Board approves 10‑year capital funding projection including biosolids program; modest rate increases planned

The Sacramento Area Sewer District board on Sept. 10 approved a 10‑year capital funding projection that incorporates the recently presented biosolids program and calls for modest rate increases and several future debt issuances.

Director of Finance Tepper Banda presented the long‑term financial plan update, saying the district is in strong fiscal health but will need to balance capital needs — including the biosolids program — against rate impacts. "Sac Sewer is in excellent financial condition, and that's puts us in a really good place to deal with all these problems that we're talking about," Banda said.

The board approved the capital funding projection by roll call. Banda summarized the projection as approximately $1.4 billion in treatment‑system capital spending and $217 million in collection‑system capital over the next 10 years. He said biosolids projects account for a large share of the treatment total and that staff used conservative assumptions for growth, interest and potential grant receipts.

Banda outlined planned financing actions: a potential $150 million bond issuance in the next fiscal year to support the harvest‑water program (amount may be reduced if the district receives additional California Water Commission grants) and a planned issuance of about $280 million in fiscal year 2028–29 to help fund the biosolids program. He also noted the district’s existing debt profile: the treatment system carries substantial outstanding debt from the ECHO Water program (about $1.85 billion outstanding) and current annual treatment debt service is roughly $128 million with a projected peak near $153 million over the planning horizon.

To preserve coverage ratios and provide capital resources, Banda said the plan includes modest additional treatment system rate increases: roughly $1.50 per year for four years starting after the next scheduled increase, totaling about $6 over that period; the collection system would see smaller increases later in the 10‑year period (about $0.75 per year totaling about $3 over four years). "We are looking at another 4 years... an average of a dollar 50 a year, which is a total of $6," Banda said.

Board members asked about assumptions for growth and inflation. Banda said the plan uses a conservative 0.5% annual customer growth assumption (roughly 3,000 ESDs net added per year under that assumption in the treatment service area noted) and escalations for non‑capital operating costs of about 2–5% per year; capital project costings use midpoint‑of‑construction escalation and project‑level estimates.

Director Kaplan pressed staff to review growth and construction‑cost assumptions annually; Banda said the plan is updated yearly and staff will continue to refine assumptions as designs and grant prospects firm up. The motion to receive the long‑term financial plan and approve the 10‑year capital funding projection was moved by Director Kaplan and seconded by Director Sewan and passed unanimously by roll call.

— Ending note: Staff said additional public outreach and a future rate presentation will follow; proposed debt issuances and grant opportunities may change the net borrowing need.