At a City of Montgomery workshop on May 22, 2025, council members and staff discussed the city’s capital improvement plan for water and sewer, including a proposed Water Plant No. 4 and the next phase of the Town Creek wastewater plant, and reviewed financing options that could total about $22 million.

The discussion focused on project scope and timing, potential phasing to reduce up-front costs, the effect of impact fees and rate changes on debt capacity, and state permitting requirements that could drive additional future expenses.

City staff and a consultant described two large near-term projects: Water Plant No. 4 (proposed at the Briarley development site) and the Town Creek wastewater expansion (phase two of a multi‑phase expansion). Staff said initial design work is under way and that the plants are being designed to allow future expansion more efficiently. A newly drilled well showed higher-than-expected output during preliminary testing, which staff said will improve the city’s water-production capacity in the short term.

Staff presented a planning estimate that combines water and sewer projects into a roughly $22 million program. That total includes both construction and ancillary elements such as an elevated storage tank; staff said the elevated tank is a material line item of “a couple million dollars” and that phasing the elevated storage could reduce near‑term costs. The consultant said an earlier construction-only estimate from the designer was about $11 million for one full-construction package and that phasing could change the total but that inflation and remobilization costs would push phased construction higher than a single package.

City staff noted that the Texas Commission on Environmental Quality (TCEQ) typically requires elevated storage once a system reaches a threshold (staff cited 2,500 connections as a trigger) but said the city can request an alternative or temporary exception if hydraulic modeling shows adequate pressure without the elevated tank. Staff said any exception would be data driven and that the state would set the terms and any allowed delay if it approves an exception.

On funding, staff and the city’s finance representative reviewed several levers: utility revenue bonds supported by higher water and sewer rates, tax-supported bonds, and the use of development impact fees. Staff said a planned rate structure change under review would raise the average single-family residential water and sewer bill from about $52.62 to $63.07 per month under the consultant’s scenario, and that additional revenue from the proposed rate changes could roughly support about $11 million of borrowing. Staff said the remainder of the roughly $22 million program would likely come from tax-supported bonds or other borrowing, depending on the final scenario.

Council members asked about impact fees and timing. Staff estimated the impact-fee fund balance would be about $3.3 million by year-end if the city spent nothing from it, and discussed a projected accumulation of impact fees through 2027 that staff characterized as material (staff used a figure on the order of $6.2 million by late 2027 in the example scenarios). Staff explained Texas rules limit impact-fee use to capacity-increasing improvements and described the city’s practice of making certain impact-fee payments due at the time of planning under development agreements rather than at final connection.

Council members also pressed on annexation and regional pressures. The discussion mentioned that Conroe’s expanded extraterritorial jurisdiction (ETJ) following its population exceeding 100,000 affects Montgomery’s planning area on the east/west borders and raised questions about the city’s readiness to accept large annexations or new developments if they proceed.

There was no formal vote on the CIP or on financing choices at the workshop. Staff said they would return with more detailed analysis, a pros-and-cons comparison of phased versus single-package construction, and refined financing scenarios for council guidance.

Ending: Council members expressed a desire to remain “in front” of growth rather than behind it; staff said they would follow up with the detailed scenarios and timing estimates at a future meeting.