Title
Preliminary Discussion About Sewer Rate Changes
Recommended Action
None - discussion item only
Staff Recommendation
None - discussion item only
Body
This is the preliminary discussion of a proposed 8% increase to residential and commercial sewer rates. A formal public hearing on this item is scheduled for the August Board meeting, at which time the Board will act on the final proposed ordinance.
The ten-year forecast for the sewer utility presented with the FY2018 budget included a series of incremental rate increases to generate revenues needed for current operations and to build cash reserves necessary for future infrastructure replacements, most notably the needed replacement for the White Rock waste water treatment facility. Several alternatives have been considered as to timing of that plant replacement and financing alternatives. While the long-term projection of rate increases in each scenario that was considered were somewhat different, all include a series of rate increases in the coming years. The scenario adopted by the Board included an 8% increase in FY18 and another in FY19, with declining increases in years following. The FY19/20 budget represents implementation of that scenario, updated to reflect current known conditions and financing decisions that have been or are planned for implementation. $2.5 million has been transferred from the Gas fund to the Sewer fund and used to pay down the 2012 NMED Loan that was used to finance the design and construction of the Los Alamos Wastewater Treatment Facility. We are currently working on refinancing that loan at a lower rate, and extending the term somewhat to improve cash flow for the utility. The Board has also adopted a financing strategy for the new White Rock plant that strikes a reasonable balance between life of plant, term of loan, and cash flow requirements of the utility. While these actions work together toward allowing some flexibility in terms of future rate increases, staff...
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