The Dalles council hears plan to borrow for $165 million in water upgrades, staff recommends $3M SIP and 7.3% near‑term revenue increase

City staff on Tuesday laid out financial scenarios to pay for a multi‑year water capital program and asked the City Council to pick assumptions to include in a draft Watermaster Plan for public review.

Director of Public Works Dave Anderson opened the session by saying the meeting’s goal was “to get some specific direction from council on which rate scenario you prefer.” Staff presented a capital improvement plan that includes roughly $165 million in projects in the first 10 years, led by a new treatment plant, storage and distribution work and planning for a possible Crow Creek Dam expansion.

Consultants told the council the city could pursue an 80 percent WIFIA loan for the biggest projects but would need design work before submitting a formal application. “We did do an initial meeting with a WIFIA representative just to confirm that these types of projects would likely be eligible,” financial consultant Deb Glardy said, adding that WIFIA typically requires projects to be about 30 percent designed before an agreement is finalized.

To limit the pressure on ratepayers, staff modeled scenarios that combine federal loans, two rounds of bonds and local revenue. One councilor summarized the full package as about $256 million for all planned projects; staff said final financing and interest rates will depend on market conditions and the timing of design work.

The analysis tested two demand assumptions for the large industrial customer that dominates forecasts: a low ramp and a high ramp. Staff said nearly all of the modeled industrial increase is attributable to Google data centers. “For this analysis, nearly all the industrial use that we’re considering is from Google,” a consultant said, and staff stressed the benefits Google will provide in site improvements and financial commitments.

Staff proposed pairing the financing with $3 million a year from the city’s Strategic Investment Program (SIP) to fund design, match funding and non‑WIFIA projects. “It’s absolutely critical that the city have some funding upfront to do the design for these projects,” the consultant said. The SIP assumption and the industrial‑use forecast drove the rate projections: under a conservative (low‑industrial) forecast plus $3 million in SIP, the model showed an average revenue increase of about 7.3 percent per year over the planning window; under a high‑industrial scenario the initial slope falls nearer to 5.3 percent.

Councilors discussed how to distribute the increases across customer classes. Consultants recommended updating the cost‑of‑service allocation, noting nonresidential customers would bear a larger share as industrial demand grows. The consultant described the current split (roughly 51 percent nonresidential, 49 percent residential) moving toward a higher nonresidential share if industrial volume materializes.

Council members also debated changing the amount of water included in the residential base charge. The staff presented two common options: reducing the included quantity from 10,000 gallons per month to 7,500 gallons, or to 5,000. The smaller change (7,500) would provide modest bill relief for low‑use residential customers while shifting more of the cost burden to higher users. “We would still be doing something that’s somewhat unusual,” the consultant said of a 7,500‑gallon base, but added that the change would help in conversations with funding agencies and better align the city with industry norms.

On SDCs, staff recommended updating the methodology required by Oregon statute and noted the draft produces a ceiling that council could choose not to adopt; current water SDC receipts average about $75,000 annually and staff used a conservative scenario that doubles that average for planning purposes.

After extended discussion, council members converged on guidance for staff: use a $3 million annual SIP assumption, adopt the updated cost‑of‑service allocation, reduce the residential base to 7,500 gallons, retain a 5,000‑gallon base for nonresidential customers, and package a draft rate package that reflects the conservative (low) industrial forecast — the scenario that generated about a 7.3 percent initial revenue increase in the consultants’ models. Council did not adopt rates; it directed staff to include the selected assumptions in a draft plan for public review.

Staff said the draft Watermaster Plan will be posted for public comment in mid‑November and that a public hearing is scheduled for Dec. 9, when council may adopt the plan after the hearing. Staff also said city outreach materials and examples of bill impacts will be prepared for the public comment period.

What’s next: staff will incorporate the council’s direction into a financial plan and post the draft for public review in November; the council will hold a public hearing on Dec. 9 and could adopt the plan that evening or defer action to a later meeting.