Wastewater revenues dip as leachate income falls; major capital plan drives proposed rate hikes

The Finance Committee was told on June 2 that fiscal 2025 wastewater revenues were significantly below budget—largely because leachate processing revenue fell—and that staff propose a 9.5% rate increase for FY26 to shore up the fund in advance of major capital projects.

Staff reported FY25 revenues were about $744,000 under budget, with sewage usage down $667,000 and leachate processing revenue down about $1.1 million compared with earlier years. The FY26 revenue budget assumes a 9.5% wastewater rate increase and shows a projected net loss of $1,950,000 in the FY26 pro forma column, producing an ending working capital of roughly $4,000,000.

Why it matters: staff warned that the system is approaching capacity at the Hall Street treatment plant and that significant secondary process improvements are likely required. The CIP materials shown to the committee list roughly $28,000,000 in FY28 total capital requests and an estimated $30,000,000 cost to recommended secondary process improvements. Those capital costs are the core driver of modeled rate increases extending into the late 2020s (double‑digit rises in some out years in the pro forma).

Leachate and permit constraints: staff explained the city has reduced or ceased acceptance of leachate from outside generators because of plant loading and toxicity concerns and to remain in compliance with the Hall Street plant discharge permit. Councilor Kurtz asked why the city no longer accepts leachate; staff replied environmental and permit constraints were the primary reasons and that accepting leachate would exacerbate river and permit issues.

Capacity questions and options: Councilors asked whether Pentacook (a second treatment plant) had spare capacity and if the city could send more flow between plants; staff said Pentacook has reached higher utilization because of new development and that engineers are evaluating options including upgrades or interconnection depending on capital programming.

Direction vs. decision: staff presented the pro forma and CIP and recommended a 9.5% rate increase; councilors sought clarification and asked staff to continue planning and present formal ordinances and capital financing options. No ordinance or bond authorization was adopted on June 2.

Ending: committee members were warned the wastewater fund will require substantive capital investment decisions and rate adjustments in the coming budget years to maintain compliance and accommodate growth; staff will return with more detailed designs, cost estimates and ordinance language for council consideration.