Committee holds extended listening session on sewer rates and wastewater financing; DES presents 10‑year rate study and options

The Honolulu City Council Budget Committee held an extended, informational listening session on Bill 60, a comprehensive package of proposed changes to sewer service charges, wastewater disposal charges, and related facility fees presented by the Department of Environmental Services.

Roger Babcock, director‑designate of the Department of Environmental Services, walked committee members through a finalized sewer-rate study that estimates the city’s wastewater system serves about 750,000 residents with approximately 149,000 billing accounts, 2,100 miles of sewer pipe, nine treatment plants and roughly 100 million gallons per day of average wastewater flow. He said the study accounts for operation-and-maintenance costs, current and projected debt service, reserve requirements and a multi‑billion‑dollar capital improvement program driven in part by consent‑decree obligations and planned Sand Island upgrades.

The rate-study presentation showed options for smoothing annual increases to meet revenue requirements. DES presented a 10‑year package in which cumulative increases produce the revenue needed to fund the capital program and debt service. The study also evaluated adjusting rate structure to improve equity and conservation signals; DES and a stakeholder advisory group recommended moving toward a roughly 50/50 split between fixed monthly charges and volumetric (per‑thousand‑gallons) charges so customers have more control over bills and stronger water‑conservation incentives.

On customer protections, the advisory group recommended a customer‑assistance program modeled on the city's prior rental-and-utility relief program. DES presented a preliminary proposal for a $10 million per year assistance program, administered by a third‑party nonprofit, with income qualifications (e.g., 80% of area median income) and a monthly credit (a staff example showed a $20–$25 monthly credit against the fixed portion of the bill).

The department also explained the timing drivers for debt and capital: Sand Island Wastewater Treatment Plant upgrades to meet a 2010 federal consent decree are scheduled for award in 2028 with construction beginning in 2029 and a final completion deadline of December 31, 2035; DES estimated the combined Sand Island upgrades at about $2.5 billion. Babcock told the committee that failing to plan for bond financings and rate adjustments would threaten reserve and bond‑covenant requirements.

Emma Yuan of the Department of Land and Natural Resources urged the council to consider EPA integrated planning as an additional pathway to sequence and prioritize projects that address both stormwater and wastewater needs; she described integrated planning as "a voluntary opportunity for a municipality to develop an integrated plan to meet multiple Clean Water Act requirements." A retired wastewater engineer, Roy Abe, also testified in support of exploring alternatives and said some technical work and historic monitoring should inform the choice of treatment approaches.

Committee members asked detailed questions about customer impacts, timing, equity for multifamily customers, and how the proposal would interact with existing Board of Water Supply metering and billing practices. Council members also discussed bond-rating implications if rate action is delayed; DES and the city's financial advisors told the committee that rating agencies have assumed the department will adopt a multi‑year plan and that delays or smaller increases would require steeper increases later.

No committee motion was made; the item was a listening session. DES was asked to provide more analysis, sample bills and public‑education materials and the committee signaled that subsequent hearings and outreach will be scheduled before any final committee vote on fee changes.