Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Water Fund topic
No spam. Unsubscribe anytime.
Consultants: Crewe water fund will need phased rate hikes to absorb waterline replacement debt
Summary
Consultants told the Crewe Town Council that declining usage and new debt from a planned waterline replacement mean the town will likely need phased rate increases across several years to meet standard debt-service coverage ratios, though timing and size depend on loan term and state participation.
Consultants from VML Veco Finance presented a five-year forecast for the town's water fund and said the planned waterline replacement will add material debt-service costs that likely require multi-year rate increases to maintain financial sustainability.
"Usage declines by an average of 2.6% per year," David of VML Veco Finance said, summarizing the firm's revenue assumptions for state customers; he added that the model applies a 3% annual price/inflation factor and assumes transfers out to the sewer fund cease in the scenario where the water fund is to be self-sustaining. Steve Moy, the firm's municipal adviser, said their objective was to "minimize the impact on the ratepayers" while meeting common lender coverage targets of roughly 1.15 times annual debt service.
The consultants described two term options: a 20-year and a 30-year loan, with a model loan-closing date of Dec. 1, 2025 (to capture a modest interest-rate reduction tied to the program). Under an illustrative baseline with no near-term rate increases, the forecast shows debt-service coverage slipping below the 1.15x benchmark after fiscal 2028. They presented scenario charts that included step increases that could amount to multi-year cumulative increases (for example, a roughly 24% increase in an illustrative year under one scenario, with larger cumulative changes in later years).
Consultants showed sample bill impacts using a 5,000-gallon consumption scenario: in-town monthly bills in one scenario could rise from about $34 to roughly $71 over the long-term plan. The consultants emphasized practice and politics: a single sharp increase is disruptive, so they recommended spreading revenue adjustments over multiple years to reduce customer shock.
Council members asked whether the consultants could execute financing in addition to planning; Steve Moy replied that VML Veco Finance provides both municipal-advisory planning and execution services and could assist the town if it chooses to proceed.
Next steps indicated in the meeting: council and staff will incorporate the consultants' assumptions into the FY26 budget materials and consider phased rate adjustments and additional data collection from state facility customers that could materially change demand assumptions.
