City council hears study showing possible 35% water, sewer rate jump starting July 2026

Consultants from Waterworth presented a long-term financial model for the city’s water and wastewater funds and told the council the funds are at risk of running out of cash within two years without revenue changes. Adam, a member of Waterworth’s client success team, explained the model’s components — operating expenses, revenues and the cash position — and walked the council through two borrowing scenarios that hinge on obtaining loans at either 1% or 2% interest.

A city staff member who spoke during the presentation said a combined water and sewer project submitted for funding totals $23,110,000, of which about $17,000,000 would be charged to the sewer fund and about $6,000,000 to the water fund. The staff member warned, “I think it is at year '27. We're gonna run completely out of cash if we don't do anything,” stressing that utility enterprise funds must be self‑supporting.

Under the 1% borrowing scenario, the Waterworth model shows a 35% increase in water rates effective July 2026, followed by a 15% adjustment in January 2027, a 10% change in January 2028 and smaller annual adjustments thereafter (4% in 2029 and 2% annually after 2030). Adam said that schedule would allow revenues to begin exceeding expenses and slowly rebuild the cash position to roughly $978,000 by 2033.

The consultants presented a parallel wastewater scenario with similar front‑loaded increases; the 2% borrowing alternative produces a nearly identical set of revenue adjustments but adds an extra year of a 4% increase in 2030 and results in a slightly lower forecasted cash balance by 2033.

Council members pressed the presenters on whether the increases could be phased more gradually. Waterworth and city staff said they modeled alternatives but emphasized that projections show an urgent near‑term need for significant revenue to avoid insolvency. Adam offered to return in three to four months with updated scenarios and suggested the software tool the city purchased would let staff test smaller, rolling adjustments rather than one large hike.

Next steps: the presentation provided modeling to inform council decisions; no formal rate changes were adopted at this meeting. Staff and the consultants recommended further modeling, public outreach, and a follow‑up presentation with rate ordinance language if the council directs a formal proposal.

Ending: Council members asked staff for more clarification about assumptions, cash targets and alternatives to a single large increase. Waterworth offered ongoing technical support for modeling and a plan to return with updated scenarios.