Bullhead City staff propose phased water and sewer rate increases to shore up aging system

Bullhead City officials presented a proposal during a special council meeting to raise water and sewer rates in phases over three years to cover operating shortfalls, reduce annual borrowing from the city general fund and pay for extensive infrastructure repairs. No legal action or vote was taken at the meeting.

Utility staff said the water enterprise is operating with recurring operating deficits and an unusually high backlog of repairs after the city’s takeover of the former private operator. “We are in a deep hole is what that what we’re trying to tell you,” Utilities Director Mark Clark said, summarizing the city’s financial position and long list of capital needs.

The proposed water schedule shown to council would raise base water rates by a phased series of percentage increases (about 19% in year one, then roughly 14% in each of the following two years) and consolidate two legacy rate structures (Mohave and North Mohave) into a single citywide rate. Staff presented sample bills showing the dollar effect for typical customers: the average household (about 6,000 gallons a month) was estimated to see roughly an $18 monthly increase by the end of the three-year phase-in, while customers with very large monthly use (used as examples at 17,000 and 27,000 gallons) would see larger, higher-dollar increases. Staff repeatedly emphasized that percentage increases read large but that the monthly-dollar impacts were smaller for most customers.

On wastewater, staff proposed a smaller, phased increase (presented as an approximately 9% program over three years) to restore reserves and cover ongoing operating and capital costs for sewer treatment and lift-station repairs. Staff said the city’s wastewater fund has needed systematic capital work and that the city has already spent substantial sums on sewer improvements since taking responsibility for the system.

Why it matters: Staff said the water utility has borrowed annually from the city’s general fund since acquisition and currently owes about $10 million to the general fund for the purchase and early operation of the enterprise. The council was told the system has experienced frequent main breaks (staff cited about 1,590 breaks since takeover and an annual water loss on the order of 35 million gallons), aging reservoirs and pressure-control equipment that were not maintained under the prior operator, and multiple capital projects planned or underway (new wells, transmission mains, a 1.25-million-gallon reservoir proposed for next year, and a multi-year hydrant installation program).

Council and staff noted a number of other points during discussion: staff reported the city has spent about $9.7 million on water capital improvements and about $17 million on wastewater improvements since taking over the utilities; the city’s average residential use is roughly 6,000 gallons per month; and North Mohave customers (about 2,000 accounts) have been on a historically lower base rate that staff proposes to consolidate into the citywide structure to remove a multi-year subsidy.

Council members raised equity concerns and asked staff to return additional options for customer assistance and billing flexibility. One council member asked whether a level-pay or budget plan could be offered; staff replied that such programs are doable and that the city already maintains limited assistance programs for veterans and low-income residents and can propose a more robust plan. Staff also acknowledged a numerical error on a slide showing a sample bill and said the charts would be corrected before public materials are mailed.

Disposition and next steps: Staff described this meeting as an initial workshop and laid out a tentative schedule: issue a formal notice of intent on June 5; publish public-notice materials and hold a public hearing on July 14; council consideration of adoption on August 5; and a likely effective date in early fall (staff recommended October 1 to allow about 60 days for billing and back-office changes, with September 4 or November 1 listed as alternatives). Staff said they will return at a future workshop (staff suggested June 5 as an additional review option) with a fuller package of assistance and billing-plan options for council review.

What was not decided: No ordinance or rate resolution was introduced or voted on at the meeting. Staff sought policy direction and council feedback rather than formal adoption.

Context and constraints: Staff said the proposal is a short-term, phased approach rather than a full cost-of-service study (the city did not complete a detailed cost-of-service study because staff said they were already “behind the 8 ball” operationally). Staff also noted supply-chain and labor pressures, rising materials costs and tariffs, long lead times on some equipment, and that roughly 38% of current utility spending is debt service. Staff emphasized the city’s stated goal of locally led rate decisions rather than rates set by out-of-state corporate management or the Arizona Corporation Commission.

Council members and staff repeatedly framed the proposal as a step to reduce reliance on general-fund loans and permit long-term capital work (mains, wells, reservoirs and pump/lift-station rehabs), while also asking staff to return with targeted customer-assistance and payment-plan mechanics for vulnerable households. Staff also described a list of possible revenue or cost-offset options under study (reclaimed-water uses, selling surplus effluent, asset sales or grant funding) but said those measures alone would not replace the revenue stream needed to operate the system.

A copy of the staff presentation and the public-notice schedule will be posted by the city before the public hearing; staff told council they would correct the slide errors noted during the meeting and add details on assistance programs before returning.