Herriman staff proposes smoothing water‑rate increases after an unusually favorable FY25; council asks for scenarios

Speaker 7 reviewed Herriman's water‑rate history and FY25 financial performance at the Oct. 22 work session and presented staff rate recommendations for council consideration. He noted the council previously adopted a fee/rate study, which recommended phased increases; staff compared that model to actual FY25 results and presented alternative smoothing scenarios.

Key figures and drivers: Speaker 7 said rate revenue was about $2.2 million above the model's expectation for the year, primarily due to drought‑related increased consumption, and combined with higher interest income and operating savings produced roughly a $5.6 million favorable variance versus the model. Staff also noted a backlog of capital projects and about $7.6 million in proposed carryovers that will affect next year's capital budgeting.

Staff recommendation and alternatives: To reduce volatility for residents, staff presented a scenario that spreads $3.5 million in available appropriation across the next four years and reduces the year‑to‑year swings (the presented scenario equates to roughly a 6.5% annual increase under current assumptions). Staff emphasized that the water rate is tiered, so high users may see larger percentage increases depending on consumption and tier placement. Council members asked for additional scenarios and for clarity on assumptions (bonding, capital timing, Jordan Valley purchase costs) before making a final decision.

Quote and next steps: "From a purely financial standpoint, the drought was great for the water fund," Speaker 7 said, adding caution that those conditions are not reliable. Staff will return with additional scenarios, capital carryover details and a recommendation for reserve funding.