Meridian weighs $144.5 million water‑sewer capital plan and three rate options, no vote taken

Meridian — City consultants told the Meridian City Council on June 3 that the city must raise more revenue to pay for a $144,500,000 water and sewer capital improvement plan tied largely to regulatory requirements and a consent decree, and presented three financing scenarios for council guidance. Piper Brandt of Raftelis said the options were “things for the council to think about and we’re gonna need to take some action in the coming months, but there’s no action that’s gonna need to be taken today.”

Why it matters: the projects are intended to reduce sanitary sewer overflows, meet evolving EPA treatment standards and maintain safe drinking water and wastewater treatment. Brandt said the planned capital program would require multiple bond issues and substantially higher annual debt service beginning in fiscal 2026, and that Meridian must set rates to generate the revenue to cover operating costs, existing debt service (about $4.6 million now) and the new debt service for the CIP.

Raftelis outlined three scenarios: (1A) implement immediately a capital‑recovery fee (meter‑based) and reduce annual general rate increases to 7.5%; (1B) phase the capital‑recovery fee in over two years with a one‑year 9% increase followed by 7.5% increases; or (2) keep the status‑quo 9% annual increases and accept that the city would only be able to fund roughly 75% (about $108 million) of the CIP. Brandt described the capital‑recovery fee under option 1A as $3 per month for water and $10 per month for sewer for a five‑eighths‑inch meter, scaled higher for larger meters; the phased option would start at $1.50/$5 and reach $3/$10 in year two.

On customer impact, Brandt presented Raftelis’ model showing a large up‑front impact under the full fee option but smaller annual increases later; she said the firm’s example typical residential customer using 3,000 gallons would see a per‑day increase of about 52–53 cents under the full capital‑recovery approach. The consultants also showed that continuing only the current 9% annual increases would produce a multi‑year deficit and leave some planned projects unfunded unless the city reduced its capital plan.

Timing and next steps: consultants said the financing team expects to refine a recommendation after the council gives staff policy guidance and to complete bond issuance documents if the council chooses financing; Raftelis and the municipal advisor indicated a target of preparing for a late‑November closing on the first revenue bond issue, with the first additional debt service appearing in FY2026 (city fiscal year is Oct. 1–Sept. 30). Nnamdi Thompson of Government Consultants Incorporated, the city’s municipal advisor, introduced the presentation and framed the session as an initial discussion.

Council action tied to system projects: although the council did not adopt rates on June 3, members approved a separate, related procurement: an order authorizing task order number 5 with Kimberly Horn & Associates for design and construction engineering services for potable water supply improvements, phase 1 (a 1,400‑gallon‑per‑minute groundwater well), at $663,600. City staff said the well site under consideration is at Phil Hardin Park on city‑owned property and estimated installation would take about 18–24 months because of high market demand for well contractors.

The council also approved emergency declarations to repair a ruptured freshwater line at 17th Avenue and B Street and to repair a failed high‑service pump (pump No. 3) at the B Street Freshwater Plant; staff reported the pump had been repaired and returned to service the prior day.

What’s next: consultants asked the council to provide direction on which path to pursue so staff can finalize the rate model and bring a formal recommendation and rate ordinance for council approval at a later meeting. No formal rate action or ordinance vote occurred on June 3.

Quote: “We are having to do this because the regulatory agencies are requiring us to do it,” Piper Brandt said, summarizing why the capital program is necessary. Nnamdi Thompson introduced the item as municipal advisor and framed the session as a presentation and initial discussion.

Ending: Council members and staff said they will review the scenarios, ask for additional modeling if needed, and return with a finalized recommendation and bond‑issuance documents if the council selects a financing path. The consultants noted the plan can be revisited annually; Brandt recommended revisiting the model each year as conditions change.