City Council - workshop

Consistent cadence. Yeah. All right, let's go.

Is anybody else? Okay, good morning, everyone. I'd like to call this meeting to order. Ms. Huerta, would you please call the roll?

Mayor Paulette Guajardo. Present. Council Member Roland Barrera. He's going to be late. He'll be here about 9.30. Okay. Sylvia Campos. Here. Mr. Cantu is not feeling well. He'll be absent. Gil Hernandez. Here. Kaylin Paxson. There she is. Okay. Everett Roy. Okay, absent. Mark Scott? Here. Carolyn Bond? Here. City Manager Peter Zanoni? Present. City Attorney Miles Risley? Here. Mayor and Council, a quorum of the Council and the required charter officers are present to conduct the meeting.

Great, thank you, Ms. Wetzel. So this morning we have one item, and it is an overview of Corpus Christi Water, the fiscal year 2027 operating and capital improvement program proposed budget, and water rates and wastewater rates. So just to let the public know, we will be, you know, there will be a presentation on both of those, our water and wastewater rates. We will have a second water workshop next Thursday at 9 a.m., and that will carry over, or anything from today could carry over to next Thursday, although we do have a slotted amount of time today to ask plenty of questions and go through these presentations thoroughly. If any council member is needing more, typically we have two opportunities to ask questions, but if we need a third one, I'm going to allow that, being that we are discussing water, which is such an important topic. So Ms. Huerta will do up to three, should someone need that. And so with that, I am going to turn it over to Nick Winkelmann to start the presentation.

Good morning, Mayor and Council. Nick Winkelmann, Chief Operating Officer, Corpus Christi Water. I do want to thank some of the members who are here with me, the team that's helped develop this. Wes Nebgen is here, Director. Camille Terrace, Assistant Director of Finance for CCW. Esteban Ramos, Assistant Director of Water Supply for CCW. We also have Rudy Mora, who's our Assistant Director of Wastewater. Rudy is not here today, because he is working at the wastewater plants, trying to make sure our improvements continue. Additionally, we have Andy McCartney and Richard Campbell from NewGen Solutions. NewGen is our rate modeler, and they've worked with us for a number of years now, and we're very pleased to have them on our team. Additionally, I want to thank the finance and the budget office, and Amy is here today. Thank you for being here, Amy. We're appreciative of their support. All of this was done ahead of the normal schedule, I think this is a good process for the year, and we'll go through the calendar here on the next slide.

And, Nick, before you get going, I'm sorry to interrupt you. We are going to, if you'll go ahead and go through the entire, what are we doing first?

Wastewater.

Wastewater. If you'll go through the entire wastewater presentation, and then the council members will ask questions or have the comments after that. Thank you. Yes, ma'am. Yes.

I was just wondering, is this already on Legistar or for the public to read?

It is on Legistar.

Now? Yes. Because I didn't think I had seen it earlier, but it is. Okay.

Yes, it is.

Thank you. Thank you, Nick. Go ahead.

So I'd like to just go through our calendar. Of course, today is July 8th. This is our first council workshop for the Water and Wastewater rate setting process. We have another council workshop next week on July 16th, that's a Thursday. During the workshop next week, we'll do a consent decree overview So that'll take up the majority of the presentation next week. I'll provide an update on the public utilities commission process and the hearings. We'll review drought surcharge exemption fees as well, and then cover any additional topics that we need to provide more detail to council. That may unfold today as we work through the presentation and answer your questions. The first reading for the water and wastewater rates is July 21st. The second reading is scheduled for July 28th. And again, this is outside of our normal process. It provides more time for all of you to focus on both water and wastewater. Today, we will talk about, we'll give an overview of water, wastewater and water. I will provide an overview for the department, and then we will have Andy McCartney with NUGEN. He'll go into the detailed rate setting and rate modeling slides. Additionally, Camille Terrace will provide, he'll cover a couple of slides as well and go over some of our historic rates for the last six to seven years. The mission statement for Corpus Christi Water, I'd like to read that. It means a lot to us and a lot to the team. Our mission is to provide the highest quality water and wastewater services that exceed regulatory requirements and serve the region. We do this by upholding the highest standards, providing innovative solutions, leading strategic initiatives, and prioritizing continuous improvement. And I'd like to say just on behalf of the department, I want to thank the entire department. I think they've hit a home run. this last year, and they have met our mission statement significantly, and we're very proud of all their achievements. Corpus Christi Water is an enterprise fund, which means we're fully funded by our rates for the services that we provide. We are not supported by tax revenue. It's fully supported by the rates and the services that we provide. Now, if we could talk about wastewater specifically. Our achievements for fiscal year 2026, we approved, with the council's support, we've initiated a construction project at the Oso Wastewater Treatment Plant. That was approximately a $110 million project. That's another project to ensure that our largest wastewater treatment plant is operating efficiently, effectively, and is set for the future. We have $102 million project at the Greenwood Wastewater Treatment Plant. That plant itself is likely the plant that will grow in the future. These upgrades and improvements are necessary so that plant continues to function effectively. And then we also have awarded a project at the Broadway Wastewater Treatment Plant. This continues our efforts to ensure that all six of our wastewater treatment plants are upgraded and performing satisfactorily. Lift station upgrades. The big part of any wastewater system is the lift station and the collection, the lift station system and the collection systems. We have a $19 million project to add a new force main for the Williams Lift Station. The Williams Lift Station is the largest lift station in the city. Additionally, we have contracts to rehab 11 lift stations for $17 million. And then we have the addition of a new lift station in the London area, which will open up that area and allow it to be served with wastewater services. That was certainly a forward-thinking project, and we're very proud of that. And then we have... wastewater improvements on Northwest Boulevard that will provide wastewater services to the city limits which currently don't exist if you if you head out West on Northwest Boulevard so we're excited for that as well. The collection system is is a huge part and we need to their their updates to that system and we know those because of the constraints and all of the work that we have done studying the capacity of the entire wastewater collection system. Hewitt and Santa Fe has long been a problem. We are working on a design of a multi-phase project to upgrade the collection system similar to Blucher Park. Blucher Park will be a significant improvement for the city, and that area has long suffered from sanitary sewer overflows. This project is meant to correct the capacity constraints, so we don't have to deal with those in the future. Additionally, we call them twin 36-inch wastewater lines, which feed wastewater to the Oso Wastewater Treatment Plant, Those lines will be lined so that we can ensure that they operate well into the future without any issues. Of course, those lines go through the Oso Golf Course. So we want to make sure that we maintain and protect that critical infrastructure as well. The city has approximately 20,500 wastewater manholes. This year, we have rehabilitated 225 manholes. Corpus Christi water staff has rehabilitated 130 of those, and our contractors have rehabilitated 95. CCW staff has inspected 394,528 feet of wastewater gravity main lines. We've cleaned 741,132 feet of gravity mains. We've conducted 1,224 point repairs on the collection system with our contractors completing five point repairs. Additionally, we have replaced 19,195 feet of basically clay pipe within our wastewater collection system. The replacement of the pipe is primarily done by contractors. The proposed budget for the wastewater fund, this is a similar graphic that we've had over the last couple of years. And I'll just walk through the pie chart on the left to start. So if we start in the middle, this is our expenses. The personnel expenses is approximately 23.4 million. Operating expenses, 29.6. capital 14.4 and then debt service coverage is 33.9. And as since we're an enterprise fund, the goal is a balanced budget. So we have corresponding revenue to meet those expenses. The outer ring of the pie chart is the revenue that we bring in to meet those expenses. We'll have the exact same, a similar chart for, for water as well. On the charts on the right are the year-over-year comparisons. So the FY26 budget, the revenues for wastewater was 101.5 million. In FY27, we are forecasting revenues of 105.6 million. That's a variance of an additional 4.1 million. The expenditures FY26 is $113.6 million. The budget for FY27 is $111.1 million. It's actually a decrease of $2.5 million. The wastewater team has 277 current positions. I will go over this, but we are looking at eight positions for next fiscal year. That would bring the total to 285 positions. And I'll explain that in detail. I've got a slide on that coming up. This chart provides a little more detail. It's the year over year expenses for the wastewater department. And I will go through each line on the chart. So personnel expenses, FY26 was 21.4, FY27, 22.8, which is a variance of an additional 1.4 million. The driver for that are increased cost of benefits and also the additional positions which we'll be talking about. The operating expense is 30.5 million in FY26, FY27, 30.2 million. It's a decrease of approximately $300,000. There has been a reduction in our chemical costs that is largely leading to that cost reduction. And a lot of that has to do with the upgrades that we've done at our plants. So we have and we will continue to see operating efficiencies due to our infrastructure investment. I do want to say that the wastewater team does a very good job of managing their budget. And you can see that in today's economy with prices going up and consumer price indexes, if a operating budget decreases, that's a sign of some very good management and very good stewardship by the staff. The capital budget for FY26 was $15 million. In FY27, $14.4, decrease of $600,000. That's our reduction in vehicle purchases is driving that. The debt in FY26, 31.4. FY27, 31.9. It's an increase of $2.5 million. And then the allocations went from $15.3 million to $9.8 million. That's a reduction of $5.5 million. The primary driver to that is if And there's a detailed slide on it later, but if you recall, the wastewater fund transferred money for stormwater dent previously. And Camille will go over that slide coming up. The pictures at the bottom are of the Oso Wastewater Treatment Plant. And if we could go to the enhancement, this is slide 11. So this is additional staff required for the operation and maintenance of the wastewater reuse or wastewater reclamation program. The important note here is the eight positions in the vehicles and the fact that they are funded through the contracts for our wastewater effluent. If you recall, the contracts that we have have a price and a cost for the effluent water that they're purchasing, and then there's a direct reimbursement for all our operating costs as well. So these positions will be funded through that reimbursement of our operating costs associated with the wastewater effluent program. And those current contracts are with, there's one with Valero, one with Flint Hills, and then we are negotiating with other entities as well to utilize that. approximately 16 million gallons a day of effluent water. Update on our CIP program. We know that these are critical projects. The team has done an excellent job of putting together a robust capital improvement program. It's a 10-year program. It's split into what we call short-term and long-term projects. Short-term projects are three years The long term is years 4 to 10. And I have to say that, you know, over the last couple of years that this capital plan has improved greatly. Staff is forward thinking and looking into the future. Now, plans get adjusted every single year. I'm glad we do adjust it every year. But the team is planning and we are looking ahead. If you look at our CIP projects for fiscal year 26, There were eight projects for wastewater treatment plant upgrades. The budget was $38 million. All of those projects are on schedule, as well as the budget expenditures are on schedule. There are two projects associated with wastewater lift stations. All of those projects are on schedule. Wastewater collection systems upgrades, 10 total projects. Eight are on schedule. Two are delayed, so we do have the percent of the budget on schedule is a little bit less. And then the wastewater system and other support for all wastewater services, there are four projects there. All of those are on schedule. The percent of our projects on schedule is 92%. The goal for the city on all capital projects and we appreciate the city manager setting that goal for all of us, is at 90%. So wastewater is over the citywide goal. And I do want to take a moment and thank the engineering department, who we work with hand in hand on all of these projects, and we're thankful for their assistance in delivering the projects. The proposed... Capital improvement plan for FY2027 is as shown here. So the wastewater collection system is approximately $40 million. Wastewater system and others is about $1 million. Wastewater utility support is $5.1 million. Specifically, that is replacement of wastewater infrastructures associated with street. So if there is a a street project, a complete street reconstruction, it certainly makes sense if needed to replace the water and the wastewater infrastructure below the streets. This is our funding of those the water wastewater portion of those projects. Wastewater treatment plants is approximately 52 million, and lift stations is 16.2 million. This is a continuation of our plan to upgrade the plants, the lift stations, and the collection system. These are critical projects, and we take them very seriously, and the team has done a very good job of executing the plan. If we look at our wastewater proposed CIP for fiscal year 27. There are 10 wastewater treatment plant projects 3 lift station projects 12 collection system projects those largely involve those capacity constraints that we talked about and then 2 projects for wastewater system and utility support of street projects as well. The proposed capital budget is $115 million. And if you look down at the bottom of this page, the new projects in the capital plan for FY27, these are new projects going into that short-term plan, which is the three years. The short-term plan is three years. It's also wastewater treatment process improvements in expansion so that is a current project that was in the long range plan it was in year 4. Next fiscal year it will move into year 3 for the short term plan so it's just moving up as planned. Wastewater treatment plant capital repairs this is a new project we need to make sure we're continuing to maintaining our capital. excuse me, our wastewater treatment plants. It is a project to ensure that we are able to capture those typical annual repairs. Another project from long range to short range is the River Canyon Lift Station and Force Main Improvement. New project this year is we look at our... Our highway and railroad crossings. We have a number of crossings where our wastewater infrastructure goes under railroad lines or under major highways such as IH 37, 286, and of course South Padre Island Drive. This is a new project to look at those critical crossings as they continue to age and make sure that we are replacing that in time to prevent any critical failures. Another project that moved from long-range to short-range, Woolridge force main replacement. And with that, to go into detail about our wastewater rates, I'm gonna have Andy McCartney come up and go through the next set of slides. Excuse me.

