Rio Rancho staff outline OMI Jacobs contract changes; utilities rates to rise 3%

Acting Utilities Director Steve Gallegos told the Rio Rancho Public Infrastructure Advisory Board that an amended operations contract with OMI Jacobs will cost the city $10,800,000 per year and runs until February (end year not specified in the presentation). The amendment took effect after governing-body approval in December and was prorated for the current year.

Gallegos said the contract includes an annual adjustment provision — 2.5% or the consumer price index, whichever is lower — and that the amendment added three new operators to respond to water leaks, with an internal target to repair leaks “hopefully within 72 hours.” He said the contract amendment also funded an additional hydro-excavator, a backhoe and other equipment to speed emergency response and allow crews to locate and repair service-line problems faster. “They purchased another additional hydro excavator, a backhoe, and again some other equipment to respond to leaks faster,” Gallegos said.

Gallegos also reviewed an approved rate schedule the governing body adopted for fiscal 2026: a 3% annual adjustment for water, wastewater and water-rights acquisition fees and a 5% increase for the bulk-fill station, all to take effect July 1. He said the 3% figure reflects a 1.25% additional adjustment on top of a prior 1.75% change and results from a rate study that accounted for rising electricity, chemical and construction costs as well as capital needs. “We had about a 43% increase in electricity increases, chemical costs increases in asphalt,” Gallegos said, explaining those factors contributed to the rate recommendation.

Board members asked whether the city might bring operations back in-house when the contract term ends. Gallegos said the city has revisited that analysis in prior years and may do so again, but past studies found outsourcing more economical when retirement and benefit liabilities were considered. “At the time, it made more sense to go ahead and leave it as a private contractor,” he said, adding the city will revisit the question in future years.

The board received the presentation with no vote on the contract amendment at this meeting; Gallegos said the governing body had previously approved the December amendment. He also said roughly $10,800,000 of the utilities budget is consumed by the Jacobs contract and that electricity (about $3.8 million) and chemicals (about $1 million) are leading cost drivers.

Ending: Gallegos said staff will continue to monitor contract costs and the option to rebid or study bringing services back in-house; he also stood for follow-up questions about line crews, equipment and the planned metering and software investments noted later in the meeting.