Council hears utility-rate update as staff warns of cash-flow pinch; staff aims for May 12 follow-up

City staff told the Snoqualmie City Council on April 28 that the city’s utility finances face near-term cash-flow pressure and that a pending rate-study ordinance and a high-cost water-reservoir project make timing for revenue measures important.

Dylan Gamble, the city’s CIP manager, presented the update and said an appraisal and rate-modeling process is nearly complete with consultant FCS Group; staff expects an interim report in the coming week and will aim to present materials to council on May 12 so the council can consider adopting rates on a near-term schedule.

Gamble told the council that the Class A water reservoir project had come in about $400,000 over initial estimates and that construction management and other contract costs could push that over $1 million. "Our reserves are about a million dollars for the combined utility," Gamble said, warning that the reservoir spending and timing could erode reserves and produce a cash-flow pinch before bonding revenue or grants arrive.

Staff identified several contributing factors: delays in earlier rate increases (a 2020 pause in increases), lower-than-anticipated growth and associated lower development-fee collections (system development charges), operations costs exceeding budget (notably wastewater electricity and WRF operations increases), and project timing that requires spending before borrowing or reimbursement is realized.

Gamble said the combined effect is a tightening in 2025 cash flow because assumed bonding and reimbursements may not be available in time to cover large up-front project disbursements. Staff proposed several mitigation options for council consideration, including delaying noncritical CIP projects (for example, deferring urban forestry work to 2026), increasing short-term transfers from operations, pursuing short-term external financing (bank bridge loan or interfund loan from nonutility sales-tax funds), and packaging some projects differently to reduce up-front costs.

Councilmembers asked for a clear, public-facing summary of the rate study’s rationale — a document that explains why the consultant and staff proposed the allocation of increases across customer classes and why the council had chosen a phased approach rather than an immediate, full reallocation. Several councilors said they want materials the public can read and understand; Councilmember Johnson asked for an explanatory summary that lays out the consequences of alternate choices.

Gamble and the mayor agreed to try to provide an interim report and additional attachments for council and public review with the goal of returning to council on May 12 (and to Parks and Public Works Committee on May 20 if needed) to complete rate study deliberations and consider ordinance adoption. Staff emphasized the need to balance the timing of bonding and reimbursements with project cash-flow demands.