I'm going to have Richard Campbell come up at a 50, 50 chance of that. Good morning, mayor council. Uh, what we do want to do this morning is quickly go through kind of the foundation, the framework behind what we do when we figure out funding for, for your project, for your system, for both water and wastewater. I'm going to go through that just to make sure we're all starting from the same place. We are very deliberate, intentional when we put these rate studies together. And the reason is we try very closely to follow the AWWA M1 manual on the water side and then the Water Environmental Federation manual 27 on the wastewater side because these are the guidelines these give us the guiding principles behind how these studies go together so we model that very closely then we also look at your contracts that you have in place because those have to be modeled precisely as well and and then you have debt service things like that your bond ordinances they give us certain information that we still have to follow too that has to flow right along into your rates The basics, to really boil it all down, we do three things. We try to figure out first how much money do you all need. Same thing that you've been hearing from Nick here on the wastewater side. So how much do you need? Second part of that is who's creating those costs on your system. And we look at it from a class basis, so say residential customers, commercial, industrial, those types of things. Those are the class. That's how we allocate costs once we figure them out. And then, of course, collecting the revenue. So how do we want to do that? How do we set the rates? How do we design the rates to do what it is that you want them to do? Revenue requirement, that first piece that we talked about, from a basic standpoint, we want to make sure revenues, those are our costs. then they match your revenue requirements your costs they match your revenues the revenues that you come in your revenues that we're talking about that we're really focused on are the revenues from your rates so you have other revenues your miscellaneous revenues that you pick up um your interest that comes in uh tap fees connection charges late charges those are miscellaneous we take those into account but then we look at revenues that are generated from utility rates When you're operating your system, there's no outside funding from taxes, anything from the city. It's all internal to your system. It's utility revenues. So revenue requirements, from your case, We work on a cash basis. There's a couple ways to do this, but cash basis is the same as basically doing your house. It's money in, money out. You have mortgage payments, you have food, you have electrical utility costs, those types of things, and they have to match the money that you make. It's the same thing that we look at for your systems on a much bigger scale, but it's the same thing. We look at your O&M. Cash basis, we look at your capital costs, your debt, your capital funding, what you fund cash-wise, things that you have to do with your reserve accounts, adjustments there, transfers, and then we set rates to meet that, match your financial policies that you do internally. So everything operates money in, money out. There's no things like depreciation we don't look at. Other than using your debt service, we don't look at your assets or anything like that. Those are a non-cash basis. So then those pieces of the revenue requirement, O&M, your operation and maintenance expenses, that's just everything that you're doing operationally. It's everything that goes in taking care of your infrastructure, running your infrastructure, maintaining your infrastructure. And then billing, admin, engineering, all those components go into operation and maintenance. Then we include your debt service. That goes your debt service payments, principal and interest. Then also whatever debt service requirements that you have in your bond ordinances, whatever they require, that goes into the debt service payment as well. And then the city itself, you provide certain... services for the utility so the utility doesn't have to carry them. They can be legal or IT, admin or HR, whatever that might be, but they're services that you provide outside that the utility uses, doesn't carry, and it's the department. So same thing there. Then there's transfers that you also do to the general fund that can be franchise fees, payment in lieu of taxes. So all those things are normal. Every city does that. but that's a transfer that the utility goes back to the city and the general fund. Then we talked about city policies, things that you have decided on. This year, one of those would be your debt service coverage, and that's gonna be a 1.25. So you're gonna have to have, after your operation and maintenance expenses, you have to have 25% more left over to make your debt service payment. Wasn't that last year? It's moved up to 1.25 this year. And then cash on hand, 90 days cash on hand to operate and to cover your debt service. So if you had no money coming in, you're going to make sure that you have 90 days cash on hand, and that's included in the study and in your rates. And so we talked about earlier those miscellaneous. What we're doing is we're wanting a net revenue requirement so you have all your expenses covered Then we account for whatever extra revenue you have, the interest payments you have, miscellaneous fees that come in. We back those out of your revenue requirement. And what's left is a net revenue requirement that's going to be recovered from your utility rates. And that's what we're focused on. Then I'm going to turn it over to Andy to talk about the goals and where you're headed now.

Thank you, Richard. Good morning, Mayor, Council. So our study goals for 2027 is to continue that three-year phase-in of the stormwater legacy debt that's funded through rates. And so 50% of that debt service and associated coverage is to be funded through wastewater rates as last year. Well, this year for 2027, we're doubling the amount. So it's going from $2 million in water rates to four million with the residual amount still being recovered through the wastewater fund balance. And so you can see on the chart down there how that has progressed over the, for this study as well as the two previous studies. As Rich had mentioned, the debt service coverage will be calculated in our study at 1.25 times and that's in accordance with the city policy and that was recently ratified. after discussion with the city executive leadership team, as well as Sergio, the director of finance, and Victor Quiroga, the city's financial advisor. So the minimum charges for the outside city wastewater customers, and there's like 14 residential customers and 22 commercial customers, it will be lower than the inside city residential customers. And that's because the outside city limit Wastewater customers do not benefit from any stormwater infrastructure. It's all within the city limits. And so that's why it's excluded from their monthly minimum charge, as we've done in prior years. So that debt in total is $5.5 million approximately for this year, so wastewater rates will take that 50%. It's down from the prior year. There was a refunding bond issuance. which reduced that from 6.6 million in the current rates for 26 to 5.5 and 27. The volumetric rates for wastewater volume charges will still be equal for both inside and outside customers, and the water and wastewater funds will continue to meet the cash reserve requirements as well as the debt service coverage requirements independently. So each fund and each set of rates are standing on their own. So they're all self-supporting, just following the definition of what a proprietary or enterprise-type funds should be for a city. So now the draft cost of service and rate study results. The prime drivers for the adjustments for the 2027 wastewater rates are due to the prior approved CIP projects associated debt service as well as the debt service coverage on those debt issuances. So that amounts to approximately 5.7 million for 2027 over the last year's rate study net revenue requirement. So here's a look at the proposed rates for the residential customers both inside and outside. And so you can see that currently for residential inside and outside, they're paying $8.41 and that's for volumes of wastewater billed greater than 2,000 gallons. For residential, those wastewater volumes are determined on a winter quarter basis, meaning the water usage December, January, and February when nobody is really watering outside and they're not allowed to now under the drought conditions. And so it's a fair way that the industry uses to calculate those wastewater volumes. You can't really meter wastewater volumes. No utility does, especially with that small a meter size. Also, for residential customers, you have a cap. meaning a maximum amount of volumes that you will bill, and that's 25,000, and I don't think there's many customers that are close to that. I believe last year was only like a handful of customers, and so they were mainly using lots of water. The meter sizes for inside are going up from $39.99 to $39.95, and again, that's because of that legacy stormwater debt. And you can see on the outside city limit customers, which there are 14 residential, it's actually lower than the inside, and that's because they don't benefit, like I said, from the stormwater system. And so you see a 7-cent increase in that volumetric rate and then a slight increase on the monthly minimum charge. And we do not have meters, and so it's just a flat charge no matter what on wastewater. For commercial... They are billed based on the amount of water usage that actually flows through their water meter for wastewater. And so you'll see the same monthly minimum charges, the increase to $39.95 for commercial and on the outside city limit customers, an increase from $33.12 currently to $35.15. And they're paying the same volumetric rate as residential. We started doing that a number of years ago to set them equal. And so we're continuing with that strategy for rate structure. And the last slide before we entertain questions is just a 10-year projection of those numbers. And we've got it for a water customer, wastewater customer that utilizes a 5-inch meter. They're billed 5,000 gallons of wastewater based on their winter quarter average. And then a commercial, typical restaurant utilizing a 2-inch meter, utilizing about 20,000 gallons of water a month. So you can see that increase over what they're paying currently on a monthly basis. And then we've extended that on out through our 10-year projection period so that you get a flavor of the rate path coming. As we project out for inflation, meaning your proposed 27 operating budget, the CIP, that's a 10-year program, and the associated debt issuances with that, according to the city's funding plan for CIP. Uh, I would like to note out that last year when we were here talking about the proposed 26 rates that we had projected 27 to be monthly bill impact for that residential inside customer to be just over $71. And so with the, uh, good budget news, you heard about the wastewater fund where that's actually 65 39 that if, these rates are adopted for wastewater. So that's a good news situation. So with that, I will entertain questions, as well as Nick, on the operating and capital budgets.

Okay, thank you, Andy. And thank you for the presentation. Very good info. Councilwoman Vaughn?

That was a really good presentation. Thank you all. I know you did a lot of work. I'm just going to make a statement. Thank you so much for putting the 10-year projection period, because I think the citizens think it's just going to go up this year. No, it's going to go up every year for 10 years, and we don't know after that. But thank you for doing that, because that's transparency, and that's what they need to see. Thank you.

Yes. And we've always provided that in our report, but Camille was a real wizard and he got it to all fit on a PowerPoint slide this morning. So that's off to Camille for making that magic work.

Yeah. Okay, great. We can go ahead and move on to Waterfront.

Okay.

Okay, before we move on to water, I do have a comment on the last slide. So those are projected rates. I think a good thing that the city does is we look at rates annually, which allows us to make adjustments because we do know that the department does their best to operate efficiently and that we can make those adjustments. And Andy shared what it was looking at last year, and we're under that for this year.

Great.

