Albany staff proposes biennial water, sewer and stormwater rate increases; public hearing set Wednesday

Chris Bailey, director of public works, presented the city’s proposed rate adjustments for the water, sewer and stormwater utilities and said council will hold a public hearing and consider votes on the requests at the next meeting.

Bailey said the city is proposing multi‑year (biennial) adjustments rather than the customary single‑year increases. He described three principal drivers for the increases: inflation and rising operating costs, more stringent regulatory requirements (including forthcoming changes to the city’s wastewater and stormwater permits) and capital needs identified in the capital improvement plan.

Bailey gave specific figures for existing debt service and capital needs. He told council the wastewater facility (the water reclamation facility) has an annual debt payment of a little over $4,600,000 next year; a separate clean water loan for a wet-weather lift station carries an annual payment of about $613,000; and the annual water fund loan payment for treatment facilities is about $1,920,000. He also said the city maintains roughly 600 miles of mains across the systems, about 21,000 water connections and 19,000 wastewater connections.

Bailey described a roughly $400,000-per-year shortfall between the system development charges (SDCs) originally allocated to pay a portion of debt service and the SDC revenue actually received; he said the difference has been made up from rate revenue. "That $400,000 has to be made up by rate payers," he said, explaining SDC revenue is variable and depends on development.

Based on capital funding targets and forecasts, Bailey recommended the following rate plan for the upcoming biennium: sewer increases of approximately 2% per year, water increases of approximately 3% per year (with higher percentages forecast in later years as needed), and stormwater increases of approximately 4% per year. Bailey said those increases are intended to keep pace with rising costs while limiting the burden on customers and that the exact effective dates differ by fund; he also provided an example for a typical residential customer showing a modest overall increase (roughly a $4–$9 monthly change across funds, depending on timing and consumption assumptions) and said the weighted average of the proposed increases is about 2.6% per year.

Bailey noted the sewer fund receives more than $20 million in annual rate revenue and the water fund over $15 million; stormwater revenue is much smaller and the stormwater utility is still building its capital reserve after being established in 2018. He said the sewer fund is forecast to need about 2% per year, water about 3% and stormwater about 4% for the forecast horizon and that if unforeseen regulatory or capital needs arise, staff will return to council for adjustments.

Councilors asked questions about SDC levels, timelines for stormwater pipe replacement planning and the term of outstanding loans. Bailey said water SDCs are at their maximum allowable level, wastewater SDCs are at approximately 62% of the maximum, and stormwater SDCs are at about 20% of the maximum allowable level; he said the city typically adjusts SDCs by the construction cost index and will recommend keeping SDCs unchanged this cycle due to April figures showing a small downturn.

Bailey closed by reminding council that a public hearing and votes on each rate request are scheduled for Wednesday; council did not vote at the meeting.