Perry City Council hears rate study presentation during recent work session

PERRY – The Perry City Council discussed a rate study presentation during their Work Session last Monday, Oct. 6, which assesses the revenue and financial sufficiency of the city’s water and sewer services. 

City Attorney Brooke Newby started the presentation by introducing representatives from Raftelis, a national consulting firm. The company helps local governments and utilities improve their financial foundation while minimizing the impact on people who rely on their services, Newby explained.

Mayor Randall Walker and the council tasked them with ensuring new growth and that customers pay their fair share of financing systems, according to Newby. 

The presentation was outlined as a framework and a detailed plan using extensive data. Newby shared a key point, saying the mayor and council are not yet being asked to approve the study.

Rob Ori, a representative of Raftelis, stated that they conducted a five-year projection of city operations and maintenance expenses, as well as costs. He then shared statistics, saying there is a sizable customer base. 

According to the study, there are 14,200 water accounts and 8,800 sewer accounts. The largest class in the city is single-family residential and the average customer with domestic indoor use and irrigation use is 7,500 gallons. If it’s indoor use only, monthly water use is 3,700 gallons.

Also according to the study, the amount of rate revenue being produced by the system is approximately $6 million and the wastewater system is about the same amount. This means the rate revenue added up is approximately $12 million. 

Raftelis’ business practices and rate guiding principles were also explained. The presentation says that “Rates must be sufficient to fully recover costs of providing service” as well as “growth should pay for infrastructure to connect to system,” Ori said.

The representative stated that the key factor is the revenue generated from growth-related fees charged for new developments, which ultimately benefits existing ratepayers. He explained that these fees do not contribute to funding revenue requirements, and he noted that this is a significant issue within the industry.

He then discussed connection fees, which are contributions made by new developments. These fees help reduce costs for existing ratepayers. 

Ori mentioned that the city will continue to face infrastructure construction needs in the future due to growth. He emphasized the importance of linking growth with these fees. 

As growth occurs, there is an immediate need to expand wastewater capacity at the East Perry Wastewater Treatment Facility, which is currently in progress.

Ori said that is a significant capital investment to the system. He shared the cost to construct infrastructure is going up ever since the COVID-19 pandemic. This has put more emphasis on fees. 

The study proposed a sewer connection fee which reflects only capital cost that is financed to allow new customer connections to system. Ori shared the fee would be paid at the time the building permit is being issued. He clarified as each new unit gets developed, the fee would be charged. This would be a one time fee charge for new development which will cost $8,435, which will not be charged to the existing rate payer and will be implemented in the cost of the home, Ori clarified. 

Councilman Dan Peterson asked Ori how this would impact existing rate payers. According to the presentation, the water and sewer rates increased 7% for 2025 and 2026, effective on July 1. 

However, for Fiscal Year 2027 and after, the rate is estimated to increase, ranging from 6% to 10% depending on operating cost and customer growth.

According to Ori, from fiscal year 2022 to 2025, the city’s operating expenses have increased by approximately 20%, 6.4% annually. He said the biggest cause of this increase is labor. 

According to the presentation, the average annual total utility operating expense increase will be 6.25% from 2025 to 2030. 

Ori presented the recommended rate adjustments, proposing a 3% revenue increase for both the water and sewer systems in Fiscal Year 2026. In Fiscal Year 2027, there will be more significant rate increases: the water system will see a 9% increase, while the sewer system will experience a 15% increase.

Ori said they try to scale it down over time, however the city’s biggest issue is wastewater. 

Amounts shown represent the average annual increase in rate revenue when recognizing the water and sewer rate adjustments on a combined basis, the presentation says. 

Ori recommends making adjustments and considering the sewer connection fee charge. He also recommends adopting an intermediate adjustment to the 2026 rates. Currently, it is at 3% but he suggested it be increased to 5%. He anticipates the city’s next two years will be lean. 

Ori then invited questions and opened the floor for discussion. Councilman Robert Jones mentioned that they often receive feedback from constituents who are frustrated with ongoing rate increases. He believes this concern should be addressed. Ori believed that while the current base charge for rates is low, a higher base charge could provide greater revenue stability.

Councilman James Moody clarified that between now and 2030, there will be an approximately 25% increase in water rates and a 49% increase in sewer rates. He expressed his disagreement with these proposed increases, noting that he, along with his constituents, will be directly affected by them.

Walker stated that a decision has not yet been made, but the presentation outlines a plan that the city will review annually. He also expressed optimism about moving forward with the connectivity charge in a future meeting.

To see the full recommended rate adjustments, visit the Work Session agenda.  

Mayor and council will meet again for a work session on Monday, Oct.20 at 5 p.m. 

Mayor and council will have their pre-council meeting starting at 5 p.m. and regular council meeting at 6 p.m. on Oct. 21. Everyone is invited to attend these meetings, and the agenda can be found here.