Finance consultant recommends phased borrowing and a 3% stormwater rate increase to fund CIP

John Cameron with Ehlers reviewed options for funding the stormwater capital improvement plan that grew from McMahon’s analysis. He said an initial cash-plus-borrowing scenario — a modest borrowing in 2028 and a larger issuance in 2032 — smooths customer rate impacts instead of large, lump-sum increases up front. Under the recommended scenario, the village would implement a 3% rate increase this year — roughly $2 annually per ERU, taking the standard residential ERU from $60 to about $62 — and then plan for modest annual increases that ramp to 5% in later years to support debt service and projects.

Cameron explained the rationale: spreading borrowings to combine multiple years’ projects into single issuances keeps rate changes more linear and predictable for customers, and allows the utility to use reserves strategically for some later projects. He also outlined debt-service estimates (principal-and-interest near $120,000 annually for the first issuance and about $150,000 for the larger 2032 issuance) and benchmarks for cash-on-hand (Ehlers’ method: six months operating expenses plus one year of debt; PSC method: 90 days; rating-agency AA target: ~150 days).

Why it matters: Funding choices determine stormwater-fee trajectory, capital scope and pace of compliance with TMDLs. The consultant recommended board action in this budget cycle to start the rate change and to continue CIP and ordinance discussion.

Next steps: Board discussion will continue in budget workshops; staff and Ehlers will run alternatives and finalize rates and borrowing parameters for future board decisions.