Newberg committee hears plan for a $45–50 million water plant, staff recommends 5% annual rate increases
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Summary
Staff told the Rate Review Committee that Newberg will likely need a new extensible water treatment plant in the early 2030s (planning target $45–50 million). To fund ongoing capital and operations, staff recommended continuing 5% annual water-rate increases and exploring a property-tax bond, internal loans and state/federal grants.
Newberg staff told the Rate Review Committee on Jan. 27 that the city will likely need a new, extensible water treatment plant in the early 2030s and recommended continued 5% annual water-rate increases to support long-range capital needs.
“Right now the well site can supply as much as 10 megagallons,” said Will, the utility presenter, “the problem will be the current plant can't process more than 5.5 megagallons a day working flat out.” Will recommended planning for a roughly 9-megalallon, extensible plant and said preliminary cost estimates put the project in the $45 million to $50 million range. He added the city has completed a geotechnical study and identified a seismically stable site that should reduce piling costs.
A separate financial presenter said water rates supply the bulk of system funding (about 86%) and that the committee’s financial plan currently assumes continued 5% annual rate increases. The plan also assumes a mix of funding to cover the plant: approximately $32 million in debt proceeds, roughly $5 million from other agencies, some SDC (systems development charge) proceeds and a property-tax funded general-obligation bond as the preferred debt mechanism in staff modeling. The presenter said using a property-tax bond would place the debt on property tax bills rather than water rates; if instead the city used a revenue bond the result could mean higher rate increases to meet debt covenants.
Committee members probed alternatives and risks. Will described an Oregon Lottery funding opportunity raised by a state senator that could require quick action, discussed the potential of a Dundee interconnection and confirmed the city previously purchased water rights that would require river water purification before use. Members asked about conservation measures and comparative rates in similar cities; staff said conservation and more efficient fixtures help but that weather-driven summer peaks and housing growth remain the primary demand drivers.
Staff presented a fund-balance chart beginning 2026 with roughly $14 million and noted a planned internal loan to the sewer fund and later payback; the chart showed a reserve draw near plant construction that would require the financing package to be carefully timed. The presenter estimated that under the property-tax scenario, debt service might add about $0.69 per $1,000 of assessed value (about $271/year for the average household in the model) and said the $3/month per-year bill increase figure is the rough residential effect of continuing 5% increases (typical residential usage of 700 cubic feet was used in examples).
The committee did not vote on any financing measure on Jan. 27; staff said they will continue pursuing grants and will return with additional comparisons and design steps. The committee scheduled a combined utilities meeting (including stormwater and other utilities) for Feb. 10 to continue the conversation.
