Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Utility Rates topic
No spam. Unsubscribe anytime.
Staff warns of cash-flow squeeze; rate study draft due to committee in mid-May
Summary
City staff told the Parks and Public Works Committee they expect a draft of the rate-section of the utility rate study from consultant FCS Group in early May and warned that a mix of budget overruns, lower GFC collections and project acceleration may prevent the city from issuing utility revenue bonds in 2025.
City staff presented an update on the utility rate study and a series of financial pressures that could create a near-term cash-flow squeeze for water, wastewater and stormwater capital projects.
Dylan (staff member) said the consultant FCS Group is working toward a draft rate-section report and staff expects to present that draft at the next Parks and Public Works Committee meeting in mid-May and then bring it to full council. “FCS is working towards it. They should be getting us a report in early May, and I will be bringing it to the first possible parks and public works committee meeting in May,” Dylan said.
Staff identified multiple factors putting pressure on utility finances: projects coming in over budget; acceleration of several capital projects including wastewater treatment facility phase III and an irrigation reservoir; lower-than-anticipated growth leading to reduced capacity-fee (GFC) collections; and an overspend in wastewater operations driven by construction and higher electrical use during work on the treatment facility.
A key concern staff raised is that revenue bonds assumed in previous rate models may not be achievable in 2025. Dylan said, “We probably cannot…get a bond together in 2025,” and staff estimated bond financing might be possible in 2026 after a 4–6 month preparation period.
Staff outlined short-term mitigation options: delaying some noncritical CIP projects for a year; seeking short-term interfund loans or borrowing from non-utility capital (sales-tax-backed) funds; pursuing short-term external financing from banks; and adjusting transfers between operations and capital if operational budgets allow. The finance staff representative noted that interfund loans would require repayment with interest and that the city prefers internal loans over external financing when feasible.
Committee members pressed staff for analysis before any transfers from operations to capital are made. One member said they were concerned about reducing operations funding without a detailed scrub of operating budgets. Staff replied they had already updated operations budgets to better reflect current costs but acknowledged a further deep dive would be needed before transferring significant funds to capital.
On funding needs, staff and committee members discussed a range of figures: staff said a previously discussed $44,000 monthly revenue loss estimate related to delay in ordinance adoption was a high-side figure and that updated modeling (relying more on bonding) would lower that estimate. A finance speaker said the gap to reach a near-term reserve/debt-coverage target was likely closer to $1.8 million (rather than $3 million) to restore the utility coverage ratio to policy levels, though staff indicated these numbers require further verification.
Staff emphasized there is no single solution and that a combination of delaying lower-priority projects, short-term financing and completing the rate ordinance to enable bonding will be required. The committee did not take a formal vote on the draft rate report; staff will return when the FCS Group draft is complete and circulate supporting financial analyses.
