Assembly finance committee approves debt-plus-5% rate path for water and wastewater

The Assembly Finance Committee voted 6–2 on April 30 to approve “scenario 4” for the city’s water and wastewater utilities — a package that combines state revolving fund (SRF) loans with annual 5% rate increases to cover a reduced capital-improvement plan and spread costs over time.

The committee’s action follows a presentation from consultant Paul Quinn and staff describing capital needs, projected operating gaps and multiple funding scenarios. Quinn said the reduced capital plan includes about $26 million in water projects and $39 million in wastewater projects over the multi-year study period, and that the utilities currently generate some annual cash flow but face a shortfall for average capital spending (roughly $4 million/year for water and $5 million/year for wastewater).

Quinn said the updated analysis lowered previously projected rate pressure slightly, but even the updated ‘‘cash-only’’ scenarios would have required double-digit annual increases for several years. By combining roughly $4.5–5.0 million in SRF loans with targeted rate increases, staff and the consultant modeled a path that limits annual increases to 5% while deferring some projects and seeking outside funding later to avoid a larger immediate spike in rates. The package approved by the committee assumes a 20-year SRF loan term at about 2.75% for modeling purposes and relies on additional outside funding beginning in 2028 to keep the 5% cap sustainable.

Committee members pressed staff on why the community faces the shortfall now. Superintendent Maguire and Manager Kester said much of the system is 40–50 years old; Kester noted the city paused a prior 1% capital spending program and that inflation and deferred maintenance have compounded funding gaps.

The committee heard repeated staff and consultant warnings that under the reduced capital plan the utilities are deferring roughly 90% of the identified capital needs outside the current study period; staff said a further infusion of cash or additional borrowing likely will be needed after 2028 if projects are to proceed. Quinn estimated that keeping annual rate adjustments at 5% would require roughly $4.3 million (water) and $12.4 million (wastewater) in outside funding in a cash-only approach; with SRF loans those outside needs fall to roughly $900,000 (water) and $8.5 million (wastewater). He summarized the combined need for the two utilities at about $17 million (cash option) or about $9.4 million (with SRF loans).

Mayor Weldon moved the committee’s preferred scenario — debt plus 5% annual increases — and the committee approved the motion 6–2. The roll call recorded Mayor Weldon, Assemblymembers Hall, Atkinson, Kelly, Smith and Chair Bryson voting yes; Assemblymembers Hughes Scandies and Steininger voted no.

The committee’s vote sends a rate recommendation into the budget process; staff told the committee changes adopted tonight would be reflected in FY26 budget materials and that the assembly will have additional opportunities for public comment. Staff and the consultant also noted the choice involves tradeoffs: SRF loans can lower near-term rate pressure but add federal/state procurement and project requirements that can raise construction costs, while a cash-only approach requires larger near-term increases.

Quinn and staff emphasized these are modeled scenarios and that details (loan amounts, exact timing of rate changes and any supplemental funding sources) would be refined as the budget process proceeds.

Ending: The committee directed staff to continue working with the consultant on the budget paperwork and to return final ordinance language and implementation details as the assembly’s budget schedule requires. The committee also discussed potential ballot or assembly actions later this year to secure non-rate funding options (temporary sales tax allocations or bonds) to reduce longer-term rate pressure.