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Consultant outlines multiyear rate plan, $35M treatment-plant estimate and two funding paths
Summary
A rate-study consultant told the Montecito Sanitary District board the district’s capital and operating needs support a 10-year financial plan, including an estimated $35 million wastewater treatment-plant project and options to fund it through steep near-term rate hikes or a combination of rates plus debt.
The district’s rate-study consultant presented a multiyear financial model March 2 that projects the district’s capital, operating and reserve needs over the next decade and shows how different funding strategies would affect rates and reserves.
Consultant modeling estimated the wastewater treatment-plant project at approximately $35,000,000 and placed total planned capital spending in the multi‑year rebuilding and rehabilitation plan in the tens of millions. The consultant illustrated a rates-only scenario — which would require very large near-term rate increases — and a blended approach that issues debt in fiscal year 2029 to spread costs over 30 years.
"We assumed the $42,000,000 30 year, debt issuance at 5% over a 30 year period," the consultant said when describing the favored model. Under the recommended blended approach, the consultant presented phased revenue increases of 14% in FY27 and FY28, then 13%, 12% and 10% in subsequent years to meet capital and reserve goals while maintaining industry-standard debt-service coverage levels.
The consultant emphasized that the Proposition 218 process requires a detailed cost-of-service report and a 45-day notice before a hearing; written protests meeting the statutory threshold can prevent rates from being adopted. The board asked for additional detail on the proposed schedule, the treatment-plant timing and alternative scenarios that would soften the initial-year hit to ratepayers.
Next steps: staff will finalize the cost-of-service report, produce a draft Proposition 218 notice and bring comparisons for alternative rate paths and reserve targets back to the board.
