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Milan reviews FY2026–27 utility rate model; water unit charge proposed to rise modestly
Summary
At an April 7 workshop, City Administrator Jim Lancaster and consultant materials presented a seven-year utility rate model that proposes raising the water unit charge from $5.22 to $5.84 per 1,000 gallons while holding sewer at $8.47; the plan assumes $1 million per year for water and sewer capital improvements and seeks to grow working capital without issuing debt.
City Administrator Jim Lancaster presented the Milan City Council with a seven-year utility-rate model and FY2026–27 budget workshop on April 7, outlining proposed changes to the water, sewer and rubbish funds. The model recommends smoothing rate increases through FY2031 and assumes $1,000,000 per year in combined water and sewer capital improvements paid from cashflow.
The presentation, which included consultant contact information from Plante Moran, showed a proposed water unit rate increase from $5.22 to $5.84 per 1,000 gallons for FY27 while holding the sewer unit rate at $8.47. The consultant materials in the packet showed a combined per-unit charge rising from $13.69 to $14.31, a roughly 4.5% increase. A sample monthly bill for a family of four in the slides showed an estimated $5.30 monthly increase and $63.60 annually under that model. Readiness-to-serve charges were unchanged in the presentation.
Why it matters: the model seeks to rebuild the city's working capital and to fund ongoing maintenance and capital projects without immediate debt issuance. Slides noted the W&S fund emerged from a deficit after 2022 rate changes and projects a target working capital increase from roughly $3.7 million (6/30/25) to about $5.4 million over the model horizon.
Details and trade-offs: the model implements a "cash-needs basis" approach that excludes depreciation to keep rates lower but requires lower cash reserves. It assumes $500,000 per year for water and $500,000 per year for sewer for capital outlay, and it shows an alternative sensitivity table that quantifies per-unit charges if additional annual debt service or capital outlay is required. The slides also listed four working-capital buckets (operating reserve, next-year debt service, emergency capital replacement and planned capital replacement) and highlighted that existing debt service of roughly $1.4 million per year falls substantially after 2026.
Maintenance and capital programs itemized in the workshop included a water maintenance program estimated at $275,000 per year (valve replacement, vertical asset CIP), estimated lead service-line work at about $60,000 per year (8–10 full replacements annually), and sewer maintenance and CIPP lining. The CIP section proposed a $10 million bond for main trunk-line work that would cover about 8,700 linear feet, alongside smaller cash-funded projects under $200,000 every other year.
What the council did: the session was recorded as a budget workshop and discussion; the minutes note a brief discussion after the presentation but do not record a formal vote to adopt rates at this meeting. The materials’ stated next steps were to consider approving rates as presented, finalize plans for additional projects and funding sources, and, if necessary, consider additional increases to cover added capital or debt service.
Sources and provenance: the council record shows the budget workshop began under "Items for Discussion" (minutes: SEG 008) and the presentation slides and related rate-model material run through the packet content (minutes: SEG 016 through SEG 266).
