City Council - Regular Meeting

for Tuesday, September 1st, 2026. And the first item that we have is the 2027 budget session number four, review of enterprise funds and utility rate recommendations. We'll turn it over to staff.

Yes, good evening, Mayor and Council. This is budget work session number four, where we're going to talk about enterprise funds. Staff has been doing an incredible amount of work to go through, prepare the enterprise fund budget for us, looking at various utility rates for consideration. We did meet with the Water and Sewer Board yesterday afternoon to present the water rate recommendations. And so Curtis will be able to share that recommendation with the City Council. With that, I've got Curtis Adams, our finance director here, as well as Ty Bereski, our assistant city manager, who will be able to help facilitate this discussion. So Curtis, with that, I'm gonna turn it over to you. Thank you, sir.

Good evening, Mayor Clark and council members. It's a pleasure to be with you again this evening. As Cody discussed, we will be going through budget session number four, which essentially is a summarization of enterprise fund activity only. Maybe.

And we weren't the only ones having issues.

For some reason, the workstation is frozen. If you wouldn't mind, Julie, I would appreciate that. Thank you. My apologies. Thank you very much. Perfect. Okay. So our agenda this morning, this morning, this evening consists of the water fund, wastewater fund, storm drainage fund, and our refuse fund. We'll start with the water fund revenue. My projections going into 2027, are 11.1 million. The operating revenue consists of roughly 9.8 million. We do have an anomaly going into 2027, which is a great positive. The CDS federal grant is expected for 600,000, and that's congressionally directed spending at the federal level. And then we have system maintenance and expansion revenue at roughly 1.6 million. I'm projecting an overall increase in the water fund revenue of roughly 15% over 2026 and that's largely due in part to the increase in development revenue and the segregation of our grant revenue of that 600,000. So the water rates that were proposed yesterday to the water and sewer board to move forward are primarily based on what's recommended in the water rate study, as Cody mentioned. And then the other is on the bottom, the ditch rates are according to the inflation CPI index. So starting with the water base, so the inside city rate at a 6% increase is set to move to $27.68. And then the outside city rate to $28.75. And then we have four tiers of our potable water consumption moving at 2%, not 6%. That's set by the water rate study. And you can see how those move. And then the commercial treated water, potable water, is set to increase at 10%, again, at the recommended rate in the water rate study. Our non-potable water consumption per 1,000 gallons is set to increase 15%, $5.28. Willowbrook is segregated for both single-family and multi-family, set at 6%. And then we have our ditch rates, as mentioned, which are set to increase according to the water sewer trash inflation CPI. The water system development fees, if you look at the blue set of columns, that is our current year rates, both inside the city and outside the city. And the equivalent residential units, the ratio from one to 166 by tap size, these are all set to shift for 2027 for inside and outside city, all according to the ENR, which is an engineering news record construction inflationary index at 3.6%. So those are all moving consistently at that 3.6% inflationary increase. This is an overview of our water fund expenditures. So I'm estimating those to come in at $11.6 million. And here is a segregation by cost category. Our asset management program is set to incur 225,000. That includes 40,000 for its share of the AMP software implementation. A 50% share of an irrigation repair truck. The gross cost of that is 90. And then we have a three-quarter ton single cab utility ditch truck at 90,000. and then our annual hydrant repair replacements at 50,000. Our fixed operating costs, I'm estimating to come in at 3.3, which consists of payroll and supplies and services. Our variable operating costs, 95% of this 5.6 million is the Greeley consumption. We do earmark roughly 258,000 for 28 years. for the potential usage of the Greeley cap. And then there is roughly about $100,000 that's earmarked in legal and professional services. $320,000 is segregated for system maintenance expenses. And then you'll see in the next slide what is being proposed to move forward and thoroughly vetted is $2.2 million for capital outlay. And then the takeaway as far as what is the financial condition then of the fund next year, I'm anticipating that the fund balance will be roughly 10.2 to 10.5 million, which is a 444,000 decrease from current year. Now the fluctuation of most of these enterprise fund balances is a result of what we deem necessary for CIP. So infrastructure improvement, replacement, So forth is usually the direct impact for the enterprise fund fund balance reduction. So we saw this, I think, in budget session too. So this is just a reminder that the total capital that was proposed in the water fund was 5.4 million. and what is proposed to move forward of that is 2.2, and it consists of engineering specs and municipal code updating, ridge pond pump station construction for a million, our lead and copper inventory of 40,000, Neville's Crossing pump station and pond for 600,000, headgate repair and automation for 60K, The water master plan of $150,000, that's actually, there is an update to that. That should start this year, and there will be a slight carryover of that for 2027. So that will be underway 2026 late, is my understanding. The Boyd Water Treatment Plant Partnership Evaluation for $100,000. Missing fire hydrant valves of $100,000. 