By Corinne Murdock |
Gilbert residents may face a massive water rate hike of up to 130 percent next year.
The town council discussed three proposed options for water rate increases during its two-day fall retreat last week: cash funded, bond funded, or cash/bond gradual funded. The additional funds would address issues and needs instigated by the Colorado River shortage: a sharp increase in raw water supply cost, infrastructure needs to access groundwater, and additional conservation staffing and programs.
The cash-funded option would require an immediate rate increase of 130 percent: the average monthly residential water bill would increase from $34 to $78 next April. Under this option, there wouldn’t be any new increases planned for the following two years, no new debt, an ongoing capacity of $6 million for one-time Capital Improvement Project (CIP) in the operating fund, and an ongoing Repair & Replacement (R&R) fund capacity of $73 million in the 2029 fiscal year.
The bond-funded option would require an immediate rate increase of 95 percent, increasing the average monthly residential water bill from $34 to $66 next April. Under this option, there would be no increases planned for the following two years, but there would be $205 million of new debt with $110 million of anticipated interest paid over 20 years. The one-time CIP in the operating fund would have an ongoing capacity of $2 million, and the ongoing R&R fund capacity would be $37 million in the 2029 fiscal year. The town noted that this option would have the lowest overall rate increase by total percent.
The cash/bond gradual-funded option would require an immediate rate increase of 50 percent, followed by 25 percent in one year and another 25 percent in two years. This would result in the average monthly residential water bill to increase from $34 to $51 next April, then $64 in 2025 and $80 in 2026. Under this option, there would be a phased increase and $80 million in new debt, with $43 million in anticipated interest paid over 20 years. Additionally, the one-time CIP in the operating fund would be $5 million and the ongoing R&R fund capacity would be $66 million in the 2029 fiscal year.
The Public Works Advisory Board (PWAB) recommended the town council adopt the third option: the cash/bond gradual funded. PWAB further recommended that the town council dedicate staff to research additional financial assistance relief to offset the predicted burden of their preferred rate increase.
The town council expressed a preference for the cash- and cash/bond gradual-funded options.
The town estimated that it will cost around $2.8 billion to undertake pipe replacement when due between the years 2090 and 2110. They estimated that would come down to an average 50-year cost of $76 million annually.
In addition to water rates, town residents also face a 44 percent proposed rate increase for solid waste and recycling services.
Eric Braun, assistant public works director, said that the town had recently taken on the practice of only increasing two of four utility rates at a time because they felt it would mitigate the financial impact on residents. Braun admitted that the plan to not increase rates under the cash-funded option was promissory only and liable to change.
Per a history of rate increases, the town last increased water rates in 2022 by 29.6 percent. Solid waste and recycling increased by 28.6 percent.
Last year, the town increased wastewater and environmental compliance rates by 32.4 percent and 59 percent, respectively.
Rates for all four utilities had no increase from 2019 through 2021.
The town council is scheduled to approve a notice of intent to increase water rates and fees at its Nov. 28 meeting, with a recommended public hearing date of Feb. 6, 2024.
Corinne Murdock is a reporter for AZ Free News. Follow her latest on Twitter, or email tips to corinne@azfreenews.com.