But again, those are just projections. Okay, if we talk about the Water Fund. And we'll start with fiscal year 26 achievements. And I am very pleased with all the employees under the Water Fund. They have worked under extraordinary circumstances. and they continue to perform and we're very proud of them. So one of the highlights that I do want to talk about is the achievement by the Owen Stevens Water Treatment Plant team. So they were recognized this year by TCEQ. They achieved recognition under the TCEQ Optimization Program. There's only 16 water plants in the state of Texas that have received this recognition and our team at Owen Stevens did this year. So they achieved it by adhering to more stringent water quality requirements, maintenance requirements and overall operational requirements for the plant. So we're very, we're very pleased to continue to share this great news. And I do want to say that the team there, if I could just expand a little bit, you know, they are treating surface water. Surface water is some of the hardest water to treat, but they are treating surface water from Choke Canyon, Lake Corpus Christi, through the Nueces River, from Lake Texana, and from the Lower Colorado River Authority. All of those bodies of water have different quality features to them. And the team at Owen Stevens does an expert job of treating that water for all of us. The other couple of things that I do want to highlight, and I apologize, this bullet inadvertently was left off the slide, but with the council support, we updated the drought contingency plan this year and also the water conservation plan. That was a excellent process. involved committees and many stakeholder engagement sessions and we're proud of that work and because of that led to the launch of an interactive water usage portal for our commercial customers and residential customers to track their water usage throughout the month and i am grateful for the tremendous work by the i.t department to put this together in a very quick time frame they have come to support us and we're grateful for that. In fact, just yesterday I heard three comments about how useful that portal has been. Two were commercial customers and one was a residential customer. Additionally, I do want to thank other departments within the city during these extraordinary water circumstances. We've gained tremendous support from our communication team of course, budget and finance, intergovernmental relations, the emergency management office, and the fire department, and we just, I'm thankful for the support from the whole city, and everyone has had a lot to play in dealing with the water situation this year. So if we could talk about additional achievements for fiscal year 26, of course, high on the list is our additional water supply. The Nueces groundwater program continues to operate. That program came together very quickly, largely in part due to design by CCW engineers, installation of water lines by CCW crews, and of course the cooperation and dedication of our trusted contractors. Another key component of our diversification strategy, of course, is our reclaimed water program. With this council's support, we have approved a construction manager at risk contract for 107 million to install the conveyance line from Oso Wastewater Treatment Plant to the Greenwood Wastewater Treatment Plant. That is a critical component to the entire program. The program is designed to provide approximately 16 million gallons a day of effluent water in lieu of potable water offsetting our demand. 10 to 11 million gallons a day of that 16 is coming from Oso. So we've got to get that effluent water so it can be utilized. That's why that project is so critical. Additionally, we have our improvement projects at the Owen Stevens water treatment plant, which includes significant investments. They have all been part of our strategic plan. The Clearwell three project was 39.5 million raw water influence. A lot of times we refer to that as our front end project. That is 93.8 million. The filtration system hydraulic improvements project at 23.5 million. Chlorine system improvements, that's often referred to as on-site chlorine generation. That will allow us to decommission and no longer utilize the rail car for chlorine disinfection. Security upgrades phase one. If you drive along Leopard in front of the plant, you'll see our new security wall going up. It looks very good. Crews are making a lot of great progress there. That replaces the old chain link fence. So we're very excited about that. We're thankful for the support on that project. There is an addition of a 54-inch water line, water main that comes from the Nueces River. to the Owen Stevens Water Treatment Plant. There is a pump station on the Nueces River. That pump station itself is critical because it pulls water from the Nueces River to Owen Stevens, but also the Mary Roads Pipeline goes through that same site as well. Currently, there are two 54-inch water lines. They were installed in 1954. It's easy for me to remember. And then there is the Mary Rose pipeline which goes through that same corridor that's a 72-inch line. This additional 54-inch line is meant so that we can go back, take one of the 1954 lines out of service and line it to make sure that we've got consistent water service in the future. Additionally, we've got upgrades at the Wesley Seal Dam and Choke Canyon. The We've upgraded the instrumentation system at Wesley Seal Dam. That is critical for any dam operations. And then there is also the rehabilitation project for the rehabilitating our spillway gates at Wesley Seal Dam. And then the replacement of sluice gate number three at Choke Canyon Dam. One thing I do want to get to, there may have been something put out order on the slides, but I do want to provide a progress on our potable water contracts. Uh, we are, uh, this is in process. Um, so we're, we're working very hard on that. Of course, we've engaged a stand tech to help us with that. We have another meeting with them this week. Uh, but just to give, uh, this council an update, Lyon Dell, their legal counsel is reviewing a potential contract. Selenese, their legal counsel is reviewing a potential contract. Citgo, we are discussing the potable water contract in conjunction with their wastewater reuse contracts. So Citgo, we're working on three different contracts at one time. There's the wastewater reuse from Greenwood, wastewater reuse from Broadway, and then a potable water contract. Valero, we've reached out to Valero. We are talking to them. But if you recall, they have an 8 million gallon a day take or pay contract for wastewater effluent. And their intent is to fully use that in lieu of potable water. Flint Hills Resources, of course, they have their reclaimed water contracts. And then we are talking to them about the small amount of remaining water that they would purchase for potable. Howard Energy, they are looking at a wastewater contract, and we're going to talk to them about a potable water contract. And then other customers are STX Beef and Phillips 66, which we are working with. The... And I apologize for getting out of order a little bit, but one of the things I want to talk about is our water pipe replacement program. So this year we've replaced 78,548 linear feet of water distribution pipe. That's across all projects. CCW replaced 5,507 linear feet. And then also, per contractor, they've replaced 73,041 linear feet of water pipe. This program has benefited the city tremendously. It certainly has reduced our water leaks within the city, and it's a tremendous investment into our water infrastructure. It's a program we don't talk near enough about. The proposed budget for the water fund is $229.3 million. Again, this is a similar chart to what we covered for the wastewater fund. The outer ring, of course, is revenue, and the inner ring are our proposed expenses or revenue requirements. So the operating, which is the red pie portion of the chart, is $99.4 million. or 42% of the budget. Personnel is $29.6 million, allocations $8.7 million, debt service $82.8 million, and capital $12.8 million. If you look at the year-over-year sample, FY26, the revenues were budgeted at $177.9 million. The FY27 budget is $220 million. The expenditures for FY26, $183 million versus the FY27 budget of $229 million. There are 329 positions in the water fund. There are eight new positions that would bring the total to 337 positions, and I'll go into detail on what those eight positions are in just a minute. If you look at the year-over-year detail and the drivers for that, personnel, the variance, it's increasing $1.9 million. That's due to the increased cost of benefits and additional positions. The operating fund is increasing $21.4 million. It's primarily based on operations of the brackish RO system. If you recall, we have an operating contract for that. We have increased costs for the wellfield. We have new costs for the wellfield operation. That includes electrical power for the western wellfield, includes gas for the eastern wellfield, and includes those new positions for the operation of the wellfields that we'll go into detail. We have chemical costs and maintenance costs, and then additional for street cut repairs when we replace A water line fix breaks or if it's scheduled, we need to repair the streets per city policy to make sure it all looks good when we're done. The capital costs have gone down. There's a decrease in vehicle purchases over last year. The debt the debt coverage like Andy stated and Richard stated earlier, the debt service coverage has gone up and then the allocations have gone down. And the pictures at the bottom are from the western well field. The picture at the right is the outfall of the western well field. And then the picture on the left, I believe it's well 12, if I remember correctly. So the enhancements associated with those positions that I talked about As you recall, we've acquired the Rockport gas department. So how does that affect the water fund? Well, the utility billing office is housed within the water fund. We do receive allocations from the gas department to manage that billing. This is the addition of one additional employee and then also professional services within four to help us ensure that we get all those accounts in order and so that we can take over the billing in the future. Again, this is covered through the allocation of the gas department, which would be included in their budget. The other two new positions that I'm excited to talk about is the utility assistance program. So we've We've had that program in the past. If you recall, there was a water symposium that raised money. Previously we had a private company distributing those funds for utility assistance. The goal of CCW is to take that program and manage it in-house. These two positions will help do so. We are looking to schedule another symposium for next calendar year to raise money. and we're working with other entities to try and raise money as well and the mayor is working on some items also. But the goal is we want to be able to manage that plan and it'll be more effective to distribute those funds because when people call to ask for assistance with their water or wastewater gas bill, they call the utility billing office What happens right now, the utility billing office then refers them to a number of different agencies. The goal here is that we can handle this in-house and get them to a direct person and hopefully streamline that effort. The Groundwater Well Program, which is new, it hadn't existed, so we're excited about that. So this is five new full-time employees to support the program along with five new vehicles That staff is required for well operations, well management, water quality monitoring. And that's not just water quality monitoring from each well, but it's also along the river. It's a very complex system. Pump station operations, we will have a pump station located at the western well field. And then our monitoring program, where we help operators area residents with residential livestock wells with their water quality sampling and monitoring. And then of course, just continued water quality testing and, um, preparing the data that we have to submit to both TCQ and the district. The picture on the left is our, we call them our meter runs. Uh, those are the two 24 inch meters. And that's the water that goes through those meters from the western well field. That's how we track the amount of water produced from that field. That data is reported to the TCEQ on a monthly basis. The data is also shown on our website on a weekly basis. Additionally, it's submitted to the district on a weekly basis. The picture on the right, that's the eastern well field. That's CCW crews that have worked very hard. They installed the piping required for that well field, and they did an expert job. And one of the reasons we're able to get that well field operating as quickly as possible is because of the CCW staff. That well field has been operating since April 2026. That's when the first well went online. We could talk about our CIP progress again the the plan is comprised of important projects and we take the execution of the plan seriously. If you we had an FY 26 we have 12 water supply projects all 12 of those projects are on schedule. Water treatment projects so that's the own Stevens water treatment plan 14 projects all 14 of those are on schedule. Water distribution lines, primarily that consists of replacement of aging water infrastructure within the distribution system. 18 projects, 16 are on schedule, two are not. The street support, this is the water contribution to streets and other projects. There are seven total projects. Six of them are on schedule, one is not. The as you can see the percent of projects on schedule is at 94%. So again we met the city manager citywide goal of 90%. The pictures at the bottom on the bottom left is that's a rail car that staff working with our our disinfection in the rail car where we will be very excited when that goes away. Again, the on-site chlorine generation project will allow for that to go away. The middle picture is Clearwell 3. That project is complete. Clearwell 3 is in operation, and we are very excited about that. The site looks a little more different now. It's a little more cleaned up, but that is Clearwell 3. And then the picture on the far right is associated with our raw water influent project. That concrete structure is actually the splitter structure or splitter box. It actually directs water coming into Owens-Stevens to the two separate treatment basins. So every bit of water that we currently see at Owens-Stevens will go through that. That replaces the older splitter structure and it's certainly an improvement. This raw water influent project It's been planned for, I don't know, 12 years plus or minus. We're about a year into this two and a half year project. We are so excited about that. That is going to make the operation of Owen Stevens much more efficient. The other part of that raw water influent project is a chemical systems upgrade. So allow us to feed the chemicals more efficiently as well. If we can move to the fiscal year 27 proposed capital plan, it's 157 million. The proposed plan has 52.3 million of water distribution improvements, 4.5 million of water facility improvements. Part of that is our security upgrades at Owen Stevens that would fall into that bucket. We've got our street support of 6.4 million. Raw water supply projects is $35.7 million, and then of course water treatment is $58.8 million. The water treatment component is primarily projects that are currently in construction, so that's the projected expenditure for next year. If we go into detail, we've got 14 raw water supply projects. There are... New projects, thanks to this council, so that we can move forward in our goal of diversifying the water supply. You have 14 water treatment projects, 18 water distribution projects, and six water facilities and street support projects as well. One thing to note that these projects, many of them are in construction, and it's just a continuance of these projects. The majority of the projects are certainly long-term. They'll take one, two, three to four years to complete. So we will see those in the capital plan for many years. If you look at new projects for fiscal year 27, and these are projects, the majority of the raw water supply projects have, of course, been approved by council, but they weren't in the capital plan last year. You have the LI Ranch, and of course that is a groundwater rights purchase. The only expenditure for that project is the option fee, and it's about $300,000 that the city has put into that. Closing on that project is conditional to the owner obtaining drilling, production, and transport permits. The Mary Rose Pipeline LNRA facility expansion. This is a capital project. We have a contractual requirement to pay for infrastructure located at Lake Texana that is solely for our use. This project includes the permanent installation of a spare pump at that facility. It's been added to the capital plan. That is key to resiliency in the Mary Roads Pipeline and adds further redundancy. The Nueces Groundwater Program has a couple of different projects. One is the conveyance system. That's the pump station located at the Western Wellfield and the conveyance system to Owen Stevens. It's the brackish water treatment plant located at Owen Stevens. And then the expansion of the Western Wellfield is in there. If you recall, that is a groundwater right purchase of the Ed Rochelle property. Additional new projects is the pre-sedimentation and lagoon interim dredging project. So we have a solids handling project for Owen-Stevens that's currently in design. Until that project is designed, built, and implemented, we have to continue to dredge out our ponds at Owen-Stevens. The sediment settles to the bottom. We need to make sure that the lagoons and the basins remain clean and at full capacity. So this is an interim project to allow us to continue to dredge those lagoons until the solids handling system comes online. We have phase two of the Owen Stevens Water Treatment Plant. So phase, the security upgrade, This is the rest of the fencing. So it goes, the current project covers the area along leopard street. This project covers along Hearn, and then it'll go into the backside of the property as well. And then we have a citywide water transmission, main valve repair replacement. This is a new project, but we have a number of large valves in the city. thinking about 24-inch size diameter valves and larger. And this will be a new project so that we can replace those valves that are aging and are not operating. Valves are critical to any system. If there is a leak or any other issue, we have to be able to close those valves to isolate the leaks so that we can make the repairs. And then coming in from the long-range plan, there is a water transmission line that needs to be moved. It goes through some critical infrastructure at the airport. That is a planned project. It just moved in the short term. And with that, I'm going to turn it over to Andy, who is going to go through the water rates.