60,000 for a water efficiency and drought management plan. 65,000 for Evans Ditch Overhead Crossing inspection. And then again, a recap of our fund balance. I'm estimating probably 10.2 to 10.5 is where that should land in 2027, should all of these projects be executed next year. So the long range financial plan, what we have is current year and then next year implications of what we just discussed. So I'm anticipating we end the current year fund balance of 10.6. That of course becomes the beginning balance for 2027. And then with a recap of our anticipated revenue or resources of 11.1, less operating and capital is where I estimate this fund to land at the end of next year. I would say 10.2 to 10.5 is the projected ending fund balance. We'll move to our waste water fund revenue. Those projections for next year, I'm anticipating at roughly 8.3 million. So this revenue is essentially all sewer sales. But what we do on the income from an income statement classification standpoint is that we earmark major maintenance revenue and system expansion revenue. And so those are essentially peeled off of the sewer sales and segregated from a classification standpoint. So the total revenue is the eight point three. However we segregate major maintenance revenue which is plant replacement committed revenue of three point one million and system expansion revenue which is segregated to pay for debt service and then any system development fees which of course are going to ebb and flow based upon the estimated number of dwelling units anticipated. So That overall revenue I'm anticipating to increase 10% over the current year, and that's strictly due to an increase in development revenue from those building permit projections. The proposed wastewater rates, those consistently across the board, the takeaway is that those are set to increase 5%, and that is essentially set according to the CPI or inflation rate index. And so you can see the residential base rate is set at forty nine dollars and twenty six cents the use charge at six dollars and forty nine cents and then we have our commercial segregation the base rate at forty nine the use charge at thirteen thirty seven. And then we have three high strength surcharges per thousand gallons outlined below but universally those are all BEING PROPOSED TO MOVE FORWARD AT 5% INCREASES OVER CURRENT YEAR. THE SYSTEM DEVELOPMENT FEES SPECIFIC TO THE WASTEWATER SYSTEM, IF YOU'LL LOOK, THE BLUE HIGHLIGHTED COLUMNS ARE THE INSIDE CITY RATES, AND SO YOU CAN SEE THE CURRENT RATE STRUCTURE IS ON THE LEFT COLUMN. the total adjustment or increase is the middle column and then what the 2027 proposed rate is the far right column. The same applies to the purple columns and that's outside. The takeaway for this particular slide is that we are utilizing the same increase methodology and that we're proposing a 3.6 change and that's based again on that ENR construction index change. So all of these figures in the adjustment categories have all been applied according to a 3.6%. The wastewater fund expenditures, I'm anticipating to come in at $11,600,000, and these are the major cost categories. $2.7 million in operating costs, which consists of payroll and supplies and services. system maintenance costs at $5.4 million, which is our asset management program, maintenance of our capital, and a share of debt service. So our debt service within this fund is split between system maintenance and system expansion. It's a 75-25 share that's booked from a debt service expenditure standpoint. The proposed capital moving forward for the wastewater FUND IS 4.8 MILLION, WHICH WILL BE OUTLINED IN THE NEXT SLIDE. AND THEN I'M ANTICIPATING AN $18 MILLION FUND BALANCE, WHICH IS A $3.3 MILLION DECREASE FROM THE CURRENT YEAR. AND AGAIN, WE'VE SEEN THIS A FEW PRESENTATIONS BACK, BUT THIS IS JUST A RECAP. There's 4.8 million proposed to move forward. A million dollars is earmarked for engineering designs specific to the wastewater treatment plant. At most, we're looking at roughly 35 to 50 million in plant upgrades. This will require financing. So the takeaway here is that the consultants, in working with them on the scale and timing, originally thought that that construction would start next year. but that is being delayed given the regulatory uncertainty to 2028. Two million is earmarked for the State Street sanitary sewer line replacement. 600,000 for a closed circuit television van. 650,000 for our annual plant structure and equipment replacement. Our annual solids handling and dewatering of 350,000. The fund's share of engineering specifications and municipal code update. A sewer line relocation and upsizing. This is again related to the 37th Street widening phase three. Annual sewer line maintenance of 100,000. And again, consistent with the last slide, I'm anticipating roughly an $18 million fund balance to conclude next year. And that's primarily due to the wastewater treatment plant delay in construction. The implications from an income statement standpoint is I'm anticipating that we will conclude the current year with a fund balance of $21 million. That, of course, carries forward to becoming next year's beginning balance with available planned resources, less operating in capital. There's your $18 million year-end estimation for next year. So we have two funds remaining, storm drainage and our refuse collection fund. So storm drainage revenue is estimated to come in at $2 million. This consists of one primary operating revenue source. This is our drainage fees, roughly $1.9 million. And then we have a small income stream of roughly $100,000, and that is our system development fees and permit fees. so the increase that's