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Boise staff warn of growing funding gap for water-renewal work as costs climb
Summary
Haley Faulkner told the council that rising materials, labor and regulatory costs have opened a funding gap between available capital and projected water renewal needs; staff will return in May with project-level priorities and funding scenarios, including the option of another bond.
Haley Faulkner, deputy director of Public Works for Water Renewal Services, told the Boise City Council that the cityRenewal utility collects and renews about 30,000,000 gallons of wastewater each day across two main facilities and a thousand miles of pipeline, and that many of those assets are decades old.
Faulkner summarized the 2020 utility plan and its financial strategy: the plan estimated roughly $750,000,000 in 10-year capital needs and the city secured a $570,000,000 bond authorization that passed in 2021 with roughly 81% voter approval. "We collect and renew 30,000,000 gallons of water every day," Faulkner said, and described the systemas having "a thousand miles of pipelines" and facilities "valued at approximately 4 and a half billion dollars." She said the plan committed to replacing the 75-year-old Lander Street facility over coming decades and to adding capacity and redundancy across the system.
Council members pressed staff on the plan's cost basis and timing. Faulkner said the 2020 plan used 2018 cost estimates that were updated for the 2021 bond vote and that COVID-era supply and labor pressures have driven material and construction costs far above those early projections. She showed a 2014to2024 chart of material-price trends and said that while some prices have eased, they have not returned to pre-pandemic levels, and that those trends (plus increasing regulatory requirements) have led staff to defer some projects and now to identify projects that must be accelerated.
On funding choices, Faulkner outlined two basic pathways: fund projects with cash (rates and fees) or use bonds to spread costs over time. She said a cash-only approach would require substantially higher near-term rate increases (staff referenced an illustrative 50% initial increase in a no-bond scenario), while bond funding lowers near-term rate pressure but adds interest expense. "That financial strategy did always include an anticipated second bond authorization in the future," Faulkner said, and staff are preparing scenarios that link project priorities, timing and funding choices for the council's guidance in May.
Faulkner also highlighted operational and regulatory pressures shaping priorities: rising solids and biochemical oxygen demand in influent, new treatment requirements for temperature and phosphorus, and workforce and contracting constraints. She warned that the combination of higher capital costs, changing loads coming into the system and tougher regulatory expectations increases the risk of equipment failures, emergency repairs and, potentially, regulatory noncompliance affecting the Boise River.
Council members praised staff for sticking to the rate plan adopted in 2020 while noting the new cost realities. Several asked for a clear accounting at the next meeting of how much of the 2021 bond remains unspent, which projects remain incomplete, and how far those funds will take the utility's original plans.
Faulkner said staff will return with a two-part presentation in May: specific project priorities tied to drivers and a set of funding scenarios for council direction. No funding decision was requested at Tuesday's briefing.
