The most pressing topic of the meeting was the financial sustainability of the city’s utility services, specifically the water, wastewater, and sanitation sectors. Henry Thomas, a senior vice president at RFAS Financial Consultants, presented a comprehensive analysis of the city’s enterprise funds. He emphasized the need to balance revenue requirements against operating costs. Thomas highlighted that while major projects with long-lived assets might necessitate future borrowing, ongoing renewals and replacements should be funded from rate revenues. He pointed out that the sanitation utility, with its high operational costs but limited infrastructure projects, was particularly unsustainable at current rates. Thomas stressed the importance of building cash reserves. The consultant proposed phased rate adjustments to maintain positive cash flows and prevent reliance on reserves.

Thomas outlined the anticipated growth projections, estimating approximately 29,000 water accounts and 24,000 wastewater accounts by fiscal year 2025. This growth is expected to result in an increase in combined system revenues, from $33.7 million to $36.6 million. He proposed rate increases of 15.5% in the first two years, followed by inflation-aligned adjustments, to ensure the financial viability of the system. He stated that the current rates would be insufficient to fund the required capital improvement plan.

The council also debated the sanitation service’s financial projections, noting the current customer base of 21,400 and an annual growth rate of approximately 1.8%. Without rate increases, system revenues are projected to decrease by 2029. Operating expenses, influenced by rising labor, health insurance, and fuel costs, are expected to impact the budget significantly. The capital improvement plan for sanitation involves a projected $6.88 million, primarily for vehicle replacements and expansions. The council considered a 15% rate increase for residential customers in 2026, with subsequent annual increases of 6.5%.

A discussion on municipal impact fees highlighted recent legislative changes that complicate fee implementation. Under Senate Bill 1080, municipalities must provide a 90-day notice before collecting fees, and any fee increase exceeding 25% must be phased in over two years. If the increase surpasses 25%, a four-year phase-in period is required. The council acknowledged the difficulties posed by the lack of a clear definition for “extraordinary circumstances,” which could allow for faster increases. The attorney warned that these regulations could hinder the city’s ability to fund necessary infrastructure projects amid rapid development and growth pressures.

Specific fee projections included a potential increase in police fees from $747 to $1,262 and fire fees from $78 to $1,511, both exceeding statutory caps without invoking extraordinary circumstances. The council debated the implications of these legislative changes, expressing concerns about the potential burden on existing taxpayers if impact fees cannot be adequately raised.

Discussions during the budget workshop also focused on proposed utility rate increases, including water, wastewater, sanitation, and stormwater services. The need for compliance with the TRIM process for notifying residents about these increases was emphasized. Proposed increases were substantial, with 15.5% for water and wastewater, 15% for sanitation, and 20% for stormwater. The council acknowledged the necessity of having a multi-year plan for stormwater rates to better communicate expected financial obligations to residents.