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Santa Fe officials unveil multi-year water and wastewater rate increases to fund $300M+ infrastructure
Summary
City staff presented a plan to raise water and wastewater revenues over the next decade to cover major capital projects — including two dam rehabilitations and a planned $182 million wastewater plant investment — with proposed average-bill increases phased over 5–10 years and a mix of grants and very low-interest loans to reduce customer impact.
Santa Fe officials presented a package of utility revenue increases and financing proposals aimed at funding more than $300 million of water and wastewater capital projects over the next five to ten years.
The proposed plan combines state and federal grants and low-interest loans with a phased utility rate increase. Jesse Roche, interim public utilities director, told the governing body the proposal would raise average bills gradually so the utilities can fund large projects including two dam rehabilitations and a major upgrade or replacement of the Paseo Real Water Reclamation Facility.
Roche said, "we need to increase revenues." He told the council inflation and deferred investment since 2013 left the utilities unable to cover planned work: "Since 02/2013, inflation has increased by 41%…a dollar of revenue pays for 41% less goods and services than it did in 2013." The presentation showed water and wastewater together averaged about $65 per month and the package would gradually raise the combined bill toward an $82 average by the end of the planning period.
City finance director Emily Oster explained the plan in credit-market terms. Oster described recently secured borrowing terms the city is pursuing, including an essentially 0.1% loan through the New Mexico Environment Department Clean Water State Revolving Loan Fund: "That extremely low interest loan that we've been able to secure…allowing us access to up to $151,000,000 of funding at the interest rate of 0.1% is exceptional," she said, but added the loans still must be repaid and the utilities need revenue to cover debt service.
Roche and consultants laid out the capital needs: roughly $125 million of water projects (two dams, a treatment plant upgrade and the San Juan–Chama return-flow pipeline) and an estimated $182 million for the wastewater reclamation facility. Roche said prior reserve balances would be consumed by those projects and that without rate and financing changes the water fund would be negative within a few years.
The package staff presented includes: pursuing approximately $77 million in grants/low-rate loans for water projects; revising the development fee-in-lieu for water rights; seeking about $114 million in near-zero-interest loans for wastewater; and a proposed revenue schedule that raises water revenues 4% per year for five years (with an ongoing smaller step afterward) and wastewater revenues 4% per year for ten years. As an example of customer impact, Roche said an average residential account would see roughly $3 per month added in the near term and then additional phased adjustments over the next five to ten years.
Mayor Alan Weber and several councilors emphasized the cost of inaction. Councilor Amanda Chavez, chair of the public works and utilities committee, and others said meeting compliance and reliability standards for the wastewater plant required near-term commitments even as the city works to limit customer impacts. The finance director noted the city has applied for and received some grants and that the new low-cost borrowing materially reduces the cost of borrowing compared with typical bond rates.
City staff said the governing body would consider an ordinance to implement wastewater rate changes in two months and a later ordinance to phase in water rate changes so they could become effective in January where applicable. Roche said detailed development and billing impacts will be worked through committee and public hearings prior to final votes.
Supporters of the plan at the meeting — including the city manager and the FCS consultant who assisted staff — said the blended approach of grants, low‑interest loans and phased rate increases would address immediate compliance and reliability needs while spreading costs over time. Opponents and some councilors pressed staff for more detail on customer protections, the treatment of low-income households, and whether alternatives (additional grants, different project scopes or timing) could reduce rate pressure.
Staff recommended continued committee review and public outreach; the governing body is expected to consider ordinance language at committee and then return to the full council for potential adoption in the coming months.
