Port Hueneme Water Agency adopts $9.1 million FY26 budget and approves $1.1 million upfront CIP payment

The Port Hueneme Water Agency unanimously adopted its fiscal year 2026 operating budget and a $1.1 million capital improvement program (CIP), and approved a proposal to bill the CIP as a lump-sum in July, the board decided at its regular meeting.

The action approves a proposed $9.1 million combined revenue-and-expense budget for FY26 that reflects higher water purchase costs tied to rates from United Water and Callego's, and includes a separate $1.1 million CIP line item that staff asked be paid up front so large design and construction bills can be paid without waiting on monthly collections.

Ashley Chaparro, Finance Director for the Port Hueneme Water Agency, told the board that water purchases are the agency's largest expense and that PHWA follows the rate trends set by the entities it buys from. "Our water purchases is the biggest expense for the PHWA budget. This is gonna lead us as far as how much do we need to budget to then cover those costs," Chaparro said. She presented FY24, FY25 (current) and the proposed FY26 figures and described a swap in fixed and variable components that leaves the overall per-entity total largely unchanged.

The approved budget shows $9.1 million in total revenue and expense for FY26. The CIP request is separate from the monthly fixed and variable rates and is shown as "miscellaneous revenue" on the budget. Chaparro said, "This would be billed to the entities, in July," and that the proposed July billing would follow the same percent allocations used for the monthly fixed rate, with the City of Port Hueneme taking a 54.27% share.

Plant operations staff described the CIP projects that make up the $1.1 million request. Two near-term projects identified for FY26 are a bag filter replacement (estimated about $440,000) and a water tank rehabilitation (estimated about $690,000). A larger membrane replacement project is planned for a following year and was estimated at about $1,200,000; staff said they pushed the membrane work to the subsequent fiscal year to keep the current CIP manageable.

Staff also summarized recently completed and in-progress work. An earlier low-flow pump project is complete; operators estimated that project has saved roughly $150,000 to $200,000 in water purchases by reducing use of imported water and increasing groundwater use. The bag filter design is complete and staff said they are ready to move to construction in the next few months; the tank rehabilitation design is also complete.

Operations staff explained the bag filter upgrade will replace the existing large exterior bag canisters with cartridge-style filters that better protect downstream membranes. The operations presenter said the bag filter is "the first stage of filtration" and "protects the membranes." Staff also said they are pursuing grants for the membranes and bag filter, and that the U.S. Navy has offered to provide a letter of support; however, staff noted the tank rehabilitation was classified as maintenance for grant purposes and may not qualify for many grants.

Agency staff told the board the proposed $1.1 million CIP would be funded from the water enterprise fund balance and that staff will return to the City Council to request adoption of the special CIP funding approach. The finance director emphasized the agency will run the usual year-end true-up: any unspent CIP amounts would be reconciled so customers are charged only for actual annual expenses.

The board voted to adopt the FY26 operating and CIP budgets, the proposed fixed and variable rate components, and the lump-sum CIP upfront payment. There were no public comments on the item and the motion passed unanimously with Vice Chair Thomas absent.

Separately, during closed session the board authorized the city manager to execute an extension to a tolling agreement by a 4-0 vote; the agency attorney reported that result when the meeting returned to open session.

The board adjourned with its next meeting scheduled for Monday, July 21, 2025, at 4 p.m.