Finance staff propose 6% water-rate increase for 2026; council debates timing, billing frequency and customer tools

Finance staff presented two comparable scenarios for water-fund capital planning (building a satellite treatment plant vs. expanding the existing plant) and recommended a 6% water-rate increase for 2026 under either scenario. Staff said either option will require debt issuance in later years and that the 6% increase preserves the fund's cash-balance targets in projected scenarios.

The presenter (finance staff) reported that the typical winter-quarter residential increase would amount to roughly $2.50 per month for an average customer and that summer/irrigation season bills would rise by several dollars per month under the proposed rates. Staff also showed that the satellite-plant scenario would require larger additional increases in 2027–28 compared with the expansion scenario.

Council members asked whether the increases could be phased (smaller near-term rises followed by later adjustments). Staff cautioned that smaller increases now would leave the utility fund below target cash reserves and that a conservative approach reduces the risk of larger future spikes. Staff said they can provide additional modeling on phased options.

Council discussed changing billing frequency to help customers manage irrigation-season bills. Staff described existing options: the WaterSmart app, budget-plan/level-payment options that let customers pay monthly or spread annual usage across months, and automatic ACH enrollment. Staff said adding more frequent billing cycles could increase processing workload unless customers enroll in automated payment plans; they also suggested incentives and the possibility of a small paper‑statement surcharge to encourage electronic billing.

Staff recommended returning with more modeling of phased-rate alternatives and the operational impacts of monthly or semi‑monthly billing before council sets final rates.