Durham officials propose modest water and sewer rate increases to fund major capital projects

Durham City officials on April 24 presented proposed water and sewer rates for fiscal year 2025–26 that would raise overall utility charges to support a multiyear capital program, rising construction costs and new treatment and supply projects.

Don Greeley, director of the Department of Water Management, told the Durham City Council that the utility faces large capital needs, notably a Jordan Lake intake, a new treatment plant and roughly 17 miles of pipeline that together are among the largest projects the utility has planned. “We expect that project to cost, when it's all said and done, close to a billion dollars,” Greeley said during the presentation.

Why it matters: The utility is proposing an 8.5% increase overall, with tiered volumetric charges intended to promote conservation. Greeley said the proposed rates are intended to protect affordability for the three lowest residential tiers while spreading borrowing and construction costs to avoid abrupt “rate shock.” For a typical Tier 1 household the staff estimate is a monthly increase of about $2.41 — from $28.17 to $30.58.

Key details from the presentation and council discussion: - Capital program scale: staff showed a projected capital improvement program (CIP) of nearly $2 billion over the coming years, with roughly half of that total attributable to the Jordan Lake project and associated system upgrades. Greeley said the Jordan Lake work and distribution improvements will be phased over a decade and beyond, with parts of the program expected online by 2031. - Affordability and customer support: the city continues to operate a hardship fund funded at $150,000 annually; staff reported roughly $100,000 in assistance provided so far this year and said accumulated balances from prior years have built a cushion (~$400,000) that can be used if demand for assistance rises. - Conservation emphasis: Durham uses a five‑tier volumetric structure. Staff reported about 40% of single‑family accounts are in Tier 1 and roughly 35% in Tier 2, so the council and staff framed affordability primarily around those lower tiers. The utility retains a watershed protection fee of three cents per tier to fund land purchases and buffer protection around reservoirs. - Regulatory and program drivers: staff cited PFAS and other emerging contaminant rules and ongoing investments at the utility’s four treatment plants, multiple large distribution projects downtown and in the east and southwest, as drivers of the CIP and rate needs.

Council members asked about cost‑recovery for regional partners in the Jordan Lake project and financing options. Tim Flores of the finance department and Greeley said the city expects to use revenue bonds as the primary financing tool, work on governance agreements with partner utilities and explore federal and state loan programs where those terms are advantageous. Greeley said staff will bring governance agreements and more detailed financial models to council when they are finalized.

What happens next: The proposal was presented in a work session with a 30‑minute allocation for the item; staff said the presentation materials would be uploaded for council review and additional information about tier consumption ranges and detailed cost models would be provided on request. The council did not take a final vote on rates at the April 24 work session; further council consideration and public hearings are expected as part of the FY2025–26 budget process.

Ending note: Council members repeatedly emphasized the balance the city must strike between meeting large infrastructure needs and protecting low‑income households, and asked staff to return with additional detail on consumption ranges per tier and financing scenarios.