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Council reviews sewer- and stormwater-rate changes to finance Midwest Industrial Park upgrades
Summary
City staff and an outside financial adviser presented a rate study proposing a series of sewer and stormwater increases to fund immediate sewer upgrades for the Midwest Industrial Park; council voted to read the ordinance by title and refer rate work to the finance committee for second reading.
The Richmond City Council on Aug. 4 heard a detailed presentation on proposed sewer- and stormwater-rate increases intended to fund sewer upgrades serving the Midwest Industrial Park and other capital needs.
The proposal, presented by Pat of RSD and Corby Thompson of Cronin Associates, would support design work already started and finance construction of two immediate sewer segments while creating capital reserves for a third segment planned in 5–15 years. Pat said, “Before you, this ordinance is a rate ordinance. The driving portion of this was the Midwest Industrial Park.”
The meat of the plan is a revenue-requirement schedule that Cronin used to calculate needed rate changes. Corby Thompson, a financial adviser with Cronin Associates, told the council the district needs to meet debt-coverage and capital requirements to issue bonds and to avoid large future “rate shock.” He said the city implemented a 5.75% increase earlier this year and that the study shows additional increases that, in the adviser’s scenario, amount to roughly a 36% series of increases plus a further 13% in 2029. Thompson summarized the financing requirement and coverage condition: “In order to issue the bonds through SRF, we absolutely have to make sure we have a 125% debt service coverage.”
The presentation gave these cost and funding figures: $2,000,000 is the approximate design cost already started; the two immediate construction portions are estimated at about $26,000,000; a third portion, to be designed only when demand justifies it, was estimated at $12,000,000—bringing the three-part total to roughly $38,000,000. Earlier local commitments include roughly $200,000 from the district for I&I work, about $800,000 in a city Midwest Industrial Park account and $1,000,000 from the Wayne County EDC to fund initial design. The presenter said the project was submitted to the State Revolving Fund (SRF) but did not qualify for SRF funding because it is an expansion project and not regulatory in nature.
Corby told the council the draft rate schedule would increase a benchmark 4,000-gallon monthly bill by roughly $3 per month (about $36 per year) under the adviser’s scenario; smaller users would see a slightly smaller monthly impact. The presentation also proposed increasing the stormwater fee from about $6 now to approximately $9.40 to align stormwater revenues with expected needs.
Council members asked how rate increases would be spread among users and whether captured tax increment financing (TIF) from new industrial development could repay debt later. Corby said the cost is spread across utility users and that TIF revenues could be used to reduce rate needs later through a “true up” once those revenues are being received; he cautioned that TIF cannot be counted until those revenues actually exist. He gave a rough TIF estimate of $12,000,000 as a potential future contribution, but said that number is not finalized.
Council discussion included requests for comparative demographic or income data about peer utilities; Corby said he could provide those comparisons on request. Council members also asked for the rate history; staff said the last significant rate action was in 2022 and subsequent adjustments in 2023–25 had been applied.
On procedure, the council voted to suspend rules and read Ordinance No. 35-20-25 (the rate ordinance) by title only; the motion carried. Pat and Corby told the council the ordinance is scheduled for public hearing Aug. 18 and that the item will be referred to the finance committee and returned for second reading. No final rate adoption or bond authorization occurred at the Aug. 4 meeting.
Why it matters: the recommended increases are intended to secure the debt-service coverage needed to finance immediate sewer expansion that supporters say is required to market and develop industrial land. The plan relies on bonding and future development-generated revenues; council members asked for additional comparative and demographic context before final approval.
Direction and next steps: staff and the consultant will provide additional materials to the finance committee; Ordinance No. 35-20-25 is set for public hearing on Aug. 18 and will return for second reading and further council consideration.
