory Canyon. Staff said some projects will be phased over several years and some early design work is expected in 2026.

Staff told the board the CIP balances reliability, risk and affordability. “We are trying to avoid rate spikes while maintaining system reliability,” Chris Douglas said. Steph Klingemann outlined proposed rate adjustments: an 8% increase in water rates, a 6% increase in wastewater and a 5% increase in stormwater/flood for 2026, followed by additional increases in 2027–28 (staff proposed 8% for water and wastewater in 2027–28 and 7% for storm and flood in later years) to sustain reinvestment.

Why it matters: Boulder’s utilities manage billions of dollars in buried and above‑ground assets. Staff said current annual reinvestment has averaged roughly $10 million but the program needs more — on the order of $15–20 million a year for the water utility alone — to “flatten the curve” of the asset condition index and avoid larger failures or emergency repairs.

Key projects and costs - Barker gravity pipeline: staff described about 14,000 feet of pipeline and siphons that require relining in winter work windows; the city is budgeting roughly $5 million per year for that program through 2029. Douglas said the relining restores, rather than expands, historical capacity. - Barker Dam and other high‑hazard dams: staff described recent state engineer adjustments to dam safety hydrologic and seismic analyses. For Barker Dam, experts recommended a program of targeted monitoring and test anchors before committing to a multi‑year, high‑cost stabilization project; staff said a large capital remedy could be orders of magnitude greater and that monitoring may be a prudent next step. - Treated‑water projects: the 60th Street transmission pipeline remains on track with sections opening this summer; a Kohler‑to‑Broadway pipeline and several tank replacements are planned for later years to support outages and reliability. - Wastewater: a sanitary sewer lining program launched after the 2013 flood remains a high priority; staff said the program has reduced the share of older, high‑risk pipe in downtown Boulder and the system is being rehabilitated on an accelerated schedule compared with earlier plans. - WRRF HVAC and piping: the Water Resources Recovery Facility’s HVAC and hot‑water loop replacement saw a large cost escalation from earlier estimates (staff said a prior estimate of about $600,000 has grown to roughly $11 million), prompting a request for additional 2026 funds. - Storm and flood: the South Boulder Creek mitigation project (estimated at about $66 million) is advancing to bid and permitting; Gregory Canyon design work will target roughly 25‑year protection in constrained urban reaches; the upper Goose Creek project combines stormwater and flood improvements with construction anticipated in later years.

Funding, bonds and reserves Staff said primary funding sources are user fees and municipal bonds, with targeted use of state and federal grants or loan forgiveness when available. Kellogg noted the enterprise fund limitation that no more than 10% of revenue may come from government sources under TABOR‑style constraints; staff described plant investment fees, biogas/hydropower sales and other supplemental revenues as additional sources. Steph Klingemann explained the financing strategy: bonding smooths rate impacts for large projects and was preferable to very large immediate rate hikes — staff said financing the South Boulder Creek project entirely by rates would require two years of 70–80% increases, an outcome the city avoids by issuing bonds.

Staff also reviewed reserve policy: operating reserves are targeted at 25% of operating expenses; a newer water resilience reserve is set at about 10% of water customer revenue; capital reserves are being strengthened for wastewater and storm/flood. Staff said day‑to‑day cash and debt metrics (days cash on hand and debt service coverage ratio) remain within typical targets, and that the city recently received a strong rating on the South Boulder Creek bond work that supports borrowing capacity.

Board discussion and next steps Board members pressed staff to highlight near‑term projects (those with the greatest impact in the next one to two years) and to explain how staff prioritizes tradeoffs when costs escalate. Joe Tadayuchi and program managers described a mix of analytic tools — asset‑condition indices, consequence‑of‑failure scoring, readiness to construct and interdepartmental coordination with transportation and planning — combined with judgment to re‑sequence projects when needed. Staff said the board will see a formal recommendation and a public hearing in July and that the board’s July recommendation will go to city council with a request that council adopt the CIP and rates in the budget process.

“Unless you individually reach out to us with concerns between now and July, we’re feeling like putting this together and coming back with what we’re proposing is where we’re at as a staff team,” Tadayuchi said.

Ending: Staff asked board members to review detailed spreadsheets and to return questions before the July meeting, when the board is expected to act on the CIP and proposed rate changes.