Title
Hold a public hearing and consider an ordinance amending the Code of Ordinances Chapter 30, Water, Sewers and Sewage Disposal, to amend residential and commercial water rates and residential sewer rates.
Body
DATE: September 2, 2025
TO: Kent Cagle, City Manager
FROM: Jeffery Reynolds, Executive Director of Public Works
SUBJECT: Water and Sewer Ordinance Rate Amendments
BACKGROUND AND FINDINGS:
On July 7, 2020, City Council received the results of the 2020 Water and Sewer Rate Study. The study found that the City’s water revenues were insufficient to fully fund the projected expenses over the next five years. City Council deferred a rate adjustment at the time due to the pandemic.
In the recent Water & Sewer five-year rate analysis it was also recommended to implement a phased approach to adjusting the base rate paid on different meter sizes by commercial customers to be in line with the American Water Works Association (AWWA) recommendation. The first phase adjustment was included in the fiscal year (FY) 2023 Budget, the second phase adjustment was included in the FY 2024 Budget, phase three was included in the FY 2025 Budget, and phase four is included in the proposed FY 2026 Budget.
The last residential water rate increase took place in FY 2022 and the top two volumetric tiers were increased in the FY 2025 budget. The FY 2026 Budget includes an increase to the residential water rates, as well as an increase to the three-tier volumetric rates to encourage water conservation. This includes a $0.50 increase to the base water bill, making the standard rate $15.54 a month and includes up to 2,000 gallons. All volumetric rates are based on each additional 1,000 gallons of water. Therefore, tier one (2,001 – 15,000 gallons) will see a 3.15% ($0.11) increase, tier two (15,001 – 30,000 gallons) will see a 5.16% ($0.23) increase, and tier three (30,001 gallons and above) will see a 5.03% ($0.28) increase.
Additionally, in the proposed FY 2026 Budget, there is a recommendation to increase residential sewer rates by $0.83 due to an increase in the Sewer Warranty Program. This program increase will affect all residential customers that are in single-, two-, three-, and four-unit homes, and provides coverage of the sewer line in the right-of-way to the main.
THE ALTERNATIVES CONSIDERED:
N/A
Which alternative is recommended? Why?
N/A
CONFORMITY TO CITY POLICY:
This item conforms with state and local policies.
FINANCIAL IMPACT:
What is the amount of the revenue/expenditure in the current fiscal year? For future years?
The financial impact is additional revenue from the increase to the base rate and three-tier rates for residential water. There is also additional revenue from the fourth of a 5-year phase-in of increases to the base rate for commercial meters. The additional expenditure for the sewer warranty will be offset by the revenue collected. All the additional revenue is included in the FY 2026 Proposed Budget.
Is this a one-time or recurring revenue/expenditure?
N/A
Is this revenue/expenditure budgeted?
N/A
If not, where will the money come from?
N/A
Is there a sufficient amount in the budgeted line-item for this revenue/expenditure?
N/A
RECOMMENDATION:
City Council approve the ordinance amending Chapter 30, Water, Sewers, and Sewage Disposal, of the Code of Ordinances, to amend residential and commercial water rates as well as residential sewer rates.
DEPARTMENTAL CLEARANCES:
Public Works
Finance
Legal
ATTACHED SUPPORTING DOCUMENTS:
Ordinance
Presentation