Staff recommends rate model that would raise average water bills; board hears alternatives

The district's rate study consultant Sean Korn (HDR) presented preliminary revenue‑requirement results that reflect updated assumptions: a 5% construction‑cost escalation in 2025 (then 3% thereafter), higher O&M inflation (5.9%), the addition of Tahoe Swiss Village acquisition projects and an updated five‑year CIP that rose from roughly $56 million to $76 million for water. Under staff'recommended assumptions (higher PAYGO of $3.8M for water, updated debt assumptions for the Tall Cedars and Madden Creek projects), the consultant reported a preliminary revenue adjustment of about 12.5% for water in 2025 and roughly 9.5% in subsequent years; the average monthly water bill would increase by an estimated $14.50 in 2025 for an average usage customer.

Staff also laid out alternatives: increasing the share of debt service funded from property tax (from 33% to 50%) would cut near‑term rate pressure (about a 0.5–1% reduction per year under the model) but shift costs into later years and pressure the general fund; deferring PAYGO to prior levels (keeping water PAYGO at $2.5M) would reduce 2025 increases toward ~7.5% annually but would defer $6.6M of capital and require larger increases later. Directors asked for sensitivity analyses (property tax share, WIFIA timing, staffing phasing) and staff said it will finalize the revenue requirement, complete the cost‑of‑service step and return to the board in September with a recommended Prop 218 notification schedule.