Thanks, Nick. So I want to talk about the water rate structure proposing for 2027. So we'll have that separate raw water charge that will continue And that raw water charge also includes a $0.05 per 1,000 gallon water supply development fee, and that's been done in the past. There will be a minimum charge, and that's based on the actual meter size that the customer has installed at their premise, and then a volumetric charge, which you've all seen in the past. So some of the water system functionalization. So by the columns, you've got customer class and then each function raw water diversion pumping, which diversion pumping is basically taking it from the Oasis River to O.N. Stevens. You've got treatment, network, and then distribution. And you can see that all customer classes pay for raw water. And then as far as diversion, all customers pay for that diversion pumping. except for the raw water contract customers, because they take it either out of Lake Corpus Christi or the Nueces River themselves. So they don't pay for diversion. Then treatment, all customers pay for the treatment function, except for raw water customers. That's kind of logical. And then network, all customers pay for the network, which is the larger water mains, pumping, high-service pumping and storage, except for the raw water customers. and then the wholesale treated water customers. Remember, there's two of those, San Patricio and South Texas Water. They take water right at the Owen Stevens facility. And then you've got Network, where everybody takes Network except the raw water customers, and then those two wholesale treated customers that I talked about. And then outside of the wholesale customers and raw water customers, everybody pays for their portion of the distribution system. And we've been doing that consistent with our study and as well as other large utilities in the state follow the same kind of functionalization. Slide 49, some of the rate study goals. So much like wastewater, we're continuing that phase in of the year three of the stormwater legacy debt. Again, for water, we're going to pick up an additional $2 million plus the debt service coverage. So that's gonna amount to about 36% in the water rates. That residual 14% will be picked up by the wastewater fund balance and 2027 will be the last year for that. Then they'll be all self-sustaining. They'll each pick up half of that stormwater legacy debt service. Again, we're calculating that debt service coverage has been mentioned at the 1.25 times, which is the city policy. Just like for wastewater, those minimum charges for outside city customers will be somewhat lower than the inside city water customers, and that's attributable to the stormwater legacy debt that gets built into the minimum charge. For this year, the minimum charges will apply up to meter sizes 30 inches and greater, whereas before it's kind of stopped at 10 inches and greater. What that means, if you had a 12-inch or a 14-inch meter, you were paying the same charge as someone with a 10-inch meter. So we're trying to capture the higher cost involved with those larger meter sizes for those larger customers. And again, just like wastewater, the water fund will stand on its own and meet the cash reserve requirements as well as the debt service coverage requirements independently. So that's a good thing. As I mentioned, each water fund, wastewater will be self-supporting as far as the rates that it charges. Some of the cost of service and rate study results for water, we've got the prime drivers for the 2027 rate adjustments. Similar to water, we've got debt service coverage. We've got some operating expense increases. And then we've got the prior approved CIP project debt. service and then we've got the new water supply project debt service and that additional revenue requirement mainly being driven by these water supply projects is 56.8 million and most of that's Located in the raw water function that you'll see later in the rates And I'm going to turn it over to Camille to talk about the debt service on some of these new water supply projects Hello council

So basically, what we wanted to do is give you, because this wasn't part of last year's capital budget, these are new projects, it wasn't part of last year's rates, so we wanted to give a clear picture of the impact of, we've mentioned it before, but of course, every new project is gonna have a rate impact, so we wanted to make it very clear that we're very proud and happy the council approved those projects, but of course, as a finance person, there's a cost associated with those and we have to bear it. So the approved projects as of right now equates to $1.1 billion. That equates to 74 point estimated $74.5 million in annual payments. Of course, like city manager has mentioned, we wouldn't take out all of that debt in one shot, right? So these impacts from these new water supply projects is going to be Basically right now if everything works out a three year process to build it into the rate. The first that is in the current rate is the 20 million dollars and kind of broke it down as to which project is contributing to that additional debt requirement. And of course with that projection for 28 29 we're only approving a rate for 27. If something changes project slows down or anything like that we'll adjust those in the coming years. But right now, to give just an estimate of what potentially the additional debt burden would be on the utility and the rate, we broke it down to give a little bit of visibility on that aspect. And I'll give it back to Andy, who will continue with the actual rates.

Thanks, Camille. I wanted to talk about the Monthly minimum charges that vary by meter size. So you've got the current listed in one column and the proposed for 2027. Again, these include that debt service and debt service coverage on that legacy stormwater debt. That's why it's going to be a little bit higher than on the next slide for outside city customers because, as a reminder, outside city, they don't have any stormwater infrastructure installed by the city outside of its city limits, so they don't carry the burden of that. So you can see that for the larger meter sizes for greater than 10 inches, there is an additional cost to having those larger meters that we're proposing for 2027. And you can see it goes up to 30 inches and larger. So somebody with a 30-inch meter, instead of paying $2,587.50, as they're currently doing next year, that they would pay $17,199 even on a monthly basis. And that's based on, we calculate those meter equivalency factors based on the flow rate of those larger size meters compared to the smallest meter you have installed on your system, which is the 5-8 inch meter. So we're following the M1 as well as the M6, which is the AWWA metering standards to get those figures on flow rates. Next slide. Slide 55 shows those outside city monthly minimum charges. Again, we're going up to the 30 inches and larger and it does not include any of that legacy stormwater debt because as I've said, it doesn't apply to them. So you can see those charges aren't quite as high as for the inside city customers because of that. Next slide shows the volumetric rates for both inside and outside city limit customers. And you can see because of all the raw water projects that are undertaken with that debt service coming on in 2027, that raw water rate is going to increase from $1.18 per thousand gallons to $1.95 per thousand gallons. And so as a reminder, all the retail customers pay that raw water charge. For residential, we're keeping that first tier, zero to 2,000 gallons at 75 cents. And we've done that to be consistent with affordability. And then the next year from 2,001 gallons up to 6,000, there's actually a decrease because you've got cost shifting to raw water from the other functions. And so that's why. And also charging for the larger meter sizes, it creates less pressure for the volumetric rates to carry the cost burden because those are directly attributable costs. The volumetric has always been kind of a fallout. And we try to get as close as possible to that customer class cost of service. So you can see the other tiers for residential have actually declined, but they're all paying a higher raw water rate. So their monthly bills are going to go up. On commercial, if you recall the past, going back to 2023 when we were here for the 24 rates, The commercial customer class has always been over collecting compared to their cost of service, and so we were able to get them very, very close to their cost of service. That's why you see their volumetric rate, and it's for all gallons. And so there's not a break for that first 2,000 gallons. All gallons, $3 per 1,000 gallons. The large volume customers, for that first 10 million gallons, they used to pay a flat amount no matter how much they used. And currently it's $45,500. And we're going to charge them for all gallons at a uniform rate of $3.83 per 1,000 gallons. And then irrigation, as in the past, has always been tied to that fourth tier of residential, and so that's actually 1071, a decrease from the 1117 per 1,000 gallons. So these are the public agency or wholesale rates. They have a separate raw water rate, and you might say, oh, it's lower, but remember, because of contracts, we have to true up. what we had charged back in 2025, that proposed budget with the actual cost that the CCW incurred, and that's why it's a little bit lower. And so it's going to go up a dime to $1.43, and it's only applicable to San Patricio, South Texas Water, Violet Water Supply Corp., and Port A. Wholesale treated, I mentioned earlier, that's San Patricio and South Texas Water. treated water, which includes the treated water function and the raw water diversion, is actually going down six cents from $1.80 to $1.74. Again, it's because of the true-ups. When you try to budget for commodities such as treatment chemicals, you always want to budget a little bit, you know, conservatively, and then because of their commodity prices, they tend to fall, and that's one of the big drivers of the true-ups. cost because you're trying to project 18 months in advance, and then you're truing up the actual cost. And that's all according to the contracts. The last is the treated wholesale water customers, Violet and Port A, and their rate is actually decreasing to $2.33. They're still seeing an increase in their monthly bill, though, so I just want to point that out. Then you have the What we used to call the non-rate payer, but it's actually the wholesale raw water customers that take water from the Nueces River and use it directly so they have some kind of treatment processes of their own. And those customers are San Patricio, Celanese, as well as Flint Hills Resources. And their rate's going to increase nine cents from $1.36 per thousand gallons to $1.45. So remember, it's a different function. So it's not going through all the raw water steps that retail customers have or even the wholesale, you know, that diversion. So they're taking it straight from the Nueces River. So the monthly bill impacts. So we wanted to show you also that dollar impact that we were showing last year. And for a residential customer, they typically utilize 6,000 gallons of water, 5,000 gallons of wastewater. Talked about that with their winter quarter average. And so their current monthly bill for that kind of water usage is 4,207. Last year, that would have been an increase of 478. So we're projecting with the rate structure we're recommending that monthly bill would be $44.55. That's an increase of $2.48. For wastewater, they're currently paying on a monthly basis for that 5,000 gallons of wastewater determined on a winter quarter average basis, $63.52. And last year, that was an increase over $25 of $4.20. This year, that monthly bill would be $65.39 for a monthly bill impact of $1.87. That total dollar impact for our residential customer using 6,000 gallons of water and 5,000 gallons of wastewater would be $4.35 a month. For commercial, that typical restaurant, having a two-inch water meter installed, under the current rates, they would pay $236.18. So last year, that was an increase of $19.62. For the rates recommended for 27, their monthly bill would be $251.88. That's an increase of $15.70. But remember, we're finally getting them to their cost of service. So the commercial's not having huge over-recoveries as they've had in the past year, so we've been bringing them down every year. On the wastewater side, they currently would pay $189.67. And last year, that was an actual bill decrease of $1.69. In 2027, the wastewater rates, their monthly bill would be $192.59, which is an increase of $2.92. So that commercial customer, which is a typical restaurant, would see a monthly bill impact of $18.62. The majority of that being on the water bill because of the raw water cost. For large volume customers, we've done it a little bit different. Last year, we've showed the typical 90 million gallon a month user, which is like right in the middle of all of the large volume users, both inside and outside. So this year, we want to show what's the impact to the highest large volume users using 260 million gallons in a month. So that monthly bill, they're currently paying just over 1.4 million. Last year, that was an increase of just over $170,000. Under the rates this year, it would be just over $1.5 million a month. their total bill, and that would be an adjustment of $67,629.59. For that median or average large volume user using 90 million gallons a month, they're currently paying just over half a million dollars. Last year, that proposed increase was just over 63,000. This year, they would be, under the 27 proposed rates, just under $525,000 a month for an increase of almost $23,500 a month. And finally, for the lowest large volume customer, and these are all using a 16-inch meter, so it's applying a larger meter size to them. They're currently paying just over $70,700 a month, and last year that increase would have been almost $14,000 a month. This year they would pay $73,881, just over, and that monthly increase would be $3,149.59. And finally, for the wholesale treated, which would be basically San Pat using 50 million gallons of water a month, they're currently paying just under $159,000. Last year that was a decrease, and it was again because of true ups, so they were seeing a reduction. This year, they're seeing an increase, even though that volumetric rate for treated water went down. The raw water is going up, so there is an impact of just over $4,100 a month. So they would be paying just over $163,000 a month. out showing that rate path because as as camille has mentioned earlier on the slides when you have with debt issuances you know coming on you don't issue the money all up front issue the bonds you issue you layer them out according to your cip funding policy and so we're showing those later cip projects when that debt service comes on so that's why you see bill impacts out into the future So it's showing a rate path as it is now. But remember, like I showed on the wastewater, that monthly bill impact for next year may be lower, just like it was for wastewater. That's because things change. Last year, we didn't have all these raw water supply projects in there. And with that, I'm going to turn it over to Camille to show how these proposed rates, as well as the current rates, compare to other utilities.

