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Smithville rate study recommends 2027 water and sewer increases to fund $56M in near-term projects
Summary
A Raftelis rate study presented to the Smithville Board recommends an 8% water increase and a 30% sewer increase in 2027, with additional multi-year increases thereafter, to finance roughly $56 million in capital needs between 2027–2031 and planned borrowing.
City-contracted consultant Tom Beckley of Raftelis told the Smithville Board of Aldermen on April 7 that the 2026 Rate Study shows a funding gap when current revenues and operating needs are combined with capital projects in the updated CIP. "Existing revenues total approximately $7.7 million annually," Beckley said, and the study layers operating cost inflation, existing debt and capital needs to calculate requirements.
Beckley presented about $56 million in major capital needs scheduled between 2027 and 2031 — including the Owens Branch interceptor, wastewater treatment plant expansion and engineering and design work for the future water treatment plant. To support these projects the plan anticipates issuing $24 million in Certificates of Participation in 2027 (with interest-only payments during construction) and an additional borrowing program of roughly $46 million between 2030 and 2032 tied to the water plant expansion; about $16 million of routine rehabilitation work is expected to be cash-funded from annual revenues.
To close the modeled funding gap, Beckley recommended an 8% water-rate increase and a 30% sewer-rate increase in 2027; sewer increases of 15% are modeled for 2028 and 2029 with more moderate increases thereafter, while water increases are modeled annually and include a larger step when the expansion nears construction. For customers receiving both services, Beckley said the combined 2027 impact would be about 19% and average increases around 12% per year from fiscal years 2028–2031.
Beckley said a previously proposed 15% increase for 2026 was not implemented, which contributes to the larger recommended adjustments now. He also noted that a full cost-of-service analysis indicates the City could justify raising wholesale water sales to Water District No. 8 from $7.14 per 1,000 gallons to about $10.37 per 1,000 gallons. The presentation compared Smithville's rates to regional peers and showed the city's rates are toward the upper end of comparable systems.
The Board and staff discussed impact fees and development considerations. Beckley indicated the sewer impact fee appears appropriate based on current asset and cost information, while the water impact fee for a standard 3/4-inch residential meter (currently $3,100) could be increased to about $4,200; Mayor Boley suggested phasing any increase so as not to unduly affect development. Staff and board members also discussed affordability metrics, volumetric pricing and the trade-offs of tiered rate structures versus administrative complexity.
No formal vote on the rate recommendations occurred during the work session. Staff said the presentation and model will inform upcoming budget sessions and the Board's annual retreat, where further direction and public outreach planning will be considered.