expected for next year over current year is roughly five percent and because the revenue source is singular for this particular fund that's simply due to the increase in the storm drainage uh dwelling unit fee that's expected to go up their proposed rates as just discussed universally we're increasing these rates at five percent You can see the residential per dwelling unit charge will go to $23.11. And then the commercial fees are split in three tiers by square footage from $58.87 up to $141.59. The system development fees for the storm drainage fund, it's the same outline. You can see the current rate is the left column. The inflationary adjustment, which consists of the 3.6% change in the ENR construction index, leaves the new potential rates at that 3.6% in the far right column. And that simply consists of three residential fees and three commercial fees. I will make note. The residential for each square footage over the 10,000 square foot, you can see it's nine cents. 3% of nine cents is 9.3 cents. So obviously can't charge that, therefore it says zero. It will remain at nine cents because it's only 3.6%. Our storm drainage fund expenditures consist of 5.1 million is what I'm anticipating. THE SEGREGATED COST CATEGORIES FOR THAT INCLUDE OUR ASSET MANAGEMENT PROGRAM OF 67,500. THAT CONSISTS OF ITS SHARE OF THE AMP SOFTWARE IMPLEMENTATION AND A 50% SHARE OF THE SUPERINTENDENT TRUCK AT 42,500. OPERATING EXPENSES CONSIST OF PAYROLL, SUPPLIES AND SERVICES AND SYSTEM MAINTENANCE. We talked about how the debt service is earmarked. It's shared between system expansion and system development. And the last piece is the capital, which we'll see in the last slide is set at 4 million. 3.2 million of this will be offset by the remaining balance of the state revolving fund loan. That was originally issued in 2021 at 8.6 million. So of that four, 3.2 will be offset by the remaining proceeds, and then our debt service, of course, will increase. So I'm anticipating the fund balance for storm drainage to be 1.1 million, which is a $270,000 decrease from the current year. One thing I noted for the Water and Sewer Board is the takeaway for the storm drainage fund is it's a relatively small fund. It has a singular revenue source. And so the fund balance ebbs and flows pretty slowly. And so we have to be very intentional on what capital we choose to move forward for this particular fund, because the revenue gain is pretty nominal. If we had more than one revenue source, there would be more ability to earmark infrastructure at a faster pace. And again, a recap of the capital that's moving forward is 5.2 million has been proposed for the storm drainage fund. You can see 4.8 million is being earmarked for the 23rd Avenue drainage outfall project. This will be a carry forward from the current year. Again, funded from the state revolving fund loan. We have our annual curb gutter and inlet outlet rehabilitation program at $150,000. Stormline jetting and pond clean out of $100,000. The storm water master plan of $150,000. This closed circuit television van you can disregard. That has been removed. The engineering specifications and municipal code updates. Drainage infrastructure associated specifically with the 37th Street widening project. its share of the asset management software. And then we have, this should be roughly about 1.2. It needs to be updated. I would say 1.2 to 1.6 is the estimated year-end fund balance for next year. And again, the financial outlook from the major categories from an income statement standpoint is that I'm anticipating 1.4 as the ending fund balance for the current year. That is the carryover beginning fund balance for next year. After accounting for our expected resources, less operating in capital, there's your 1.2 to 1.6 should be the ending fund balance for next year. And our final fund is the Refuse Collection Fund. This is strictly charges for services. At $1.4 million, it does include a miscellaneous revenue of $35,000 for cleanup voucher sales, but that's primarily a charge for service fund only. And then these rates have been set consistent with the other. The notification that I received from Waste Management is an inflationary increase for next year of roughly 4.7% to 5%. So we've historically increased year over year since 2021, roughly 5%. So we set it accordingly. And so there are five collection services, standard trash collection, our bundled trash and recycling, and then we have extra trash and recycling, and then an overage fee, all set at 5% increase. The fund expenditures are as follows. You can see the ongoing collection, recycle, and related costs is 1.2. The cleanup weekend is roughly 120,000. A small degree of overhead at 70. That matches the prior slide at roughly 1.4 million in anticipated expenditures. And then a recap of how that affects the fund balance. anticipating it to end this year this fund maintains a relatively small fund balance because it's simply a repository for the trash collection and associated fee revenue so you can see it's supposed to end it this year roughly three hundred and ninety two thousand that carries in as a beginning balance to next year plus anticipated collection revenue and expenditures which closely match. I'm anticipating that to go up slightly to roughly 400,000 at the end of next year. And our final slide of the evening is a recap of the last three budget sessions. I will be going over the general overview of everything that has been assembled up to this point on September 15th. It'll be a recap. It's roughly 15 slides. And then October 6th will be the first reading of the approval of the budget, and October 20th will be the final reading and approval of the 2027 budget. That concludes my time, and I'd be happy to answer any questions.

