Solvang staff warn wastewater treatment upgrade and rising costs threaten reserves; council hears rate scenarios

Solvang utility staff presented a detailed update on water and wastewater finances and capital needs, telling the City Council that previously adopted rate steps were generally meeting operational needs but that reserves will drop sharply once major construction and debt service begin.

Jose, the utilities presenter, said the 2022 rate study envisioned steep near‑term sewer increases and built in debt service: “In year 1, the rate increase was 37.5% for waste for sewer bills. The next 3 years were 17.5%.” He told council those increases assumed repayment of a loan projected in the study and warned that, if the treatment project’s price rises further or other CIP work is required, additional rate increases could be necessary.

Why it matters: Solvang’s wastewater project is the largest near‑term capital obligation identified by staff; a higher cost would translate into larger or longer rate increases for customers. Staff presented three scenarios for 2026–27…