HomeMy WebLinkAbout(P1) Council_Open_Session_2025-09_23_v2Water and Sewer Rate Study Results
Presentation to the City Council
City of Port Arthur
September 23, 2025
1
Agenda
2
2
Background and Objectives
3
3
Study Background
4
The 2025 Utilities Fund did not have any funding for Planned Capital Improvement Projects or emergencies.
At the End of the year 2025, the Utilities Fund operating budget projection is an Operating Fund deficit of $5.5 million and Capital Fund deficit of $8.38 million.
The General Fund does not have the resources to subsidize the Utilities Enterprise Fund.
Since January 2025, the General Fund has provided $7.6 million in funding for the Utilities Department.
The Utilities Enterprise Fund is not be able to repay the General Fund any of the $7.6 million borrowed during the 2025 budget year.
The Attorney General filed a lawsuit against the City on February 20, 2025 regarding the operation of the City’s wastewater system.
4
Study Objectives
5
The City engaged NewGen to develop a FY 2026 water and sewer rate recommendation that:
Accounts for inflation in both operating and capital costs of at least the most recent Consumer Price Index (CPI) of 5.3%.
Enables the City to address the capital needs of the Wastewater System.
Results in the meeting a minimum fund balance policy as quickly as reasonably possible.
Ensures that essential water and sewer service remains affordable to City customers to the greatest extent possible.
5
Affordability Evaluation
6
Local Affordability Evaluation
“Essential Service” = 3,500 gal/ mo.
43 gallons per person per day for typical household
The Household Burden Indicator (HBI): “Basic service” cost as a percent of the Lowest Quintile Income (LQI), i.e., lowest 20% income bracket.
The Poverty Prevalence Indicator (PPI): Percentage of households at or below 200% of the Federal Poverty Level.
7
7
Local Affordability Evaluation
8
Because of Port Arthur’s PPI of 47%, any water and sewer rate results in a Moderate-High Burden on households at the lowest 20% of income.
8
Statewide Benchmarking
Average statewide residential bill for 5,000 gallons per month based on Texas Municipal League (TML) annual Water & Wastewater Rate Survey.
Exclusively from Texas cities that directly provide and bill for these services, excluding those served via municipal utility districts or private agreements
Under the FY 2026 recommended rates, how does a Port Arthur residential bill for 5,000 gallons per month compare to the statewide average residential bill?
9
9
FY 2026 Rate Increase Recommendation
10
Summary of FY 2026 Rate Increase Recommendation
The FY 2026 recommended rates:
Generate revenues sufficient to meet operating and capital expenses including annual CPI inflation of 5.3%.
Include $3.0 million per year for emergencies / contingencies.
Eliminate Operating Fund deficit of $5.50 million within three years.
Eliminate Capital Fund deficit of $8.38 million in FY 2026.
Assume Capital Fund deficit and all future capital is funded with new debt.
11
11
Recommended Rates
12
Note: Statewide comparison based on 5,000 gal./mo. + 5% annual increases.
12
Thank you
Eric Callocchia, Partner
ecallocchia@newgenstrategies.net
13