Andy and before I say anything we always have to think about We're comparing two different cities. Every utility system is different. This is not apples to apples It's it would be not fair to say that you know San Antonio doesn't have 141 million for 141 mile pipeline that we have right. And the costs associated with that neither would Dallas or anything. So comparing these is more of a general idea. It's not apples to apples. But if we look at all of the cities for 2026 and we compare Corpus Christi 2026 we're a little bit below the middle mark. If we compare the same rate so we And Eugen is a consultant for a lot of these cities. We know that their rates are going to be going up as well in 2027. But even if we compare Corpus Christi which is that orange line to 26 for everybody else we're still basically in the middle of of of the cities that we looked at. So yes the rates are going up but comparably we're still looking pretty reasonable. for a residential user because this is comparing residential water rates for 6,000 gallons. If we go into wastewater, obviously, again, no system is the same. We have a consent decree. We're going to be one of the highest ones because we do have an obligation a mandated obligation to make significant improvements in the system. We have been committed to those. So if you look at it, you know, it was 63-52. We're going to 65-39. We're comparing again to 26 data. Other municipalities, other cities are going to be adjusting their rates. But I wanted to give a general idea to council of how we're, you know, comparing to others. And then the final slide that I wanted to show is, so we and I have been, you know, tracking what the bill impact has been for the different classes, right? Residential, commercial, and large volume from 2020 through, you know, this proposed rate increase. And it kind of breaks out, you know, what happened to that, you know, average residential customer bill over those eight years. And the biggest impact, if you look down on that slide, and this has happened when the city has contracted with NUGEN and we did a proper cost of service study based on classes, the biggest adjustment in this whole billing system was in 24, and that was for the large volume users. tremendous increase there from prior years, and that has continued overall. So I just wanted to give council an idea of how the bills have looked through the past eight years. And basically that concludes the presentation. We're open for questions.

Great, thank you. Councilwoman Paxson. Thank you.

Nick, I've got to say, CCW coming out of the gate as kind of the first introduction to our budget presentations, you've set the bar pretty high. This was a great presentation. It was incredibly well organized. A really wonderful balance of very pertinent information and without overdoing it. So thank you for all of the work put into this. And that includes everything leading up to being able to present this. So thank you for that. I just have a couple of quick questions. I was curious, with the request for additional staff for the effluent program, do we have, or does the reclaimed program fall into that at all? Are we gonna keep kind of the projection that we have had this past year and the year before? Because I know for a while we were saying that if we wanted to keep that program or perhaps even increase that, we would need to look at further staffing and things.

So yeah, thank you councilman the I think you're referring to the the residential reclaim program which is currently at the also wastewater treatment plan. So if you recall last fiscal year council approved the additional positions for that we feel confident that the that staff can continue to manage that program.

Okay perfect and then for. For the item where you're doing the utility improvements in conjunction with street repairs or or or things like that are you guys do you have challenges being able to keep up with repairing those roads where we've had to access those lines are pretty much anything in queue is able to be addressed.

So the item, there's a couple of different items in this budget. One is both water and wastewater contribute to street capital projects. And that's done in conjunction with the full street reconstruction project. And then additionally, there are, we call them street cuts when we're replacing a water line or a wastewater line, a water main break. And as a result of that, the CCW staff works to stabilize the road and ensure it's passable. However, that's not a permanent repair. So we've worked really closely with our public works department and with Ernie, and we are working to bring on and utilize contractors to get those repaired in a much quicker fashion. Admittedly, we'd like to see them permanently repaired permanently, more efficiently, so we're working with both Public Works and Engineering to utilize contractors to get that done.

Okay. Do you feel like we will see the effects of that new solution in this upcoming budget year?

Absolutely. I think we'll see, because we're going to start using some of the existing contracts we have, so we'll start seeing some improvements still this calendar year, but The real benefits will be next fiscal year.

Okay, fabulous. Thank you. I know that's been a big, it's a big task. Work like this is all over the city, so I'm glad to hear that there's a plan. Thank you for that. And then last, Nick, what do we need to do to expand the parameters for that utility assistance program I found out recently that community members who are inquiring and interested in utilizing that program, they're only eligible if they're on certain state financial assistance. And I wasn't aware of that quite at the inception of this utility program. What do we need to do to evaluate that and perhaps expand those parameters? I think we're still sitting on a pretty decent fund balance, but my concern is where Yes, there's a demographic that it's serving and they need it. I think there are some that we may be missing.

Yeah, and I think that's a fair question. So currently that program's administered by an outside agency. So they're managing those funds under their direction and their covenants. By bringing the program in-house, that gives us a little more levity to open up that program more, and we'll have to look at that. And, of course, the more funds available, the more good we can do. So I would certainly advocate for that. But, you know, right now those outside agencies, they're managing it to the best of their ability, and, you know, I wouldn't comment on that.

Is this it? Yeah, Nick, so we have to develop the guidelines. This would be this coming year, October 1, will be only the second year in the city's history of helping residents with their water bills. It's pretty typical for a water utility, like just up the road, San Antonio, as an example. They've had it for years and years. And so we have to develop the guidelines still on qualifications. It could be income sensitive. It could be it could be age sensitive it could be military sensitive. And so right now it's probably just based on because it's mission 9 1 1 that is our provider with them with the monies that we have today. So they're probably basically basing on extreme poverty levels because that's who they serve and that's familiar with. So we have to develop it to be more inclusive. And it would be how many times a year could you get the assistance, those types of parameters we have to develop. I think we've talked about once or twice a year. So we'll be developing those guidelines for implementation for beginning, I think, January 1 or is it October 1?

The we're hoping to make it live October one, but there's a lot of works left to do there.

But this is a great thing for the city and the mayor may want to talk a little bit. She's working on a, on a, on a, on a companion initiative to fund it even more. But this is something we have never had, and we finally did it last year. Then Drew, myself, and the team talked about doing it. Last year we were able to seed fund it with revenues from that water symposium, but it has to be a recurring funding program to include using monies from the water utility to help residents that just can't, might just be down financially, not in perpetuity, and just need that one or two times assistance. It's a pretty typical thing, so we're glad we have it. That's a long answer to your question, Councilwoman, but we are developing it to be more inclusive. We do know there's more strict limitations today, and we want it to be more expansive to our customers, residential customers.

Thank you, Peter and Nick. I appreciate that answer, but to recap, You mentioned October 1st. Is that when we're looking at taking this in-house, or what is it that October 1st is triggering?

So that's when we would, of course, we've got to have funds. I mean, currently there are no funds associated with it, but with the start of the new fiscal year, that would allow us to hire those two employees and really get the program under its feet. And then, of course, we'll need funds before we can start distribute them because currently the the existing funds were with mission 911 and then we're going to plan another water symposium to raise uh to raise additional funds as well so that's that's part of the work product as well that we got to work on okay i see that's the clarification so the existing fund balance that was from the previous symposium would stay with the current administrator and then should this budget pass we're looking at taking this in-house

And that's where you're going to do a second symposium to kind of like create another account, if you will.

Yeah.

And then look at those parameters. Okay. Again, thank you very much, Nick.

Okay, thank you. And yes, that is coming. And I think, like you mentioned, that symposium was, I think, $70,000-ish of all of which went into this program. But then you start looking at households. So how many households can be helped with how much money? So it's a big... It's an undertaking, as you mentioned, but I think that symposium is absolutely, I think y'all had a lot on your plate, but continuing to do that, maybe fall of next year, would definitely, would secure and almost guarantee, because I think there were people that would have liked to have attended and sponsored, but there just wasn't enough space, if you will. So I think we can continue that and then work on additional funding to make it a stronger program to be able to expand. And as Peter mentioned, that is something I'm working on now. So I'm gonna throw out a few questions I have and then you can answer them. As these projects come online, these different water projects that are coming online, and you explained very well that we are paying for the projects that aren't necessarily online quite yet. But we have included them because at some point they will be. And we all know that some of them, well, Evangeline is not something that is coming online, or that we can say is coming online at any certain time. We don't know on that one. So that's my concern, right? Paying for something that we really don't know. So I'm curious to know how much, and I think you gave us a slide, but if you'll let us so we're, transparent the public can know, for example, what projects, I guess we only have a few really, very small expenditures on some of the ones that are like Lee Ranch, for example. But if you can tell us, what is the long-term strategy for managing that debt? So when would residents expect to begin seeing the benefits of retiring debts and therefore stabilizing our water rates. Because as was mentioned, a whole lot changed from last year to this year because we brought on so many water projects. The other thing I wanna ask is miscellaneous revenues. I'm just curious, what does that look like? Are we, I mean, how much does that, how much comes in under miscellaneous revenues? And then I wanted to know, future projects, have we looked at adjusting what those future, if those future projects must come on, need to come on? I know in the past we have changed the plan to not have to increase rates, or are they all of critical priority? Let's see here. In-house crews, so I'd like to know what, they did a portion, a small portion, which is a great help for the rate payer, because we're paying in-house crews versus the contracting, but we must have both. The contracting out is huge, and I understand that. Is there, what is the plan on that? Just a status on the in-house crews and how that works. The other day, I think I asked you, Peter, who, that huge water break, you know, who fixed that? Did we have, usually we have IDIQ. Well, I'm gonna come back. I'm just throwing all of this out here first and then we can talk about them. The well operations. So our well projects are intended to be intermittent, right? And I see that we're needing to invest more on the operations side of those. So how does that work long-term? Those wells aren't going to stay on forever. I mean, they're not going to be turned on. Hopefully desalination comes on and we're able to, back to your point, diversify, turn this off while this is on, kind of like the Mary Roads, that huge project that you pointed out, what the 1954 pipeline has to be maintained or serviced and therefore the other one turns on so i'm curious about that and then um what is our obligation annually again on the consent decree those are all my questions and yes a big shout out to the operations team the uh was it the operations yeah our um

At Owen Stevens?

