Sanford consultants recommend phased water and sewer increases to fund $296.8 million capital plan

Henry Thomas, Senior Vice President at Raftelis, presented the Sanford City Commission with a five‑year utilities rate study at the Oct. 27, 2025 work session recommending phased increases for water and wastewater to fund a $296,800,000 capital improvement program and maintain financial targets.

The study recommends smoothing increases now rather than deferring large increases later: a roughly 7% annual path for water and about 6% for wastewater under the current draft. Thomas said the city—s utilities are enterprise funds and that "98% of the recurring revenue for the system is derived through user rates." He told commissioners the recommended path aims to preserve liquidity and meet loan covenants while allowing annual review and adaptation.

The consultant described the CIP as front‑loaded and noted funding sources: about $77 million in grant funding, roughly $71.9 million assumed as future State Revolving Fund (SRF) borrowings, and roughly $148 million expected from rates and reserves. Thomas identified four large projects that together account for about $111 million of the total: a dioxin project at the main wastewater plant (about $59 million), Wastewater Plant 3 (about $18.2 million, including the South Sanford Water Resources Center), a cloth‑filtration system (about $12 million) and an expansion to 6 million gallons per day (about $21.8 million).

Thomas explained reserve and coverage targets the study uses: an operating reserve target of about 90–120 days and a debt‑service coverage target higher than the SRF minimum (the SRF minimum is 1.15 net revenue to debt; the study targets roughly 1.5) to provide capacity for pay‑as‑you‑go renewal and replacement. He described current system counts and growth assumptions: roughly 19,900 water accounts, about 18,400 wastewater accounts and about 5,200 reclaimed accounts, and noted development impact fees of about $3.5 million per year that are legally restricted to growth‑related capital.

On bill impacts, Thomas showed a typical 6,000‑gallon combined bill rising in the study from $86.89 to $92.41 under the proposed 2026 adjustments. He also compared Sanford to peer Florida utilities and warned the industry is experiencing broad cost pressures: "Most every utility on this chart is facing the same issues you are," he said, citing examples of other Florida cities adopting double‑digit increases in some years.

During Q&A, commissioners asked for clarifications. When asked what a hypothetical additional $500 million wastewater project would do to rates, Thomas gave an approximate, financed example and said it would have a roughly 40% impact on rates (30‑year, roughly 5% conventional financing, illustrative only). Commissioners also asked staff to follow up on revenue trends after new meter installations; staff said they would report back. The consultant and staff confirmed the next formal adoption requires public notice and is expected to return to the commission in December with any adopted increases effective in January.

The study and staff recommendation will return to the commission for a publicly noticed vote; no formal rate adoption occurred at the Oct. 27 work session.