Hagerstown staff proposes four-tier inclining water-rate design, targeting July 1 implementation

City staff on March 24 told the Hagerstown mayor and council they are prepared to pursue a four-tier, one-class inclining-block water-rate design that staff and a consultant say would produce a modest revenue increase while shifting cost burdens away from many residential customers and toward larger commercial users.

Nancy Hozgraff, introduced by the mayor to present the review, said staff wants direction from the council to move the proposal through ordinance so the new rates can be in effect for "all bills rendered on or after July 1," with October 1 as a fallback date if testing and billing work require more time.

The alternative rate structure, presented by Connor of NewGen Strategies, would replace separate residential and commercial cutoffs with a single set of four tiers and increasing multipliers for each tier. "Customers typically care about their bill change, not necessarily their rate change," Connor said, explaining the presentation used sample bills to illustrate effects under a projected 5% annual escalation.

Connor and staff showed examples: a single-family household using about 13,500 gallons per quarter was projected to see an approximate 11% decrease in the water portion of its bill (about $43.31 down to $38.40 in the presenter’s example). By contrast, a median commercial customer and a large commercial user were shown in staff examples to face bill increases in the mid-30 percent to about 40 percent range because those customers would reach higher volumetric tiers sooner under an inclining structure.

Hozgraff emphasized the packet contains additional slides and sample usages and that the presentation focused only on the drinking-water portion of the municipal bill (water only; the full customer bill also includes wastewater, curbside garbage, the bay restoration fee and stormwater). She said wholesale customers were treated separately in staff work: the city’s three wholesale-contract towns—Smithsburg, Williamsport and Funkstown—are subject to existing contracts that include a 16% discount, and staff did not recommend reopening those contracts as part of this step.

Council members pressed staff on equity and implementation details. One council member argued the current declining-block model had been unfair to residential customers and said moving to the proposed design would "right size" charges so customers "pay their fair share." Members asked whether low-usage seniors would face increases; staff ran examples showing a 4,500-gallon-per-quarter (about 50 gallons per day) account would see a small decrease in the water portion under the proposal. Staff also explained options for multi-family properties with master meters, including existing administrative practices that can move a large-diameter meter to a "fireline" account if little water flows through it for 12 months, lowering fixed fees for certain properties.

On timing and next steps, Hozgraff asked the council whether to proceed with the four-tier model and requested authority to bring forward an ordinance to introduce the rates and a follow-up ordinance to adopt them. Staff reiterated the goal of having new rates take effect for bills rendered on or after July 1, but recommended an Oct. 1 effective date as an alternative to avoid billing-cycle complications if testing in the Munis system requires more time.

The work session concluded without a recorded formal vote on rate adoption; staff left with direction to return with ordinance language and additional wastewater/sewer-rate options at the next meeting.

The meeting adjourned after a motion, a second and no further discussion.