Republic reconsiders water, sewer hike

The Republic City Council appears to be backing away from its plan to boost water and sewer rates significantly over the next three years. An ordinance revising the new rate structure starting Jan. 1, where higher fees were going to be charged beginning this month, was introduced at the March 3 city council meeting. 

Bob Ford, chief financial officer, reviewed the reasons the city opted to raise charges to customers 300 percent by 2027. That included an immediate 45 percent increase in the base charge, a 109 percent increase on the surcharge, and another increase in 2027. 

Part of the reason stemmed from the $90 million capital improvements strategy over the next 20 years to keep up with city growth. Another stemmed from no rate increases from 2014 to 2022. Had the city raised water rates 7.5 percent annually over the last decade, the rate change would have reached the same level. 

“Today’s current rate structure disproportionately impacts those low usage customers,” Ford said. “Rate structures that have a low fixed base rate coupled with a per-gallon charge from gallon 1 tend to be more fair to the low-end user, as do rate structures that are tiered, where the more you use, the more you pay per incremental gallon. In our current rate structure, the effective cost per gallon actually decreases as the customer uses more water.”

The presentation to the city council noted, “Attempting to correct more than two decades of limited investment within a short window of time creates significant rate shock for our citizens.”

Ford told The Commonwealth, “While we did hear from some of our customers about the size of the water rate increases, it was really continued work and evaluation by city staff that was the primary driver to recommend the modification.” 

Original plan

The strategy as initially laid out called for investing $70 million of the $90 million plan in the first 10 years. Under the revised plan, the city will cut that rapid upgrade to evenly split the improvements to $45 million per each 10-year period. 

“In keeping with our vision ‘to do the right thing at the right time for the right reason,’ our goal is to balance the necessary capital investment with rate increases that are more tolerated by our citizens' personal budgets,” Ford told The Commonwealth. “To be clear, the city will need to increase water rates on an annual basis to fund ongoing infrastructure investment, but those annual increases will be steady, predictable and methodical. The specific rate recommendations and methodologies for 2027 and beyond will be part of the FY2027 Budget discussion scheduled for October of this year.”

Ford proposed holding the water bill rate in 2026 at the same rate as 2025, but increasing the sewer rate. The end result meant that customers using from 500 to 1,500 gallons of water a month would only see a 10 percent increase in the coming year, as opposed to a 26 percent rise. Those using 4,000 to 10,000 gallons a month would see their bills rise by 11 percent, instead of 35 to 39 percent this year. 

“Staff feels this should balance a bit more with their needs,” Ford told the council. “In 2027, we’ll explore alternative methodologies so that the rate impact – how we deploy those rates – would impact all users equitably, as opposed to one group paying a higher rate per gallon than another group. We will bring that back to you in the budget process next fall.” 

To keep the capital improvements advancing, Ford proposed pursuing a tax-exempt special obligation bond offering for $45 million. This strategy would give the city access to the money in tranches, such as drawing $30 million up front, then $15 million more five years later. The city would have three years to spend at least 85 percent of the bond proceeds. 

Final adoption of the ordinance is likely at the council’s next meeting on March 17.