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Douglas officials flag water fund stress and weigh modest rate increases to avoid larger hikes
Summary
City staff told the council the water fund will require reserves to finish capital work and urged consideration of small, recurring rate increases to prevent a larger future rate shock; sewer fund planning includes a 30% PER for effluent reuse and targeted annexation sewer work.
City staff told the joint Mayor and Council and Finance Committee on June 2 that the water enterprise faces financial strain and will use reserves to fund near‑term capital projects.
Pedroza, presenting enterprise fund details, said the water fund will use $867,160 in reserves to complete projects including a reservoir roof, node and hanger replacements for automated meter equipment, and remote disconnect meters. He warned that while the city previously realized operational efficiencies from its automated metering system, ongoing maintenance for electronic nodes and the city’s aging underground infrastructure continue to push costs upward. Staff cited recent valve failures and a major main break near St. Luke’s Church as examples of infrastructure fragility.
To avoid the need for a single large rate increase later, Pedroza and staff suggested the council consider modest incremental rate adjustments; Mayor Jose Grijalva specifically asked staff to model a five‑cent or ten‑cent monthly water rate increase to demonstrate impacts on fund solvency. Martinez supported preparing projections showing the effect of a five‑cent annual approach for both water and sewer.
The sewer fund was described as relatively healthier under the five‑year rate implementation, with projected revenues up about $118,867 and $500,000 planned from reserves for sewer extensions in 20th and 23rd Street annexation areas. Staff also outlined a 30% preliminary engineering report (PER) for an effluent reuse system that could convey treated wastewater for irrigation of the golf course and parks, a long‑term project requiring substantial permitting and funding.
Sanitation rates, last updated in 2011, are under review; staff proposed a rate study and noted a small use of fund balance this year. The city is pursuing a $750,000 grant for a microplastics recycling program sited near the wastewater treatment plant that would create roughly 2–3 FTEs in year one if awarded.
Council members asked for clearer public communications about the rationale for rate changes and requested a formal rate study and outreach plan before any adjustments were finalized. Staff agreed to return with modelled scenarios.