At Owen Stevens, yeah, congratulations. I hope they're listening because your mission statement states that we are, our mission is to exceed regulatory requirements and that's exactly what they're doing. So congratulations to them all.

Absolutely.

And to you.

So Mayor, I'll go through a portion of your questions and then I'll have Camille come up to talk specifically about the debt and the debt issuance. A couple of things, and I might not go in order, but I know I'm going to cover everything. So if we start with the in-house crews, so CCW has a number of in-house crews. We're fortunate to have them. They do a lot of work. We're also fortunate to have our contractors on our team. The system is large. There's a lot of work to do. Not all of it can be handled by in-house crews. That's where our contractors come in. Typically, if the issue, let's say it's a water main break like one that happened last week and it was a contractor hit it, If it's a break that our crews cannot handle, then we call in a contractor. If it's an issue that our crews can handle, we utilize them because we know typically it can be done in a more cost-efficient manner and timely manner. So those are the decisions that the team makes, and that's how we decide whether to call in a contractor or FCCW crews, handle it. Any break that happens, we have our first responders that get on site, they evaluate the situation. Next is our CCW valve crew. We have to isolate the leak and stop it from leaking. Then we have to notify any customers whose service will be impacted. So all of that is being done by CCW crews. If the While that is happening, the construction crew is getting ready, getting the repair materials and getting that ready for the repair. If it's a repair CCW can't complete, we get our contractor on site simultaneously, and that happens.

Nick, if I can just add to that. So just to be clear, the break that was largely publicized on social media last Friday or last week, It was caused by a contractor working for a utility company, a telephone utility company, and the contractor drilled directly through the water line. The water line didn't break on its own. It was an auger that drilled directly through the water line, even after they did the line locate. So this is just a good example that this happens pretty frequently. I've asked Miles, who oversees risk management and departments like CCW and Public Works, we have to develop a better system to make sure we're getting paid by these companies like AT&T. It costs probably hundreds of thousands of dollars for overtime. This project at the HEB on Robert and Alameda happened at dusk and it wasn't done, it wasn't finished till 5 a.m. in the morning. That's all overtime, that's on holiday pay, that's lost water. So the organization doesn't have a good system to make sure we're getting our money back when these happen and we're putting a process in place because risk management will assess the damage, send a bill, but do we get paid and does the department monitor that and close it out? So we're going to be developing a monthly process where we see all the issues that were caused by companies that drilled through or broke our water or wastewater lines. What was the damage? What's the estimated cost? When do we send the invoice and when do we get paid? And so that one is a good one. I want to thank Chris Six because their headline story was just that the city is going to seek payment from AT&T or from the company. That's right. Our residents need to know that issues like the one that happened on Alameda and Roberts are unacceptable. And our rate payers should not be paying for those fixes. It needs to be the companies or their subcontractors that caused the damage. So Pier 6 did report on that, but just to have it here so the council and the community knows that we're developing a better process to make sure we get those monies.

Great. Thank you. And it would include the cost of water as well.

Right.

Yeah. Mary asked about future projects. I think you're referring to projects within the CIP program. One thing to note that the majority of the projects are under construction. You know, we've got 500 million or so at Owen Stevens that's in process. So those are projects we're committed to completing. The money is budgeted annually as we incur the funds. But we absolutely look at critical nature of projects. And then that CIP plan changes year over year. We push some projects up and move some back based on need. You asked about well operations. Yeah, that's a very important topic to discuss. The groundwater assets that the city is installing absolutely have to be maintained. We need to make sure that they are well maintained and available for use in the future, and they are a critical part of diversifying the supply. As we gain new sources, and those new sources would include the full reuse program, once that's fully functioning and fully in use, future seawater. Once those new supplies come on, then you manage your supply and you can adjust the usage of the groundwater source. The program itself is, in terms of groundwater, is meant to be operationally flexible and variable depending upon the needs. For example, The eastern wellfield is largely meant to be used only in times of very detrimental droughts. We know the water quality there is much poorer than other sources, so it would only be used on that basis. The western wellfield is... is very flexible, and in fact, the brackish RO plant that we are designing and gonna install to treat that water at Owen Stevens, that has a lot of operational flexibility. It can be operated, well, it can be operated at zero, it doesn't have to operate, but it can operate as low as four million gallons a day and operate as high as 24 million gallons a day. And it's very important that we understand all those sources need to be properly managed so that we can responsibly meet the needs of the city. And I do want to say that decisions are made daily on well operations, which well runs, which well doesn't run, how much we put into the river. Those are based on just the... The well itself, which particular well itself we're running on that day, we rotate them. It's based on the water quality in the river and the bed and banks permit. And recently we did request some additional well permits from the district. We did not increase additional production amounts. We just wanted, the goal is to spread the production over a larger area and add more wells for redundancy and flexibility. The well pumps itself, the wells are 800 to 850 feet deep. The pumps themselves are set anywhere from 550 to 600 feet deep. Those pumps are repaired at times. They'll have to be removed, taken out of service. In the future, well screens will have to be cleaned and rehabilitated. So we just want to make sure we have proper redundancy to do that. And yeah, you're absolutely right. It's key we continue to diversify the supply. If we don't, we continue to put stress on the existing supplies we have. And that's whether that's surface water or groundwater. The addition of new supplies allows us to diversify and not have to rely on one source more than the others, which is something we do not want to do. The obligation of the consent decree, that is going to be the majority of the presentation at next week's workshop. The consent decree, there's a lot to unpack there, and we want to give it its time and its due, so a large portion of the next workshop will be consent decree, and I'm excited to talk about it. This is something that we've wanted to do for a number of months now, but just couldn't get it on the council agenda. The agenda has been really packed, so I am excited about that. And I'm going to let Camille come up and talk about debt issuance and when debt falls off.

Sure. So because the slide is up, so as you can see, all of these obligations are 30 years, right? So the $20 million we're projecting to sell this year is a 30-year obligation to sell. We broke it down trying to be as reasonable and as conscientious to what the actual expenditure associated with a project is and will be. So if you look at, for example, the West as well as the Eastern Western, that will be there basically build. So the full debt is associated in twenty seven. Right. Where if you look at Evangeline, we. base and Nick sends out the memo from Friday's memo we have spent 66 million dollars up to today's date that 6.9 represents a little bit under 100 million you know so we're trying to make sure that we're you know the debt that we're going to issue matches to actual expenditures you know the brackish conveyance system you know we're starting on right now broke it down into two years 50 50 because anticipated the completion is the following year So that's how we're breaking out the debt, and the debt will continue from the year of issuance for another 29 years. So that's, you know, that will be, and that's built into the rate. That's just the reality of, you know, adding projects. And that applies to all of our projects. It includes ONS projects and line replacement projects. We don't issue 100% of that debt in year one. If we know that project is going to be a three or four year project, we break out that issuance over three or four years based on the best estimate we have of how much money each year we're going to, you know, spend for that project. So that's the whole idea is to not burden anybody with a hundred percent costs. If we do not have the a hundred percent costs, you know, the project naturally will build the costs and that's how we try to build the rate into it. But it is true. And that's what the, projections showed because of the system needs, because of the additional water supply needs, that the rate will continue going up.

So do we have a The $6.9 million, the 2.1, 1.2, 4.1, 3.0, what those equate? It's probably more.

$289 million.

No, what do they equate out of the rate for the rate payer?

Oh.

So if the rate is whatever it is. So it increased... How much of that rate is attributed to the projects?

Previous slide, yeah. 36% of the rate increase?

I'm talking about the actual rate. You'd have to dig down in it. So if you're $50, how much of the $50 is due to... the water projects, those numbers you just showed. And then there's another portion of probably inflation, the cost of operations go up, or chemicals, or whatever.

So. Right, we have the answer, Mayor. So the total new revenue requirements are some $57 million on this chart. And 36% of the additional revenues which causes the rate increase is, 36% is from the new water supply projects. So if you look at the rate for the residential customer, it's $2.48 increase. How much? $2.48. So 36% of that is for the water supply projects. So if we do the math, right?

Somebody do that.

Yeah. So if you take, let's just see here.

$2.48 times $0.36. What did you say, Camille? $0.89. $0.89.

So 89 cents of the increase.

Yes, or 89 cents of the rate, of 89 cents of the 44.4. No, I think he said of the rate increase. Of the increase, 89 cents of the increase.

Yeah, yeah, it's 248 times .36. So it's 89 cents. Yeah, 89 cents.

Of the $2 in.

Right, of the 248, that is a projected rate adjustment for the residential, I'm just picking one there, for the residential customer.

Right.

I'm 89 cents of that is for new water supply projects. Which and if you look at go if you look at this chart we're benefiting know the next one Camille we're benefiting mayor you mentioned we may not be seeing all the supply but they what the Western the eastern and western wells were benefiting from right now. The extension will be benefiting soon right practice conveyance and the reclaim water those are all once those lines are all done that we benefit the residential customer. The containerized unit, brackish unit, that's part of the new ACES program, and customers are benefiting from it today, and they will in the spring as well. The only one that is still being worked on is Evangeline. So that one, there is no water supply right yet, but we continue to work through that process to try to get those rights.

Right.

Okay. And then the final question that you had, Mayor, is how much of the the miscellaneous revenues. So that's why we broke it down. So you have miscellaneous 1.6, which miscellaneous is any and all revenue that are not fines and fees. So, for example, delinquency payments, you know, things like that. Of course, there's interest and then fines and fees, like fines would be, you know, if somebody doesn't... we lock them out and they open it up again, well, there will be a fine associated. There's fees for meters, there's fees for taps. So altogether for the total budget for water, it's around $5 million. Out of the $220 million in revenue, $5 million is for those miscellaneous interests and fines and fees. The remainder is a little bit of fund balance and then primarily the rate, right? So that's what ND Calc is. When it comes to wastewater, It's the numbers a little bit lower because it's a lower budget and there's so we're looking at. 3 million dollars if my memory. Yes so yeah 2.6 and 0.6 so 3.2 million dollars for those other revenues that are not associated with the right. And in the wastewater so 5 in water 3 million in wastewater.

Got it. Thank you very much. Councilwoman Vaughn.

Well, you know, this is really impressive. If you look at all the projects over the last 10 years up to date, all the things that y'all have done, it's so impressive. I don't think you understand it until you see it on paper. So thank you. Y'all worked very hard. With that being said, we're going to have a great water portfolio when it's all done. We will.

That's correct. Yeah.

So for 2007, we know that $1.87 for wastewater, $2.48 for water, that's a total of $4.35. Gas is not included because y'all don't do that. So at least the citizens are going to know how much their wastewater and water are going to be. I think, thank you for saying you're going to do the symposium again. We need to do that every year for the citizens who can't afford to pay. And I know we challenged industry to step up, so I'm hoping that's what the mayor's working on with them, that they step up and put some money in for that as well. On page 41, Nick, it's about the groundwater program. The mayor kind of covered it a little bit, but that was a concern for me because I know we said it was intermittent. And you kind of worry me when you say on the western fields that's flexible. Are you telling me that you're going to continue this over time, even after we get our other water sources online?