Great. Thank you, Curtis, for the presentation. Councilmember Delaney. Yes.

Yes, thank you. Great presentation. I just had one question. On the wastewater rates, it says that the reason for the increase of 5% was because it was a staff recommendation in 2021.

So the reason that might have been a little confusing, that's a great question. So the increase is attributed to the waste management CPI letter that they release every year. And so that has consistently been roughly 4.5% to 5%. And so on my notes section, I simply placed, it should say contingent upon waste management CPI index. It's not really a... This is for wastewater? Yes, go ahead. My brain thought about the other fund. I apologize.

Sorry about that.

I heard the difference.

So on the wastewater side, we've really been waiting to figure out exactly what the wastewater treatment plant expansion project has looked like. So when we have that, we will go back and have an updated rate study specifically focused with those numbers. When we look back at how we've done the sanitary increases over the last few years we've noticed that the wastewater inflationary kind of indexes have been higher usually between 5 and 7 percent. I think it's due to limited supplies increased monopolization of the providers. And so we've just put that placeholder in at 5 percent. Some years we've been well most years where it's usually a little more than 5. And so that's kind of been our safe number over the last few years. I think this year it's anticipated to potentially be somewhere around 6-ish percent. We're a little more locked in, so we were comfortable with 5% knowing that when we have a full capital project for council, it'll be reflected in a new rate study.

Great. Thank you. Council Member Crabtree.

Good evening. My first question I have is about outside rates for outside city. Who is that? It's both for wastewater and water rates proposed. Who is the outside city rate?

So yeah, that would be any of the county properties we serve utilities to. And so it does vary slightly. So generally, when we look at outside of city, its arrowhead is kind of the main water outside of city rates. They're mostly on septic, and that's something that we expect to change in the near term, and probably in the next few years, given when that development happened. So I expect we'll see more wastewater outside service there in the near future. Hillen Park is also representative of an outside city entity. We're kind of doing some work on some previous projects agreements that that council and city entered into in the mid 90s that has been a bit illustrating in in how we come up with those but those would be the outside city entities there's also. It's carriage estate I believe is is another one we have a handful of properties on the railroad diagonal that we provide service to mainly on the wastewater side so if they had septic they would have been required it with they were within 400 feet of our system to connect. So those would be an example of outside city repairs as well.

Thank you. Based on, if I can follow up with that real quick, based on some of the research we've been doing this week, from a water perspective, I believe the only one that is being billed as an out-of-city customer is Arrowhead, whereas Hill and Park is actually, although they are outside of the city, according to the information I got from utility billing, being billed as an in-city customer. So I'm following up with that to see what that means for us.

So then these outside city definitions or populations, what revenue did they actually contribute to the City of Evans? Because if they're a county, we're not collecting any tax revenue for property tax, correct? That is correct. So then why is their rate so close to inside city where we are collecting taxes? I think there should be a larger description between that.

