City Manager Eric Garrity described proposed changes to the city’s water and sewer budgets and several capital projects included in the FY 2025–26 draft.

Garrity told council the draft includes a proposed 7 percent increase to water and sewer rates (the transcript contains an inconsistent later reference to “70 percent,” which appears to be a transcription error; Garrity earlier and elsewhere in the presentation cited a 7 percent increase recommended in a prior rate study). He said the water operating fund is projected around $6.56 million and noted ongoing pressure from reduced consumption and chemical‑cost fluctuation.

On capital, Garrity identified a large marker against water and sewer capital this year: a roughly $15 million placeholder for a future sewer-plant rehabilitation project, which he said drives the combined water/sewer capital total to about $15.6 million. The manager also listed $240,000 proposed for water-storage tank repair, $100,000 requested for a PK alternate water‑supply study, and $60,000 for manhole and clean‑out replacement. He said the water fund requires a general-fund management-fee transfer ($800,000) and a $1.4 million transfer out largely to service existing water‑related debt.

Garrity cautioned that even with the proposed rate increase the city will draw on reserves to meet the capital and operating needs described. He asked council to prioritize the PK study and tank work as part of the budget deliberations and to allow staff to return with refined projections after YCAD valuations and other revenue adjustments.

Discussion only: council and staff reviewed project timing and options to phase capital work; direction: staff to refine water/sewer revenue and fund‑balance projections and return with updated cost estimates. No rate ordinance or formal rate-setting action occurred at the meeting.