Well, and let me, I understand why that's confusing, so let me do my best to clarify. So even today, we don't, and we're in a historic drought, we need the supply. Even today, the production varies from a day-to-day standpoint, so It's hard to say it's gonna be consistent every single day. So even today in these extreme circumstances, it varies up and down. Once we add more supply, I would absolutely I could see once you certainly have things like sea water in the effluent program is in full demand I could see times in the in the winter when you would not utilize it you'd only be pumping the water for operational needs will price of the flow some water through the brackish are we've got to continue to maintain that but in the in the wintertime you know our demands aren't as high So that would be a good time for us to do maintenance, continue to operate the asset. The other component to that is when our reservoirs recover, that is our most cost-effective water. And we are committed to our ratepayer to utilize our budget responsibly. So we're going to use that surface water, which would in turn decrease use of the groundwater as well.

And I just want to make sure, because we've said that over and over that that was going to be intermittent and we need to keep our promise because we are going to get other water supplies on. We only did it because we didn't have the water.

That's correct. Councilwoman, let me add a little more detail to Nick. So to include recently, we've completely turned off the new aces program, turned off the wells. We're pumping zero when there was a lot of water coming in from those recent rains. So it can go from zero to, you know, 10 million gallons. just on one of the well fields. So that is intermittent and it will be, especially when the western reservoirs recover if they do. But even if they were off, there's still a maintenance program here. And this is very different than the decades ago where the city didn't own the property and we had to pay people to get on their ranches to maintain the wells that were there. So this system has to still be maintained even if it's off for weeks or months. You can see pictures here, it's a pretty complex system. We purchased 250 acres, so just grass maintenance, making sure vandals aren't doing things, this livestock in the area, making sure our livestock hasn't gotten out of the fences, testing the wells, doing flushes, or just pumping maintenance. Correct. It's a very labor-intensive process, so we appreciate you bringing up this point, because the five positions, even if the wells aren't on, there's still things to maintain taxpayer or ratepayer-funded assets.

And I understand that. I was just going to make sure about the intermittent because that's so important to the rural areas because we gave our word. I just want to make sure we keep our word because I know we need the water now, and I get that. I just want to make sure. So these five people are just going to be specifically for that groundwater or all groundwater?

So they are targeted for the Nueces County Groundwater Program. Like the city manager said, there's a lot of property maintain. We have a lot of, and we need to meet our commitment to help area residential and livestock well owners also. In the future, you look towards Evangeline. I think maybe that's where your question was going to Evangeline. is do we need, would we need more people for the Evangeline? That was next. You read my mind. Yeah. And I, you know, one thing about the location of the Evangeline, you know, we have a crew that maintains the Mary Roads Pipeline. So we would expand that responsibility. And then in the future, we would evaluate to see if we would need one or two more individuals or We'll have to evaluate that as we go forward.

Okay, great job on the presentation. Thank you.

And I do want to highlight something the city manager said, and I'm so glad he brought it up. So just as recent as June, we only operated well pumps for 11 days for the entire month of June. That's good. So we showed the flexibility just last month. Yeah. Yeah.

That's so important that you keep saying it.

Yes.

They hear you out there.

Yeah, it is important, yeah.

Councilman Compost.

Thank you, Mayor. Wow, great presentation. I just want to start off by thanking all the workers, of course, you all that are present here, but all the other unseen heroes, you know, in the water department. So thank you so much because I know they work so hard. I was thank you about the consent decree I wanted to know you know when was that going to end but evidently that's going to be in our next workshop or is it just an agenda item or what are we.

It'll be it'll be a detailed presentation in our workshop on July 16th. OK. And they'll they'll be 30 or so slides for just for consent decree.

OK. I wanted to ask about the chlorine rail system when will that end because we're working on that and replacing it, so that's one question. And I was just thinking about the Lake Texana, you know how it, I mean, thank God that it continues to rain in that reservoir and we continue to benefit. What is the possibility of us helping them expand the lake texana so it can hold more water because i you know it's overflowing now because it's got so much water i don't know if that could be a possibility but anyway i just thought i'd throw that out there um the other is uh thank goodness that we also have like a projection on our water rates and and you know a possibility and i also wanted to thank the previous city council and the city manager for leading that because that was one of the um my platform issues when I ran is I wanted to make sure that the water rates and you know of course the IDAs were going to be fair didn't win on the IDA but the water rates was a success and that this is a result of that fight is or that activism of making sure that you know all classes our water classes are treated equally and I thank new gen for for taking that on. I can see it's very complex, it's still very complex, but again, I think you're unraveling it and you're making it a little bit more transparent as to how we're coming to these rates, so I'm seeing you know, a light at the end of the tunnel. I also remember a discussion about, I don't, you know, how, because right now we're having these workshops and rate, usually, I guess it's going to be rate increases every year, right? But I think I've heard, that other cities have it automatically for five years. Is that something only because sometimes and this is how we got into this mess is that some of our councils do not want to increase those rates to keep up with the projects that we have online because to increase it but at the same time we don't want to continue to have consent decrease. So, you know, it's a balancing act. I also want to thank Councilwoman Paxson on bringing up the water, helping out the customers in the water. Utility assistance. The utility assistance. Like I brought up before, the gas department has done a tremendous job. They've had theirs for, I don't know, at least five years, I think. Again, I think it is just a matter of hopefully the mayor using her influence with some of these large corporations that are willing to come and make that donation. So hopefully she'll be able to do that. Let me see. We also... I was wondering... On page 64. You or we didn't include San Antonio on this again why was that page 64 on the residential water customer using 6,000 gallons.

I apologize. It's not that we didn't include it. It's the formatting on the presentation. It's actually San Antonio is the line right below Corpus Christi 2026.

Okay.

So it's $40.22. $40.22 for San Antonio. That's San Antonio. I do apologize. Okay, no, no. It's just the formatting. When I saw it on the screen, I couldn't believe that all of the names didn't pop up.

Okay, good. Yeah, because it came up on the wastewater, but not for the water. Okay, good.

Yeah, there's a couple of cities that they got left the formatting. They got deleted off of there. There's a couple of blank lines.

Okay. Let me see. Okay. So now that we have the proposed rates for inside and outside large volume users, we used to charge a flat $45,500 per month. Now we're going to be charging $3.83 per 1,000 gallons. Yes. Okay, so I guess for corporations that use like, I don't know, 10 million gallons a month, how does that come out? I mean, do we come out kind of?

Yeah, there are examples.

Oh, yeah, okay.

Yeah, if you go to this slide, slide 61, this shows three examples of our large volume users.

Yeah, okay, so much better.

Yeah, so the top one, the 260 million gallons, that's like a big refiner. Yes. And then the lowest one is one of our, is a real live example from one of the lowest, what we call a large volume user, that would be the military installation.

Okay, yeah.

Right, and then the 90 million is the average of all the, we have nine large volume users, and San Francisco has 11. But so of the nine, when you take the average, it's 90 million gallons per month. But the top one is a real live example. And so, you can see, Councilwoman, to your point, rates are going up. And I'm glad you highlighted that because you were instrumental in helping the council with an 8-1 vote, set the rates correctly for large-volume users. And they literally doubled.

Ms. And we needed to fix that. I mean, again, like you said, decades and decades of neglect of not addressing the issues. So, again, thank you. Mr.

Right. They doubled, and that meant that the subsidy that the residential and commercial had been paying went away.

Right, that's why residents knew that we had been subsidizing the large water users for years and years, so again, but we're fixing it. Yeah. I guess I'll have to wait on my next round. Thank you.

Councilman Hernandez.

Mayor, should I answer some of Councilman Campos' questions? Yes. A couple of things that I wrote down. The chlorine rail system, so that's a three-plus-year project. So we have three to four years before it's fully implemented. The first phase of the project, though, is going to liquid chlorine, which would allow us to start getting rid of the rail cars. And then the second phase is actually generating the chlorine.

Nick, if you can go to 42, slide 42, just in case people, I know some council members caught this, but the picture on the far left is these are city employees. If you look closely, this is highly hazardous. They're using gas masks. And the managing liquid chlorine, which is archaic almost as we're one of the last water systems that uses liquid or gas chlorine that comes in on a rail car for disinfection purposes. And so that's not a, you know, you can see the severity of the job and the precautions we have to take. So that three-year project will replace this antiquated system and we'll be generating chlorine on site. Correct. From salt, basically, right? Salt and water.

Salt and electricity. Yeah.

Does that mean we can sell any of the excess?

Or would we even be interested in doing that? No, I don't think, yeah, the assets are pretty crude, so it's just the rail cars come in with liquid chlorine, and you hook up hoses to this, and I don't think anybody would want to buy that. Yeah. Yeah. But anyway, we just want to point that out, so thank you, Councilman, for bringing that up.

The other, Councilwoman, yeah, consent decree, we'll talk about that next week. LNRA and Lake Texana, of course, any reservoirs like that are highly regulated, water rights are highly regulated, and they have obligations to release environmental flows also as part of their program that they are committed to. But we work closely with LNRA. They've been very supportive and very helpful of the city of Corpus Christi and CCW, and they are a great partner, and we continue to talk to them frequently. In fact, they join our weather service calls weekly as well, so we're glad to see them on there.

Okay. Thank you, Nick. Councilman Hernandez.

Oh, you got it? Okay.

Oh, we have another one?

Yes, I apologize. Yes, Councilman Campos asked about the automatic rate increase adjustments. And I know of two utilities that utilize that, the City of Houston and then I believe the City of Laredo. I would caution against doing that. It really depends on that specific utility. I believe three years ago, Councilman Hernandez suggested And the council agreed to review rates annually because you've got a huge capital project program in place. And capital projects are always continually shifting. That's why it's good to look at rates on an annual basis, whether you hire an outside consultant or staff does it. Just because of that, because you've got so much going on and there's been so many changes with your rate structure. This is the fourth year that we've been you know, here helping the city work through these issues. And so that's why I kind of caution against that. It's very limited use, usually by utilities that their capital program has stabilized, they're doing a certain amount of capital projects every year, or they're not really growing, they're landlocked, such as Houston is. But Houston's undergoing a consent decree, so on wastewater, or they're about to, so it's really highly dependent on that utility, but I don't think CCW is there yet for that.

What would be the positive or the negative? Councilwoman, he's answering your questions, but we'll go around to, so we can, yeah. Thank you.

Thank you. Okay, thank you.

Councilman Hernandez.

Okay, thank you. I had asked that you put the percentages on the increases there for residential, for your examples here, And maybe it's just me, but there's a little bit of inconsistency on the increases for those examples. So I looked at residential, the increase was 5.9%. Commercial was 6.7%. Large volume was 4.7. And the last one was 4.5. And wholesale was 2.6. Now you explained wholesale before. as being contracts from the previous year, not its contractual uniqueness to that. I understand that. And then bringing commercial back to, you had mentioned bringing it lower to meet their set, but they have the highest increase from 26 to 27. So I just need to understand how you got to that.

Correct. Leaving off the percentage increase, I think that's an oversight. But as far as the inconsistency, yes, we're doing a cost of service. So we've got, like for commercial, yes, we are getting them to their cost of service very close this year. But some of the commercial customers actually have larger meter sizes. And so you're seeing that come into play with them, even though their volumetric rate is decreasing. Again, it all depends on getting to the customer class cost of service. Large volume, we've got that nailed down. We're within $8,800 of their cost of service. The wholesale 2.6, we covered that. I'm not sure what the – was it irrigate? The 4.5%, which one was that? Was that one of the large volumes?

The 4.5 was the last example on the lowest – large volume water users. Okay.

Within a large volume. So yeah. And those percentage increases on the monthly bills, it all depends on the meter size and how much volume of water that you're taking or volume of wastewater. So it's really dependent upon that. So it's kind of like a snapshot.

