Village consultants recommend final 10% water and sewer rate increase in 2026 to fund $92 million CIP

Consultants from Raftelus told the Village of Wellington council during a workshop that the village should implement the final 10% water and sewer rate increase in fiscal year 2026 and then return to annual indexing to fund a six‑year $92,000,000 capital improvement program.

The recommendation came as Joe Williams, a Raftelus consultant, and Michael Noga, a Raftelus consultant, presented a revenue sufficiency forecast and capital funding plan. “We do recommend doing the final 10% rate adjustment,” Williams said, adding that the dotted blue forecast line—which assumes the final 10% in 2026 and then reversion to indexing—provides sufficient revenue to fund operating costs, existing and proposed debt service, and the pay‑as‑you‑go portion of the capital plan.

Why it matters: The village is planning about $12–$15 million per year in capital spending, with major projects including meter replacement, membrane master‑plan work and various water and wastewater upgrades. The presentation said roughly $53,000,000 of the $92,000,000 program is expected to be funded by cash/reserves; the remainder would be covered by capacity charges, an anticipated PFAS settlement payment stream (up to about $6,000,000 over several years), and new debt.

Raftelus and village staff outlined key financing assumptions and near‑term steps. The village has awarded roughly $6.5 million of the meter replacement contract (the presenter said the project is about $11,000,000 total) and expects to fund the remainder—approximately $4,000,000—later this fiscal year. Raftelus recommended pursuing State Revolving Fund (SRF) loans for future projects, noting SRF loans have historically offered very low interest rates; one current SRF loan in process was described as having about a 20‑year repayment term and very low interest (presenters cited an expected funding rate around 1.2% for the meter project portion).

Staff timing and customer notices: Tanya, a village staff member who introduced the item, said the village will begin mailing rate adjustment notices in June to customers in the utility service area to meet statutorily required notice timelines. Final approval of the utility budget is scheduled for the August meeting, staff said.

Discussion highlights: Council members asked whether the forecast reflected the current budget and recent audited results; presenters said the model uses audited 2024 operations, the adopted 2025 utility budget, and available 2026 inputs, and assumes 4.5%–5% annual escalation for operating expenses going forward if full CIP funding is required. Raftelus noted an alternative indexed scenario (based on the village’s Water and Sewer Maintenance Index) would generate about 5.3% rather than the full 10% increase in 2026. The consultants emphasized the additional 10% is roughly a 5% increment above the index scenario and that the three‑year elevated‑increase program begun earlier has substantially strengthened the utility’s reserves and cash flow.

What was not decided: The presentation was a recommendation and informational workshop; the council did not record a final vote on the 2026 rate increase during the workshop. Staff indicated notices to customers will be sent in June and that formal approval would be part of the August budget process.

Next steps: Staff will finalize paperwork for the meter replacement debt award and bring documentation to the council on an upcoming agenda. The village will continue the SRF loan application process for additional projects and will bring the 2026 utility budget and any final rate ordinance to council for approval in August.