Nashville council leans toward 15% water and sewer increase after rate‑study presentation

At a May 13 budget work session, the Town of Nashville heard an outside analysis of its water and wastewater funds and rate options that left the council leaning toward a 15% across‑the‑board rate increase.

Hope Thompson, senior project director at the UNC School of Government, told the council the School has prepared a financial “health check” and a cost‑versus‑revenue tool for Nashville after encountering data issues that made a full rate‑revenue projection unreliable. “We have not done what we call a true rate study,” Thompson said, noting the team’s interim approach was designed to give council usable scenarios for this budget season.

Thompson said the Town meets five of six industry indicators the School tracks, but lags on the percent of capital assets depreciated (about half of system assets have exceeded their useful life versus a conservative 35% benchmark). That gap, along with a significant recent wholesale price increase from the town’s bulk water supplier, shaped the options Thompson presented: a 15% immediate increase to mirror the wholesale bump; a 17% increase to add more capital to reserves; and a staged approach of three 10% increases over three years.

Thompson described tradeoffs in plain terms: a larger near‑term increase builds reserves and helps pay for capital projects sooner, while phased increases reduce immediate sticker shock for customers. She also explained the School’s modeling constraints: the billing‑level meter data Nashville provided produced projection errors that required additional validation before the team could deliver a full revenue forecast.

Council members pressed staff about internal accounting (tracking how much town departments use), non‑revenue water, connection fees and the feasibility of system development fees. Several council members expressed frustration that Nashville is constrained by a regional arrangement that gives the wholesale supplier control over bulk rates; staff and Thompson said remedies are complex and would vary case‑by‑case.

On the three rate scenarios, council discussion split: some members favored matching the 15% wholesale increase and adding modest follow‑up adjustments in subsequent years; others argued for 17% now to build capital reserves faster. Council members repeatedly raised affordability concerns for low‑income customers.

By the end of the session the council had not taken a formal vote on a new rate ordinance but agreed “to leave the 15 in for now” while staff and the School of Government continue work on revenue projections, communication plans and options for borrowing on large capital projects (water towers, additional wells) if council wants to accelerate improvements.

Next steps: staff will continue the School’s rates analysis, refine revenue projections once internal meter and facility billing is validated, and return to council with recommended language and fiscal impact tables for any formal rate change.