Committee hears staff presentation on 2025–2030 utility rate adjustment; asks for options to limit 2025 increase to 10%

City staff presented Agenda Bill 25-003 — a draft ordinance to change the municipal code governing water, sewer and stormwater rates for 2025–2030 — during the Parks and Public Works Committee meeting on Jan. 7.

The proposed rate package would raise combined residential utility charges primarily to cover capital projects and related debt service; staff’s workbook shows a proposed 12.11% combined increase for 2025 and a notably larger 18% first‑year jump in the sewer rate tied to upcoming capital work. Committee members asked staff to return with options that would limit the 2025 combined increase to 10% or less and to provide multiple scenarios and supporting analyses before the ordinance moves to full council.

Why it matters: the increases would affect monthly bills for residential, multifamily and commercial customers. Committee members said the single largest near-term increase in 2025 could be difficult for ratepayers and asked staff to identify options to soften the immediate impact while still funding required projects and regulatory obligations.

Staff presentation and technical details Dylan, a staff member, summarized the ordinance format and how to read the rate tables, noting underlines indicate additions and strikethroughs removals in the draft municipal code language. He said the staff package includes (a) an "average residential" illustrative bill using an assumed average usage of 700 CCF, (b) percentage changes year‑to‑year for each utility, and (c) the ordinance‑format rate tables. Dylan said all customers are billed from smart meters and that the draft does not include proposed GFC (growth‑fee/construction fee) changes pending a future CIP discussion.

Staff and councilors identified the key capital drivers behind the 2025 increase: completion of WRF Phase 3 (the wastewater treatment facility work), construction of a Class A water reservoir adjacent to the golf course, and stormwater work tied to the Sandy Cove project. Staff said the reservoir is expected to be funded in part by a low‑interest loan (described in the discussion as a 1% loan) and that the WRF project and other mains replacements are significant cost drivers. Rough figures mentioned in committee discussion were approximately $15 million for the wastewater facility across multiple years and about $8.3 million tied to reservoir work in the biennium; mains replacement figures were described approximately (speaker gave a range near $0.8–$1.8 million).

Debt, bonding and timing Committee members pressed staff on whether timing or additional bonding could smooth the 2025 impact. Staff explained the mix of pay‑go, loans and bonds affects annual rate pressure and noted legal or contractual constraints and regulatory mandates limit how much projects can be delayed. Committee members and staff referenced a maximum utility debt guideline of 50% (a policy/constraint referenced in the discussion) and observed the sewer fund’s current borrowing level was reported at about 42% of that limit; increasing borrowing closer to the cap would reduce near‑term rate pressure but would change long‑term debt service requirements.

Equity and affordability concerns Council members emphasized that the 2025 increase is the largest single proposed jump in recent years and could be hard for some residents to absorb. Staff reminded the committee the city uses an assumed average residential usage to illustrate impacts, and staff also noted the city operates an affordability program that can reduce qualifying ratepayers’ water and sewer charges by about 30% (the program requires annual application). Committee members requested that staff present alternative schedules that spread some of the 2025 increase into later years and show how those alternatives affect multifamily and commercial classes.

Committee direction and next steps Rather than voting on the ordinance at committee, members instructed staff to return with analysis and options. Specifically, staff were asked to: - Produce options and scenarios that would keep the combined 2025 increase at 10% or less (committee asked for at least three distinct options/approaches). - Model impacts across customer classes, including illustrative commercial customer examples (heavy and light commercial) and historical commercial rate comparisons. - Recalculate bonding/debt‑service impacts (staff said they would work with FCS Group or similar consultants to recalculate bond numbers). - Describe which projects, if any, could be delayed without jeopardizing regulatory compliance or existing contracts, and the tradeoffs of each choice.

Committee members signaled they prefer bringing the ordinance to the full council’s public hearing calendar but want the additional homework/analyses available for council consideration. Staff said the committee may either forward the current draft and let council decide whether to amend it, or delay committee action to allow a revised draft to return to committee before it goes to the council public hearing.

Votes and routine actions The committee approved the meeting agenda and the Dec. 3 minutes and later approved a motion to adjourn; those routine votes were recorded without detailed roll‑call tallies in the transcript.

Ending Committee members reiterated the need to balance regulatory commitments, project timing and ratepayer affordability. Staff will return with the requested options, commercial modeling and bond recalculations for the committee and council to consider before final adoption of the ordinance.