That is something that we absolutely need to be looking at in the near future. This is something that I was looking at last week as I was preparing, as I was approving documents for the council agenda. So where we're at right now is the in-city rate Proposed in-city rate for Evans residents is $27.68 for water, $27.68 for the base rate. The out-of-city rate is $28.75. I have concerns with that. That is a $1.07 difference, 3.87%. What concerns me is the in-city rate payers, the customers inside the city are not only paying taxes to the city, have built the system, but at a 3.87% differential are largely supplementing the cost for any asset management or capital improvement projects outside of the city. Now, in doing some research, and I have the city attorney looking into this as well, but we have found, yesterday we found, thanks to Curtis' research, Curtis Cunningham, Resolution number 14-1996, passed May 7, 1996, where we took on the Arrowhead system, the Hill and Park system, and the West Hill and Park system. And in, I want to say, paragraph 2C on page 3 specifies that the out-of-city rate will be $1 above the in-city base rate. And so we're 30 years down, 30 years into that, or since that agreement was passed. What concerns me is that hole's getting deeper.

Yeah, and that's, I mean, is there a sunset on that agreement? Not that I've found, no, sir. Well, I'm concerned about that as well as the developer fees. And I would like to, clearly you're looking into that. Yes, sir, we are. Because I don't like that on our budgetary side. The next question I have is, On the wastewater side, you said that we're doing a CPI index of 5%, but 10% increase overall was because of developer fees. What if those developer fees weren't there? Would we be running a negative figure?

I would need to look at the gap, and I can absolutely follow up with you.

And the last question I have is, I don't see a cost for the weekend, or excuse me, the cost, the revenue side for the weekend cleanup was 120,000. I don't see a cost on that. Am I missing that somewhere?

I think it was built into the operating. It just was not earmarked, but I can follow up with that as well.

Yeah, I'd like to know that. Okay. I'd like to make sure that the weekend cleanup is in balance and is at least paying for itself. Perfect. Those are all the questions I have. As always, I love the finance meetings, so. Great job.

Thank you.

Council Member Neill.

First of all, Cody, I'd like a copy of that 97 agreement. Uh, that's, uh, when I was working for C, it occurred when I was working for CDOT down in Alamosa. So I had no knowledge of what was going on with, uh, at that time period in Evans. Um, i did email that out to council yesterday but i will print it off and put in your mailbox okay thank you um part of what uh i think occurred uh for for years there was a representative from arrowhead on the water and sewer board i believe he was an attorney and he had been in a terrible car wreck and They insisted on keeping him on the water and sewer board and not replacing him for over a year. And I think that that may have something to do with what kind of a deal that they made with Arrowhead to supply him with water. I don't know for sure, but I'm kind of assuming that. I am also concerned that over 20 years ago, we were charging the city council and at that time was charging or attempting to charge snowplows to the water fund. I find it a little concerning. I'd like a little bit more information about the two trucks that we are buying for the water fund or the truck and a half, I guess, as to why the One truck is totally devoted to that fund and the cost not being allocated to other funds. I'm assuming the $600,000 for the TV van for the sewers, I believe we've been using an outside service for that. Is that correct, Cody?

We have an existing piece of equipment. It's just outdated. It's been a bit inconsistent in its availability, so we've had some maintenance issues with it. We actually weren't able to hit our televisioning goal this past year because of downtime, so this gives us the opportunity to go in and replace that piece of equipment. We have not outsourced that on the wastewater side.

Okay, maybe I'm thinking of the sewer jetting because I think that's been outsourced. I'm sure that if the equipment is probably old and needs to be updated with the current technology, I'm sure that there have been vast improvements in the cameras and the size that we can shoot them down the lines with. The other concern is we seem to be devoting quite a bit of money for one particular area of the city now that only has a benefit to about 73 homes. And that's somewhat concerning to me. So I hope to get some answers for some of this later on. Thank you.

Thanks, Council Member Neill.

Can I answer the truck question off the bat? So the first truck that was listed was the ditch truck. So that's the truck that our ditch rider uses. It's outdated. It has some issues related to the designed load of it and towing. So that is fully used for the ditch riding services of the city and ditch maintenance. Irrigation repair truck. We had quite a few conversations about that, and so we have an individual that's focused on parks irrigation, redoing all the irrigation system work that we've uncovered over the last year. They have a skill set that's also hugely beneficial to a lot of the pump station and pump station feeder infrastructure. So there is a lot of synergies and connections, water fund basically getting to the point of where the pump station becomes general fund assets So it seemed it seemed pretty fair given the allocation of where that truck will be used and how many infrastructure issues we've had on on both sides of the pump station the side the water fund traditionally takes over and then the side that the park general fund conservation trust fund would be used for.

