City reviews water and wastewater rate study; staff outlines three increase scenarios to shore up reserves

Manager Whitehead presented the city's water and wastewater rate study at a March 25 public input meeting, describing three possible rate paths designed to stabilize finances and fund capital repairs. He said the study's baseline shows the city currently charges a $19.48 monthly base fee and that the consultant modeled volumetric tiers and a range of percentage increases to protect cash reserves.

"Right now, we charge a rate of $19.48 to every resident," Manager Whitehead said, adding that under the study's scenarios the city could either continue automatic 3% annual increases, raise commercial rates to 5% while keeping residential at 3%, or consider a more aggressive option (6% residential and 8% commercial) to restore positive cash flow. He said the consultant also recommended meter-size-based base fees, phasing out the 2,000-gallon free allowance, and charging a 1.25 multiplier for customers outside city limits.

Whitehead summarized the fiscal trade-offs: staying at lower increases would require drawing on cash reserves (he cited a projected $179,000 draw in 2026 under a status-quo trajectory), while the higher scenario would return the system toward positive cash flow over time. He said projected new annual water debt payments, after including recent USDA loan obligations, would be roughly $755,000.

Officials discussed the wastewater plant's immediate needs. Whitehead said wastewater debt service is about $100,000 annually and described an emergency borrowing scenario that could require temporary, larger increases (examples offered in the meeting text included short-term 15% then 25% hikes) to address headworks and weir repairs. He reported the city has raised nearly $2.0 million toward repairs and was pursuing roughly $2.6 million in potential Water Trust Board funding to address key components.

Whitehead emphasized the interaction between grant-funded capital and recurring debt, noting many grants include loan or match components that add long-term repayment obligations. He recommended using the study as a multi-year roadmap, conducting follow-up rate studies on a multi-year cadence, and prioritizing the worst infrastructure needs first so future reassessments can refine rate recommendations.

The commission did not take a vote. Whitehead said staff will review budget numbers for the last three years and expected to return with a refined recommendation; he also said another public hearing would be appropriate before finalizing any rate change.

Ending: The meeting closed after public comment and commission discussion; no formal rate change was adopted and staff signaled a further hearing and budget review before any decision.