Wastewater officials propose continued 5% rate increases, outline major capital program and reserve strategy

Consultants from Burns & McDonnell and Johnson County Wastewater staff told commissioners the utility’s financial plan supports a 5% annual rate increase as the most likely path to maintain capital projects, meet debt service and sustain operating reserves.

Dave Nauman of Burns & McDonnell said the 5% planning assumption has held up over recent years and compared Johnson County’s average monthly wastewater bill favorably against regional peers. Nauman said integrated planning and a mix of WIFIA and State Revolving Fund (SRF) loans have helped lower financing costs; staff reported estimated financing savings of more than $130 million through alternative financing strategies.

Nut graf: the utility faces a multiyear capital program — including Nelson plant completion, Mill Creek storage, Tomahawk and future plant expansions — and staff urged the board to view the 5% assumption as a stabilization tool that leans on reserves in the short term while preserving coverage ratios for future debt.

Staff described the operating fund and capital fund structure, target reserves (90–180 days), and the capital program approach that phases very large projects to match available financing and reserve balances. Nauman and staff said Nelson project work was placed under multiple guaranteed‑maximum‑price contracts and some major equipment and piping were pre‑procured to reduce inflation exposure.

Commissioners asked about inflation, tariff risks and SRF/WIFIA availability. Staff said the Nelson project uses a GMP and includes allowances; local teams are meeting weekly with the contractor to mitigate tariff and inflation risk. They also warned that proposed federal cuts to SRF in some budget drafts could materially reduce low‑cost financing nationally, and that would increase borrowing costs for major projects if alternatives aren’t found.

Wastewater staff presented a CIP with large near‑term cash needs (Nelson completion and pump station work): the five‑year capital program shown in the presentation totaled roughly $669 million, with 2026’s capital request just over $231 million and a one‑year capital ask of about $231 million. Staff said customers would see a modest bill increase under the proposed 2026 rate schedule — about $2.54 per month for the average residential user under projected 2026 rates — and that these increases are projected to keep Johnson County competitive regionally.

Ending: staff said they would continue to monitor inflation, debt markets and federal/state funding programs and return as capital work and financing decisions firm up.