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Philomath consultants say FY27 utilities need about $2.4 million; propose tiered water rates, elevation surcharge and phased changes
Summary
Raftelis told the Philomath City Council on July 28 that the FY27 revenue requirement for water, sewer and storm drain is about $2.4 million (roughly 24% above FY26) and presented policy options including raising the fixed revenue share to 30%, a two‑tier residential volumetric rate with a 12‑unit cutoff, an elevation surcharge of $0.74/unit for higher zones, and scaled private fire charges.
Consultants from Raftelis Financial Consultants presented a utility rate study to the Philomath City Council during a July 28 work session, estimating the total revenue the city’s utilities will need in fiscal year 2027 and proposing rate‑design changes to recover those costs.
“The estimated revenue needed in FY 2027 is about $2,400,000,” Raftelis vice president Jen Tavances told council members, saying capital projects — notably work on the treatment plant — are significant drivers of the revenue requirement. Raftelis said that figure represents about a 24% increase over the revenue modelled for FY26 and that the city could phase any increases over multiple years.
Why it matters: the study translates the revenue requirement into specific changes in how the city charges water, sewer and storm‑drain customers, and each design choice affects different customer classes differently. Council members and staff said they will return to policy questions later, leaving the options on the table for further direction and public notice.
Major recommendations and examples
- Fixed vs. variable revenue share: Raftelis recommended increasing the portion of water revenue recovered through fixed (meter‑based) charges from about 25% to roughly 30% to improve revenue stability. "We recommend increasing that to 30%," Tavances said, noting fixed charges would be modeled proportional to meter size.
- Multifamily base charge: The consultants proposed ending the current multifamily practice that charges a per‑unit 50% factor and instead charging multifamily accounts the same per‑meter fixed charge as other classes ("if it's a 6 inch meter, it gets charged the 6 inch meter charge no matter how many units"). Councilors asked clarifying questions about metering and how landlords typically reallocate bills to residents.
- Residential volumetric tiers: For residential customers Raftelis presented a two‑tier option with a first‑tier cutoff modelled at 12 units (one unit = 100 cubic feet, about 748 gallons). The proposed first‑tier rate is $6.99 per unit, with usage above the cutoff billed at $10.48 per unit; exhibitors showed fewer than 10% of FY24 residential bills exceeded 12 units. Tavances summarized the intent: encourage conservation while protecting typical indoor use.
- Elevation surcharge: To recover pump‑station and distribution costs for higher elevation zones, Raftelis modelled an elevation surcharge of about $0.74 per volumetric unit for customers in those zones. "That's another 74¢ per unit for those customers in the elevated areas," Tavances said; she also noted those customers comprise roughly 7.5% of residential usage in the data set.
- Private fire and hydrant charges: Raftelis recommended scaling private FireLine standby fees by line size (instead of a flat $15.20 per month) and adding a per‑hydrant fee; staff said the system includes 37 private hydrants and 27 private lines and that a phased approach would moderate immediate impacts on large private customers.
Sewer and storm drain recommendations
- Sewer: After a recent rate increase, Raftelis said sewer revenue needs for FY27 are generally aligned with FY26; the firm recommended keeping the current fixed/variable split (about 42% fixed / 58% variable) and evaluating loading or surcharges for high‑strength commercial dischargers (restaurants, laundromats, distilleries).
- Storm drain: The study highlighted that under the current tiered structure the FY27 modeled increase could be large (Raftelis showed a 225% number under one scenario) and proposed an alternative that more closely aligns bills with impervious area and includes a credit program for private stormwater management.
Council response and next steps
Councilors asked detailed questions about funding sources for capital projects, the SDC (system development charge) shares, and whether the modeled increases could be phased. Staff and consultants said the CIP and identified funding sources informed the modeling and that a stepwise implementation is feasible. Council directed staff to continue work on rate policy options and to return with more detailed proposals to guide adoption and public outreach.
No formal motions or votes were taken at the July 28 work session; councilors said they will revisit rate‑setting and consider timing and outreach at a future meeting.