Thank you for that clarification I assume that it was for the ditch writer, but there are still. For 4 months where I I'm assuming it can be utilized by staff for other purposes. And that's why I was asking specifically if it should be charged to other departments, a portion should be allocated to other departments. But I'm glad, I appreciate you getting it on a public record, what it's used for. Thank you.

All right, so my question has to deal with the out-of-city rates. and as discussed, that we were talking about how basically us as the city residents are basically subsidizing for the out-of-state, or for the out-of-city residents to pay. The question is, if there's nothing that sunsets that ordinance, and we are still obligated for that $1 difference, when do we look at possibly going, well, would annexation be beneficial? And if I am a resident of Evans, and I'm paying taxes to upgrade those systems and pay into those systems where they're not, I'm subsidizing them, they're getting a benefit, and we're paying the dollars for it. So when, unless there's a workaround, when do we consider possibly annexing to make them contribute their fair share into our systems?

Yeah, I think that's a fair question. One of the things that I would like to do Before we start going down the annexation path, I would like to work more with the city attorney here over the next couple weeks and really determine what are our alternatives moving forward. I do have a concern with that $1 delta, with a delta of 3.87%. Because I think it does put an unfair burden on the in-city ratepayers. But before we go down that path, I would really like to be able to explore this a little bit more with the city attorney and figure out just what those implications would look like for the city. I know when we start looking at annexation, we're looking at, in some cases, some pretty heavy staff deficiencies. I think it would be, I don't think the benefit would be necessarily worth it. I think it would be very difficult to justify from a finance perspective. But if I can have a couple weeks to work with Ed and we can figure out what this looks like, then I can report back to the city council.

Yeah, I'm not saying I'm advocating for either way. I'm just asking questions because how do we resolve this issue if there's no workaround possibly for that? Yeah, 100%. Yeah. I mean, my other... My other thing would be, well, what happens if we just disregard that? We find ourselves in a legal situation, where would that outcome be? We could go to court and possibly say, this is disproportionately not sustainable and it's not feasible for in-state or in-city residents to subsidize out-of-city residents for the use of this and find maybe a way to invalidate that

contract and come up with a more equitable solution to that right yeah and my intent with bringing with with mentioning it the other day uh and and having this information for tonight is to put it on the city council's radar that it is not an equitable situation for in-city rate payers And we're talking about a circumstance that has existed for 30 years in Evans. And quite frankly, as we were going through the water fund, at first we had anticipated revenues of $10 million, a little over $10 million, but we had expenditures of $14 million. So we had a considerable amount of money that we had to cut out, but a lot of that was mains. A lot of that was mains. A lot of that was isolation valves. A lot of that was stuff. And these mains and isolation valves are outside of the city limits, which kind of reinforces my concern of the inequitability of, I think that's a word, inequity. There you go, inequity. that is placed on the in-city ratepayers. In doing some real quick research the other day, I'm most familiar with 50% differential between in-city and out-of-city ratepayers. And there's a lot of our neighboring communities that have their differential set at 50% to make sure that this exact situation is not happening to their ratepayers. So I think we have something that we really need to look at, but I am gonna need some assistance from the city attorney to navigate this agreement and figure out what that path forward looks like so I can bring you guys a solution. If you look at water rates, we're not planning to embark on a new water rate study for the for another couple years so the earliest that that would go into effect uh to begin um correcting this issue would be 2029 uh and i'm concerned we get three more years down the road that's just adding additional difficulties to the water fund uh that uh that we need to really be taking a look at now but when i look through it i do not see anything that said anything about a sunset on that's what i'm concerned about but

And that brings up the next question. Why do we have to wait until 20 and 29? Why can't we do it sooner?

For the rate study? It would just be really fulfilling the existing rate study that we have in place. So that's the time frame in the existing rate study that's already been built out to 2028. And then 2029 would be the implementation of the next rate study.

All right. Sounds good. Thank you. Council Member Kravitz, please.

