Water and Sewer Commission warns of debt-service pressure, urges data-driven rates and a debt service fund

Havre de Grace — The Water and Sewer Commission presented its annual report to the council on Feb. 17, describing last year’s fund performance and urging steps to stabilize long-term capital funding.

Dan Wisnich, chair of the commission, said available funds for Fund 9 were stated in the presentation as $9.5 million, capital usage $7.2 million and a net change of $2.9 million, with a year-end balance cited as $4.7 million. He told the council that the capital cost recovery fee (CCRF) outperformed conservative projections in the past year and that the commission’s conservative budgeting practice should continue.

Wisnich highlighted a slide noting that 135 new connections in a year are required to cover certain debt-service obligations. The presentation contrasted a budget projection of 100 connections with what was spoken in the meeting as the higher actual connection counts for the year. Wisnich said those variances materially affect CCRF revenue and therefore the fund’s ability to support capital improvements.

The commission recommended five principal steps for fiscal year 2027: establish a separate debt-service fund; pursue applicable grants for infrastructure; use Waterworth (a cloud-based financial/planning software) to collect and analyze Fund 9 data; consider implementing graduated rate structures to distribute costs more equitably across customer classes; and adopt legislatively mandated, annual inflation-based rate increases to protect the capital program from erosion by inflation.

During council questions, staff explained Waterworth aggregates revenues and expenditures, supports scenario modeling and provides more granular general-ledger detail to forecast cash flow and rate impacts. Wisnich said the commission had done preliminary spreadsheet modeling and now wants to bring in external professionals to analyze the system using Waterworth data.

Council members voiced general support but asked for a fuller briefing on how a debt-service fund would be structured and how potential annual rate adjustments would be implemented. City staff said more detailed work and a formal study would be needed before any automatic legislative changes to rates were enacted.

The report underscored the city’s aging water infrastructure — including pipe failures noted by the commission — and framed the recommendations as preventive measures to ensure the capital program can be funded without sacrificing routine operations.