Provo City Council adopts option 3 for water-rate increase, directs staff to include it in fiscal 2025–26 budget

Provo City Council on Tuesday adopted a water-rate structure identified in staff materials as “option 3,” a change city staff will include in the fiscal year 2025–26 budget for the formal adoption vote scheduled for June 17.

Policy analyst Malia Daley reviewed four alternatives and told the council staff preference was to reach a motion on one option so the change could be incorporated in the budget ordinance. The council’s motion adopted option 3, the proposal that raises revenue by about 3.3 percent and applies equal-dollar increases across the three tiers.

The council’s discussion centered on how closely each option aligns with an American Water Works Association (AWWA) cost-of-service approach and how the chosen increase would affect future years. Public-works staff member Keith said “from an AWWA cost of service perspective, option 2 aligns the cost most closely with the impact on the system,” and recommended a gradual shift to cost-of-service ratios over time.

Councilor George Hamlin (mover) said he preferred option 2 but that votes did not appear to support it. He moved to adopt option 3 as a compromise; Councilor Craig Christiansen seconded. The roll-call vote was 5–2 in favor; Councilors Becky Bogdan, Gary Garrett, Rachel Whipple, Hamlin and Christiansen voted yes. Councilors McKay and Hogan voted no. The council clerk confirmed the motion “passes by a vote of 5 to 2.”

Councilors and staff discussed the practical implications of not choosing the AWWA-aligned option now: Keith said choosing a flatter rate this year would require steeper increases in later years and place proportionally larger increases on the highest-use tier in future years in order to reach the funding targets identified by Public Works. Daley noted the packet included projections showing subsequent-year increases under each present option but emphasized the council was not adopting a multi-year rate schedule at Tuesday’s meeting — only the structure for the coming budget year.

Council members also asked about exceptions for irrigation and urban agriculture. Councilor Becky Bogdan raised concerns about orchards and other properties that use irrigation and said staff should continue work on an urban-farming exemption. Public Works confirmed they are developing an irrigation/urban-farming exemption and will return with a proposal to the council tied to the budget process.

The council directed staff to include option 3 in the budget ordinance for the June 17 adoption hearing, and staff said they will include the revised consolidated fee schedule and associated revenue updates when the ordinance returns.

Why this matters: The adopted structure changes how the city allocates water costs across customer tiers and will affect household utility bills beginning with the next billing cycle after budget adoption. Staff repeatedly framed option 2 as most closely matching AWWA cost-of-service guidance; the council chose an intermediate path intended to ease the rate transition for customers while increasing revenue less steeply than option 2.

What’s next: City staff will update the tentative budget, consolidated fee schedule and exhibits to reflect option 3 and present the budget for public hearing and formal adoption on June 17.