By Mayor Bryan Nelson

At Wednesday’s City Council meeting, we took up the issue of the increasing water and wastewater rates, which we know impacts everyone in these challenging times. I would like to explain how we got to a 15.5% rate increase and what the city is doing to reduce increases going forward.  

We commissioned Raftelis, a respected utility rate study actualist, to determine what our water, wastewater, reclaimed water and sanitation rates should be based on objective criteria. They take all the projected operating costs and capital costs over the next five years to figure a rate that will adequately pay our bills and have funds to pay for replacement of outdated equipment, such as pumps and pipes.  

This rate increase does not contemplate paying for new pipes, new capacity or new staff needed to support new development, which is paid for from impact fees that are currently $7,400 per residential property. Related infrastructure is paid for by these impact fees covered under the 403 account.  

The goals of an appropriate rate include a positive cashflow, cash reserve of 150 days of operating expenses and debt service coverage of 150%.  

Raftelis has determined that our operating expense increases will average 8.2% per year over the next five years, and our debt service will be $5 million per year.  

Back in 2017, before I was elected, we took on a $40 million loan for the new wastewater plant, but included in that 20-year debt is $15 million that was wasted on building a fertilizer plant and the west sewer plant, which have never been operational. The principal and interest have already cost all water customers over $700,000 per year, and payments will continue for 12 years for something that we didn’t need.  

The Capital Improvement Plan (CIP) is scheduled to cost $188 million over the next five years. Two major projects in the wastewater CIP include two lift stations that are over 50 years old and will collectively cost almost $35 million.  

In the water CIP, we are drilling new wells into the lower aquifer, and because of the lower water quality, will be adding ozone treatment for more than $11 million per well. Impact fees will cover some of the $11 million because of the additional capacity of the new wells.  

Raftelis’s job is to give the city an honest rate assessment based on increasing operating costs and scheduled plant and equipment replacements, then recommend a rate to accomplish these goals. 

Our entire team at public services understand the hardship that a 15.5% rate increase would be, and they were tasked with coming up with ways to increase revenue without affecting the homeowner and reducing costs where appropriate.  

We continue to reduce the number of no-reads and estimated read water meters, and our hope is to be well below the state average for uncollected water and wastewater usage fees.  

I would also like to share with you the creative ways that our public works team will help to mitigate the future increases with savings they found and non-rate increases, where appropriate. We are adjusting our new install fees for potable water, reclaimed water, sewer taps and backflow valve replacements. We are considering a small credit card processing fee, will bring forward a significant utility meter tampering fine and continue to look at all our operational and capital expenses to be as efficient as possible with your hard-earned money.  

We hope that implementing these changes will help in slowing rate increases in the near future.