Pearland presents $316M enterprise CIP for water and sewer; staff warn FY28 rate impact and promise more modeling

Pearland staff presented a five‑year enterprise Capital Improvement Plan on June 22 that lists 27 wastewater and 26 water projects, driven by aging infrastructure and regulatory commitments. "There are 27 wastewater projects we are recommending funding for fiscal year 27 through 31," Fabiola de Carvallo said, describing lift‑station rehabilitations (19 projects) and work on Berry Road and Longwood sanitary and reclamation projects.

Ms. Weekly summarized how the enterprise CIP feeds into rates. She told council the enterprise rate model assumes debt service rising from about $44 million in FY26 to $47 million in FY27 and that staff had modeled prior multi‑year rate paths, noting last year’s adopted FY26 rate increase of 5.5% and earlier forecasts showing larger increases in subsequent years. "Debt issued in FY27 for CIP projects will begin repayment in FY28," she said, underscoring that projects authorized and debt already sold constrain FY27 rates and influence FY28 rate choices.

Council members raised two recurring concerns: how to limit near‑term rate shocks and how to identify alternative funding to lower rate pressure. Staff said they are staging construction and selling debt as construction occurs to moderate rate impacts and that PEDC/EDC funds already contribute to water/sewer projects (staff identified roughly $20+ million in EDC/PEDC funds across planning years). Council asked staff to provide comparisons with neighboring cities, include revenue options beyond rate increases and test sensitivity to interest‑rate assumptions and water sales.

Lift‑station and Green Tea area work drew specific questions. Councilman McKay asked why some lift stations cost several million while others are under $2M; staff explained regional stations are larger and more complex. Staff said a feasibility study for Green Tea lift stations (to explore consolidation and possible decommissioning of some lift stations) will be brought forward as a professional services contract and may take 4–6 months, with design timelines of roughly 10–18 months depending on scope.

Next steps and rate timing: Staff committed to return at the council’s second July meeting with the detailed enterprise operating budget and an updated rate proposal, plus comparative data and sensitivity analyses. The presentation reiterated that some FY27 debt sales are already complete, effectively locking in parts of the FY27 rate picture; staff said they are continuing to model FY28 impacts and would present options to the council.

The council requested more granular revenue scenarios (including long‑term water sales and partnership options) and asked staff to test conservative interest‑rate assumptions in their rate model before recommending changes to utility rates.