Well, wastewater is a little bit different. Um, yeah, there's only understand that you don't do winter quarter averaging for commercial account. Right. So that's a, I'm not in a wastewater is a little bit different story. Um, And then how you get some of these numbers, like, for example, on the typical example that you use of 5,000 gallons, do you include the cost for the first 2,000 gallons as the $3.06 that is included, or is it just the $0.75 that is included? For residential, so with residential,

A residential at 6,000 gallons of water. So we step through the blocks. So we bill out 2,000 gallons at 75% and then 4,000 gallons at the three, whatever it is. So we have to step through the blocks with an income.

Right. Okay. So you have, I'm going to walk through the rate for a typical residential house, right? Yeah. $19 and 11 cents. for their meter charge the initial charge five eight centimeter right then the first two thousand gallons is 75 cents yes we didn't have that before because it was we had somehow included in the first yeah 2026 was the first year yeah and then for every thousand gallons after that up to six thousand gallons it is 306 down from four four oh six four oh six yes sir okay so If we just go through this, for your example of 5,000 gallons. It would be 6,000 gallons of water, 5,000 gallons. Okay, 6,000 gallons of water. You subtract the first 2,000, right, since that's 75 cents, or do you include that as the cost at 306 for each 1,000?

So the calculation would go, it's a three tier. So first 1911, I believe it's 1911 for the meter, plus $1.95 times six, plus, but that's for the raw water, plus two times 75 cents.

For the first 2,000 gallons.

So it's 75 cents per 1,000 gallons. Per 1,000 gallons.

It's not for the first 2,000. No, it's per, all of those are per 1,000, and then,

four times 306 that gets you the 44.58 okay um so that needed i just want to make sure it cleared up so there's not the under understanding that you 75 cents for the first 2 000 gallons because we added that charge last year yes sir okay yes we added we added last year and it's per thousand seventy five cents per thousand we need to put per thousand on that slide yes we would think it's on the order ordinance right unfortunately it's out in the

Oh, it is over there on the side. Shading.

But it is on a per-thousand-gallon basis.

Okay, I just, you know, our billing process is a little more complicated than it probably needs to be, but, you know, you have that when you have a progressive billing or rate structure. Yes, sir. Okay, I just think, you know, if we have a little consistency in how that works, and You know, because if you look at it just from the onset, you're looking at some reductions, but the increase in raw water, and you still have an increase overall, right? And I appreciate the discussion about having assistance for people, but the best way to assist people is not to raise the rates, right? So I know we have to raise rates because of the situation we're in.

Yes, sir. As costs increase, which... It's happening across not only utilities, but families. When you go to a grocery store, everything's more expensive, unfortunately.

Well, when we increase our water rates, we increase the cost for everybody because everybody buys water, right? Yeah. Large users buy water, so they increase their cost to their customers. You know, restaurants have to buy water from us, so they increase their cost to their customers. So we're part of that inflation, right? So I'm hesitant about adding more people that you're suggesting, eight in water and eight in wastewater. Can you include in the next presentation how many people we've added over the last eight years? Because as I recall, we've added a lot of people in both water and wastewater in that time frame. So I want to see a history of that. Also, Peter, you talked about risk management, and I remember in recovering costs for when we have infrastructure breakage, and we had a meeting with Public Works as well as Water that I had asked for with AT&T, if you recall that. I do recall it, yes, sir. Okay, so with risk management, it's not just them. You see accidents happen all the time with... Can we get a list of everything from risk management on what we've recovered versus what was reported?

Yeah, we'll get you that. So it includes things like down telephone pole, down light poles.

When people hit the little embankment on that bridge on Yorktown that seems to get hit every two years.

There's bridges, there's destruction of park property by vehicles and so on.

Exactly.

I want to know how much we collect from insurance companies and if we can get a list of it. We'll get you that. It'll probably be in a couple weeks. We're going to set up a big meeting next week, and then we'll know more. Okay. Thank you.

Councilman Bonetta.

Thank you, Mayor. Thank you for all the hard work you guys did. I mean, it's great. Just, Camille, you don't have to get up. I just, what is it? I'd like a slide, and I mean, you can give it to me later. I don't need an answer right now. It's just... If you could break down into a pie chart, how much revenue comes from the residents, commercial, large volume users, and wholesales. You know, and so that way we could see that all together. That'd be great. I just appreciate it. Thank you. Yeah.

Show it at the next presentation. Sure.

Okay. Looks like that is all the questions and comments for today. Nick, thank you. Thank you to the team. I think today's workshop was exactly what it was intended to be, and that is to give us the opportunity to ask questions, to better understand the factors driving our utility system, and gather information before we have to make these decisions, which are tough ones. But as you mentioned, we'll go back to you, Councilwoman. Next week, Thursday, same time, 9 a.m., we're going to be doing, can you repeat the topics?

Let's see here.

Because you had a few.

So it's an overview of the consent decree, update on the public utilities commission hearing, review of the drought surcharge exemption fee. And then we will also show the number of people added in water and wastewater funds over the last eight years. Okay. And then also a slide chart about how much revenue is collected per customer class.

Per customer class.

Yeah, I'll show that.

And I think we need to continue to say, I said that before, you mentioned it today, that the allocation is based on customer class and what is used.

Mm-hmm.

but a lot of times people don't realize that, or they forget that, and it's all put on the resident, and it is not. So anyhow, I think Councilwoman Campos, you had some questions, go ahead. Thank you, Mayor.

Okay, I do want to see whatever happened with, there's still some residents that have the larger meter size, like especially in my district, you know, like the Del Mar area, that area. And I had a customer asking me that they get charged, you know, the meter size, even though the smaller size. I mean, it increases. I was looking for the page 54, I think.

It's page 55.

Okay, and it had been suggested to me that one way that we could solve that issue would be to put some kind of... adjustment. I mean, uh, a physical something to the meter so that they would not receive the full, uh, I don't know if it's three, I don't know what size or what is a typical size for a resident.

So a residential meters is usually five eights or three quarter inches. And, but the, the rate is the same on both of those because those are, those are largely all of our residential customers. The three-quarter inch size are the newer meters. The five-eighths is the older meters.

And when they were calling me about the Del Mar, it was larger, though, right? Because I think I mentioned that it was...

I'm sure Del Mar is a larger meter, yeah.

So then it would be like the one-and-a-half? Or what are you talking about? The size meter? on yes yeah i'm not sure we'd have to look up to see what meter they have okay but is there a mechanism is there a way to reduce if they're not going to use that much water because it was back in the day in the 30s or 40s or whatever and that was the size that that was installed for the homes the question is can it be reduced at their cost our cost how does that work

So physically it can, the meter can be reduced. You know, there's bushings and fittings for the pipe to make it work. The costs associated with would be the cost of the new meter and the labor to do it because the meter is still functioning properly. The cost would have to be bore by the homeowner, the homeowner.

Okay. But is that a possible, that is a possibility. So they can actually, um, get that if they want it to.

They can call in and request a work order. You know, it would be the same process as a new home where we would install a new meter.

Okay.

Yeah, but they would have to cover the cost because the meters currently work.

Okay. And what about the notation or the mention of the 141 miles of pipes that we have in comparison to what city? I mean, why is that? I mean, do we have extra miles of... of piping that other cities don't? I don't understand why you mentioned it.

I mentioned it because comparing, for example, let's say Dallas, right?

Yeah.

They do not have a 141-mile road water line like Mary Roads. So the associated costs with maintaining, operating that line would not apply apples to apples to Dallas. I see. Or San Antonio or any other thing. So that was what I was talking about is it's very hard, there's no two systems that are exactly the same, so when you're comparing rates, you have to always weigh that, you know, there are certain things in some cities that are way more expensive that is just a necessity, like Mary Roads.

Thank you for clarifying that. Okay. Oh, and the only reason that I mentioned about the automatic rate increases is I was thinking that it would help our our financial outlook as far as the S&P and everybody looking at Corpus Christi and the water situation. I was just wondering, would that help or not?

Absolutely it would, Councilwoman.

Okay, that's why I brought it up, but I know it would be hard to pass, but I'm just saying because of the attention that we've been getting, I thought that might be a way to sort of reinforce that we are here to, you know, make sure that we take care of all our customers.

Right, agreed. So thank you for bringing it up. I did want to add to Councilwoman's point, the rating agencies, I think we're turning the corner with Moody's recent keeping our rate the same and improving our outlook. That's one of the three rating agencies. So the corner's turning a little bit from the rating agencies. They are very appreciative, and I think it will reflect in their analysis of us that we're doing these rates now, that we're looking at Corpus Christi water budget now, almost 60 days sooner than what we could. It shows, and we applaud the council for having the policy appetite to do this. This is very important. Nobody's said it yet today, but the rating agencies like this process that we're going through. I think just showing the 10 years' worth of rates is beneficial. It shows that we know what our rates are gonna be, and it helps to give certainty with revenues and liquidity. And so we do need to applaud the city council and the team here that's done all this work 60 days ahead of time to show predictability in our finances when it comes to water. It's paying off already, I think, as evidenced by Moody's assessment of us. And so thank you for that. So the council knows what the rates could be. Annually, we have to approve the rates, even though cities that have a five-year or a 10-year automatic approval, they still have to approve a manual.

Okay, so we still would have to approve them.

Yeah, but at least we know and we'll continue to show these to the council, and I think it helps the rate payer, especially the large volume users, as we've doubled their rates. So, and then just two other quick, one other quick comment. Next week on Thursday will be the consent decree, I'm sorry, will be the Public Utility Commission overview. The public utility hearing begins Monday, and we'll send another memo to the council to remind you. So Monday, very critical for the city where we are trying to protect the rate payer and we have to go to the, to a law judge that the public utility commission hired. Uh, it's a, there's a three day trial, if you will, where we're going to be, we have five or six of our witnesses that'll be, uh, involved with that. And so we're trying to, we have good evidence that the rates that the council approved and that we recommended in 24 and 25 for large volume users are justifiable. We know the other side doesn't think that. But this will be very big news for the city.

It's crucial, yeah, that we win this.

I know, Councilwoman, you've championed it a lot. It will be covered by the media. And so there will be a lot of attention on this on Monday, Tuesday, Wednesday. We have five staff members that have been spending an enormous amount of time getting ready.

Well, who knows? They may drop it right now.

Exactly.

Just one other last question. What is the cost of NextGen, NewGen, the cost to the city for their services? Do we have? What that is? The contract, do we have it?

Approximate $220,000. Okay. A year. Okay, just as a reminder. Yeah, we have a standard base of $45,000. Okay. And then because we do this full-scale study, right, and they have to redo all the work, verify everything annually, I came back last council meeting and that was $184,000.

Thank you. Thank you for answering that. Yes, ma'am. One other last thing. One other last thing. We have, how many engineers do we, we have a good, I hope we have a good robust interim engineering program that we use because we hire a lot of contract engineers. I'm just wondering, do you have a good where you're getting the students directly from the schools to your program?

So if you look at the city holistically, there's the engineering department, which houses a lot of engineers within the city. CCW has a small engineering team as well. CCW has two to three engineering interns every year. We use them to expose them to the water, the wastewater system. It's great experience. The capital projects are very large. We've really got to have independent, experienced, professional engineering companies to do those projects.

I'm just comparing it because when I went to go visit the street department, they did have a really good, robust program, and I thought, where are all these students coming from? And again, I believe Ernie teaches at Kingsville, and I don't know if that's where he gets them from, but I was just hoping and thinking that hopefully the other departments are taking advantage of these programs.

Yeah, we have two to three, and yeah, Kingsville, they largely come from Kingsville because there's an engineering program there.

Okay, thank you. That's it.

Thank you. All right, Nick, thank you to everybody here. Andy, Richard, everybody, thank you. So they're being known for their business. This meeting is now adjourned.