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Lake Havasu City presents $197M five‑year CIP; staff warns water, sewer rates likely to rise in later years
Summary
City staff presented a balanced FY27 budget and a $197 million five‑year Capital Improvement Plan that depends on rate increases for water and wastewater in years 3–5, highlights the second‑bridge and utility work, and flags carryovers and capacity constraints for year‑one implementation.
City staff presented the proposed fiscal‑year 2027 budget and a five‑year Capital Improvement Plan (CIP) worth $197 million at a council work session on April 16, 2026. Staff said the FY27 focus is on year‑one projects and that the CIP is ‘‘balanced and fully funded’’ only if the utility rate adjustments planned for years three through five are implemented.
City manager Mr. Kudson opened the session and warned that ‘‘the money tree is dying’’ for ongoing revenues, saying the city relies heavily on tourism‑driven sales taxes to fund general operations. Finance director Miss Olsen reviewed budget‑to‑actual results for FY26, explained carryforwards (projects not completed by June 30) and said the operating budget book will be provided in May with tentative adoption scheduled in June.
Staff outlined key assumptions: a proposed flat property‑tax rate (which would still raise levy dollars if assessed values grow), continuing monitoring of sales‑tax receipts (with a two‑month reporting lag), and the need to add revenue for utility funds. Miss Olsen said current projections show the water fund would need about an 8.5% revenue increase over the later planning years and the wastewater fund about 4.5–5% unless projects are reduced.
The CIP list includes airport pavement and lighting work, wash/drainage projects, park improvements, the near‑term rehabilitation of police facilities, and a planned Fire Station 7 (design complete; construction expected to start in June). Staff briefed the council on the second‑bridge project, noting the bridge provides a chance to route culinary water, raw water and wastewater lines that will reduce pumping and improve system resilience.
Public‑works leadership described an ongoing program of mainline replacements (about $5 million per year recently), an in‑house advanced metering infrastructure rollout and planned UV disinfection upgrades at wastewater plants. Staff warned that supply‑chain delays and contractor availability will determine how many projects can be completed each year.
Council members and staff debated timing: several members urged moving multi‑use athletic fields forward into FY27, while staff cautioned that moving too many large projects into the first two years creates year‑two funding shortfalls and could exceed the city’s expenditure limitation. Staff recommended funding design work in year one and phasing construction to smooth cash flows.
The city will carry forward specific project budgets where work is not complete, and the council will consider final operating and capital adoption at the May and June hearings. The council also directed staff to continue negotiations with the school district on an IGA for Buena Vista property that could provide flat, developable acreage for new fields and reduce grading costs.
