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Council leans toward phased water/sewer rate increases to fund aging infrastructure
Summary
Staff presented a multi-year, phased plan to raise base residential water from $12 to $15 and sewer base from $15 to $18 to support capital needs (lift station rehab, clarifier rehab, meter upgrades) and to avoid excessive depletion of fund balance; council preferred phased increases over deferring capital or issuing bonds without voter approval.
City staff told the council the water and wastewater enterprise fund currently covers operating costs but lacks recurring revenue for near-term capital needs, including an estimated $2.5 million lift-station repair and other projects totaling roughly $5 million for FY27. Staff proposed a phased multi-year approach: phase 1 (effective Oct. 1) would increase base residential water (first 2,000 gallons) from $12 to $15 and sewer base from $15 to $18, with tiered-rate adjustments considered in later phases.
"So we're looking at the water rates for residential. The base, which is the 1st 2,000 gallons, would increase from $12 to $15," the presenter said, and staff noted the average residential four-person/four-thousand? 7,500-gallon usage example would increase the combined water/sewer/subsidence bill by about $6 (from $81.03 to $87.03 under staff projections). Staff outlined alternatives — issuing revenue bonds to preserve rates, or deferring capital which would increase the risk of system failures — and recommended the phased approach to align recurring revenues with recurring capital needs.
Council members expressed support for option 1 (a phased rate increase) rather than deferring capital or pursuing large one-time increases. Staff will return with ordinance language and a schedule that phases increases across fiscal years to limit customer shock while funding critical rehab projects.
