Durham staff outline proposed water and sewer rate increases, cite Jordan Lake project as major driver

Durham City staff presented proposed water and sewer rates and a 10‑year financial model for the utility during a council work session, saying the city must finance major infrastructure projects including connection to Jordan Lake and ongoing rehabilitation of reservoirs and treatment plants.

The utility presentation highlighted system scale and costs: Durham manages four treatment plants, roughly 2,600 miles of pipe and about 106,000 customer accounts. Staff said long‑term capital needs tied to Jordan Lake and other projects push the utility capital program to nearly $2 billion over the next five years, with a single Jordan Lake‑related construction contract described as “generational” in scale. For a typical single‑family household using 108 cubic feet per month, staff said the proposed changes would raise the bill by about $2.41 per month.

City staff said the Jordan Lake work is likely to require major new borrowing. The presentation noted the city is negotiating governance and cost‑sharing agreements with other utilities and counties that will have access to Jordan Lake water; those agreements will affect how much of the initial construction cost Durham bears and how the city recovers costs through rates and allocations.

Why it matters: staff characterized Jordan Lake as a multi‑decade, multi‑hundred‑million‑dollar (they referenced figures above $1 billion for the overall program) undertaking that will affect rates, debt levels and utility capital plans for years. Council members focused on affordability and on the city’s assistance fund, which staff said currently holds $150,000 and has supported about 1,068 households this fiscal year.

Key details from the presentation: - System scale: four treatment plants, 2,600 miles of mains, 106,000 accounts. - Capital pressures: staff cited nearly $2 billion in projected utility capital needs over the next five years, largely tied to Jordan Lake and distribution upgrades; one treatment‑plant construction contract was described as having an anticipated value above $400 million. - Specific projects cited: rehabilitation projects for Lake Michie and Little River (an $85 million project cited as underway), and a planned treatment plant and long transmission mains (presenters referenced a 17‑mile, 42‑inch main and pump station associated with Jordan Lake). - Customer impacts: staff proposed modest, tiered increases in both monthly service charges and usage tiers; the example given for a typical residential customer was roughly a $2.41 monthly increase. Staff said the proposal includes higher incremental charges for high‑use tiers as a conservation signal. - Affordability: about 40% of customers fall in the lowest rate tier; staff said the systemwide bill burden is about 1.1% of median household income, near commonly used benchmarks. Staff also said they will continue to track need and, if demand for assistance grows, the council and administration have historically increased the assistance fund during budget cycles.

Council questions focused on three areas: (1) the capacity and governance agreements for Jordan Lake and how cost and allocation will be shared with Sanford and neighboring utilities, (2) financing options (bonds, loans and potential state/federal programs) and (3) affordability and customer assistance. Staff said the city will pursue standard utility financing (bonds and low‑interest loans) and continue to seek grants and state program funds but currently anticipates borrowing is the primary financing route for the larger Jordan Lake components.

Staff also described operational and efficiency work: automated meter and advanced reading technologies (moving from AMR to an AMI platform), energy‑use audits at plants, a biosolids plan and early steps to electrify and provide charging infrastructure at fleet facilities. The presentation named the UNC Environmental Finance Center as a benchmark source used in comparisons with other North Carolina utilities.

The presentation was informational; the council did not take a formal vote on rates during the session. Staff said they will return with finalized rate ordinances and recommended governance agreements after ongoing negotiations and additional engineering work.