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Water and wastewater budgets show major capital plans, proposed rate steps to cover tens of millions in debt
Summary
City utility staff outlined a multi-year water and wastewater capital program including proposed borrowing and staged rate increases to fund new projects.
Jason, the city's water and wastewater presenter, walked council through proposed capital projects, rate scenarios and debt plans for the utility enterprise funds. He told council the slides show existing debt and proposed additional borrowing "about $55,000,000 worth of debt proposed over the next 5 years" for water and roughly $10,000,000 in wastewater debt in the near term, with a much larger East Side plant conceptualized at about $150,000,000.
Water: staff proposed a combination of cash-funded projects and debt. Key FY26 projects include Chick Lane elevated storage tank (under construction), the West Side 18-inch transmission main, four new well permits/applications with $9.5 million budgeted for part of that work, relocations tied to TxDOT bridge widening on Highway 6, SCADA and pump-station electrical work, and ongoing well rehabilitation. Staff proposed a 4% water-rate increase tied to capital needs and modeled additional rate steps in future years to preserve reserves and meet debt-service coverage.
Wastewater: current projects include grease-plant modifications, the Thompson's Creek plant expansion design, several sewer extensions and force mains tied to highway widening projects, and the Brushy Creek/Grama Line collection improvements. Jason warned that a fully scoped East Side wastewater treatment plant (the large regional option) would materially increase annual debt-service needs: "based on the rate increase that we had a few years ago to accommodate around this amount of debt for the new wastewater treatment plant, we'd be looking at overall about a 50% rate increase," he said when discussing a large regional plant scenario.
Funding and tradeoffs: staff showed scenarios where cash-on-hand declines as debt and capital spending increase, with the 60-day operating reserve and debt-service coverage ratio deteriorating under more aggressive borrowing. Jason recommended council-level discussion about timing, phasing and potential cost sharing with large economic-development customers to reduce rate impact on residential customers.
Next steps: staff will return with refined debt-issuance plans, phased rate proposals and further public engagement on timing and impact if council wishes to proceed with large plant alternatives.