Another quick question, and you can just email this to me. But since we're talking about the differences in all these rates, one thing that caught my eye that I forgot to mention earlier was the non-potable rate. And I'd like to see a breakout of what we're actually spending to maintain that system versus what we're actually getting in revenue for that. Because $35 a month per resident doesn't seem like it even comes close to maintenance costs. But that's something you can just email me or unless you know that off the top of your head.

No, I wish. That is part of what we have scoped out in the water master plan to be very specific. We, in our previous master planning efforts, we've never looked at the ditch system or the non-potable system separately. So this is going to be our first opportunity to look at those independently, come up with accurate CIPs for all of those and actually get a cost of service When we went forward with the existing rate study we you know for potable it's a lot easier because we had a really good understanding of the capital plan but the rate study is only as good as the capital plan you provide to get cost of service. So I think we could probably get ballpark in terms of staff time but I think we will be most likely underestimating that until we see the results of the water master plan that should be kicking off here in the next few months.

I do appreciate it that you that is on your radar. just for the simple fact that as water rates are skyrocketing to us, we need to make sure everyone's helping pull the wagon financially, and we don't have a couple residents, or not, excuse me, residents, but a couple different areas not contributing at the same level.

Well, if you look at from, gosh, really March of 2025, and the challenges that we ran into with the ditch last year, multiple blowouts, We had the 49th Street ditch crossing in March of last year that shut down 49th Street for almost the entire year. We get to the end of the season. We have a blowout on the 42nd Street lateral line. The level of deferred maintenance that this team is working on is unreal. I've never seen anything like it. the engineering team led by Shantanu trying to do everything that they can to keep up to make progress on the deferred maintenance. And we've talked about it internally. I know we've talked about it as a team. We have a deferred maintenance backlog of about $150 million in the city. And that is downright frightening. And so one of the challenges is actually putting together a budget that I can bring to you guys to make progress this deferred maintenance without having a detrimental impact on our various enterprises you know and it is a considerable challenge so I certainly appreciate the support of the City Council's we're going through we're having these difficult conversations appreciate the support of the team for you know really jumping in there and trying to fix some of this stuff but it is a true challenge I think a non-potable rate study is absolutely critical, so having that built into the water master plan I think is important. In one subdivision, we have three different rate structures in one subdivision, and across the city, I want to say we have nine different rate structures for non-potable water, I think it's kind of, from an engineering perspective, it's the more moving parts you have on a system, the greater opportunity you have for failure. Well, the more rate structures we have in place for a system, the more likelihood we have to not capture the revenue we need to be capturing, especially in those systems that are not metered. And that becomes an incredible challenge as we're trying to put a budget together to ensure that we're bringing in the revenue to be able to maintain this so we can eliminate the system failures in June and July and August when we're pulling a lot of water and the system just simply can't keep up. So I think moving forward with these, as we move forward with these rate structures and these water master plans, the wastewater master plans, really trying to Really trying to make up lost time is what this team is trying to do. And I understand it looks like we're spending money because the bill has come due on an infrastructure system that we cannot keep up with right now. The bill has come due, especially this year, through the drought, through the amount of water we've been trying to pull for irrigation, This team has been running all over town, and I cannot accentuate this enough to the public. The bill has come due on a failed infrastructure system, and we're doing everything we can to keep up. So I appreciate you guys' support.

Council Member Lopez.

Yes. As we discussed this perceived inequity between the in and out of city population, my question is more of, What is the population difference between those that live in and the ones that live out? So, I mean, it's like, is it twice the amount of in to out? Is it three times the amount of population? And you may not have the answer because I'm just, I like to compare what we're looking at. Are we losing a lot because the population that's out is really huge or is it just small enough that it's not making that much of a difference.

You're talking population difference between in-city versus out-of-city? Yes, indeed. I think what we would find is the population of out-of-city is considerably smaller than, considerably lower than the population of the in-city. But you extrapolate that over 30 years, and that's where we really lose, really lost ground. Yeah, I think because we're looking at Arrowhead We're looking at Hill and Park. So in the grand scheme of things, as it pertains to the city proper, and if you guys have any other thoughts on that, but I think it would, your out of city is going to be much lower.

Yeah, we don't have, I don't think an accurate count by subdivision, but when we look at our utilities as a whole, generally we look at our population at, you know, kind of that 22 five level. And I think we kind of put an estimate on our service at 25,000 right under, So differential probably around that 2,000 at most, but that's kind of our internal estimate. It's hard to tell. We have a number of taps, but we don't necessarily know the people per household in some of the county residences. So I'd guess ballpark around 2,000, 2,500. Thank you.

