Drought, timing and frozen positions left Herriman’s water fund stronger than projected; staff proposes smoothing future increases

Speaker 9 (water/staff presenter) briefed the council on the water‑fund five‑year model, FY25 performance and recommended rate‑setting scenarios. He reminded council that in March 2024 the fee/rate study recommended a 16.3% increase for fiscal 2025 (that recommendation accounted for delayed timing) and that council had implemented a 13% increase when the change was delayed until November.

Staff reported FY25 rate revenue outperformed the model by approximately $2,200,000 — largely due to drought conditions and higher consumption — and that other non‑rate revenues and deferred capital work contributed to the fund finishing about $5,600,000 better than the adopted model expected. Staff noted $7,600,000 of capital projects were being proposed as carryovers in the next year and that two frozen water‑fund positions yielded operating savings.

As an illustrative option, staff proposed using about $3,500,000 of available funds and spreading that appropriation across the next four years to reduce the magnitude of near‑term increases; that scenario equates to approximately a 6.5% annual increase across those years and the model assumes the council will adopt a capital improvement plan consistent with the previously adopted water master plan. The model also assumes staff would restore a six‑month operating reserve. Staff flagged increasing unscheduled repairs late in the year as a caution and noted that tiered rates mean individual households could see different percentage changes depending on consumption.

Council discussion favored the smoothing approach for predictability, while acknowledging that reserve targets or capital starts could change the outcome. No formal rate decision was adopted; staff asked council which scenarios they wanted analyzed in greater detail ahead of a public hearing.