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Holladay work session weighs stormwater rate boost as fund nears shortfall
Summary
City staff told the Holladay City Council at a work session that the stormwater enterprise fund is unlikely to meet debt-coverage and reserve targets under the current $6.50 ERU rate. Officials discussed three options: no increase, a 30% one-time rise deferred to 2027, or 5% annual increases beginning fiscal 2026, and directed staff to refine nonresidential ERU counts using utility account data before final recommendations and a public hearing.
Unidentified Speaker told the Holladay City Council at a work session that the city's stormwater enterprise fund will not meet coverage and reserve targets under the current $6.50 equivalent residential unit (ERU) rate and that council must choose among several ways to close the gap.
The presentation, which staff said updates prior modeling and incorporates actual revenues, debt service and capital-improvement-plan changes, laid out three scenarios: do nothing (baseline), delay and adopt a one-time 30% increase in 2027, or begin a 5% annual increase in fiscal year 2026. According to the analysis, the 30% upfront increase produces the quickest improvement in reserve levels and coverage ratios; a 5% annual increase reaches similar long-term results but more slowly. The presenter said, "the message is you're gonna run out of money," and urged the council to consider both rate changes and non-rate options to improve revenue.
Why it matters: the stormwater fund currently carries debt-service obligations tied into the city's financing structure and does not produce enough net revenue after operations to meet standard coverage targets used by rating agencies (the presentation used 1.25x and 1.5x coverage as benchmarks). Staff estimated the stormwater revenue stream at roughly $1.1 million to $1.2 million annually but noted fixed costs, including roughly $670,000 in debt service, Rocky Mountain Power billing/administration and other fees, substantially reduce funds available for maintenance and capital work.
What council heard and asked: staff recommended two complementary steps before finalizing a course: 1) re-run the nonresidential ERU calculation by geocoding Rocky Mountain Power account data against parcels to identify potentially unbilled impervious-area parcels (the presentation called this "low-hanging fruit" that could increase ERU counts and reduce the size of any rate increase), and 2) return with final recommendations and model variants at the public hearing stage. Staff explained the earlier ERU estimation relied on aerial-imagery impervious-area polygons and multipliers applied to a commercial-account estimate; when matched against actual account counts the estimated nonresidential ERUs were substantially higher than the billed ERUs, creating a gap that could be addressed through data cleanup and inspections.
Direct figures mentioned in the meeting included the $6.50 baseline ERU, a modeling recommendation that previously suggested ~9.5% annual increases (not implemented), a proposed one-time 30% increase (deferred to 2027 in the model), and a staged 5% annual increase beginning FY26. Staff also illustrated that a 30% one-time increase would raise the ERU to roughly the same endpoint as a multi-year 5% approach while producing higher short-term reserves.
Other budget context: after the stormwater presentation the meeting moved into a citywide budget overview. Staff proposed a 3% cost-of-living adjustment for staff and elected officials (estimated at $72,000) and reviewed capital projects and operating adjustments across funds, including vehicle replacements, a proposed $150,000 improvement for Tucson Park and potential roadway investments in the $500,000-to-$900,000 range to meet a pavement condition target. Council discussed park staffing (seasonal versus full-time), trade-offs on curb-and-gutter patching versus longer-section repairs, and signal-optimization work at roughly 25 intersections.
Next steps: staff committed to refine ERU counts by comparing Rocky Mountain Power customer locations with parcel data and to return with updated models and final recommendations for public hearing and ordinance action. The council scheduled follow-up work in the coming budget hearings rather than taking immediate rate action at the work session.
Ending note: meeting participants repeatedly cautioned about communication strategy and public reaction, urging staff to present dollar-per-property impacts (for example staff noted the 30% example equates to roughly a $2-per-month increase on the sample bill) rather than percentages alone when the item goes to public hearing.