Council Member Neal. Yes, I don't believe that any of the rate studies that I can recall have ever really addressed the issue of the service outside of Evans. I do recall when the Arrowhead Lake was out that the, it would have been 20 years ago, roughly, the fire chief from Milken lived out in Arrowhead, and he said he, you know, having to use potable water to do his estate style lawns cost him over $800 for one month. And I was just flabbergasted at the amount of money that they were putting in to use the water to maintain their property. I would certainly, if you're more familiar with the results of those rates that I'd be curious to see if any of them had ever really addressed that, because I really don't think they ever have.

No, the most recent one we specifically looked to even see if it referenced the 1996 agreement, and it did not. So, you know, we're just wondering where along the lines it kind of was no longer considered, or we just added that $1 and kind of forgot exactly why. So, With this future rate study, we'll look at CIP. We'll look at CIP in-city versus out-of-city. We'll look across the potable, the non-pot, the ditch systems. We'll be able to have a really accurate cost of service that I don't think previous rate studies have had the resolution on. So that is scoped in. That is, I believe that'll actually come to council during the next meeting. So we'll definitely be making progress on that soon.

And the other issue I'm... would be willing to bet is when this deal was brokered there was no inspection by the city of Evans to see what kind of condition the the current system their system was currently in at that time and obviously if it's failing and as a lot of our infrastructure in Evans and it's not a good thing and it's important that we get this information out to the to our residents and the public about just how bad this situation is and why it was because of neglect not deferred it was neglect from former city councilman and mayor's yeah so a couple things that we're doing to to address the infrastructure issues if you recall

Last year, when I came to the council and asked for you guys to create an engineering department, so pulled engineering out of public works and had that dedicated professional, you brought Roshan on board to lead the engineering department. A year ago, we had one professional engineer on the team. Right now, we have for professional engineers on the team. And we're actually to a point where we can start doing engineering design in-house, which is saving us some money as well. So I'm deeply excited about that and with the team that Shantanu has been able to put together to help get ahead of these various utility issues. But the other part of that is, and with some of these, with the water master plan, the wastewater master plan, the intent with this is to actually put together a formalized capital improvement program. That way, when we're going through the budget every year, we can see a more holistic list of what are the issues out there that we need to be addressing, how do we prioritize that, and then we have the conversations of how do we fund that. And it's not going to be easy. It's going to be something that we have to have some pretty serious conversations about. We base all of our street maintenance projects off of our PCI, off of our pavement condition index that was recently completed. And we'll soon be moving forward with the 2026 program. So being able to A, get the right team in place, B, get the right program in place, and then have the studies to justify where to put taxpayer dollars to get the greatest return on that investment. are some of the strategies that staff are employing to be able to, you know, put our arms around this, put our arms around our infrastructure issue as much as possible.

It's difficult on not only this, but on 3.536 mills, too. Mayor Parton.

So when we do whatever studies, will we also be looking at, say, meters for my neighborhood? Because As we heard, there are some people that use more of the non-potable water than others. Gardens, other things take up that water. And I know right now we're paying a flat fee per month. It's $37 and something, about to go to not quite $40 a month. And granted, we don't know where that's going to fall until we do the water study. But I'm paying, for example, $480 a year If I'm not using that, why should I be paying for the others that are using that or overusing? Would that be something that we can look at? And even if, like, say, we pass the cost off to the homeowners, could there be some kind of rebate program for them having those water meters installed?

Yeah, so one of the things, if you recall back to July, June or July, when the Ridge and Willowbrook system went down. In the 2026 budget, the city council allocated $600,000 to begin the rehabilitation, reconstruction, whatever that looks like, of that system. Right now, Shantanu and his team have been working on scoping engineering to be able to go through and do a holistic repair to the to the ridge system you know what does that mean is that a new pump house or that is that new pumps is that new laterals so one of the things what i would like to do is once we have that engineering done then bring that back to the city council whether it's this fall next spring whatever the case may be and really dive into the details of the engineering at that point I do think it's incredibly important that the non-pot system be metered. We have to be able to account for that water usage. And so I think we have a number of other conversations that we need to have with the city council, but I think it's best once the engineering is done, that way we can evaluate what is the true scope of that repair, and then we can get a better idea of what programs or incentives we could look at from that point on.