Planning Commission - Regular Meeting

I am Sylvia Davis, I am the director of utilities for the city of Topeka. I've worked for the city for almost 22 years now and I am moving into my fourth year in a few months, my fourth year as director here. So many of you are well aware, see some familiar faces in the audience. We have a routine process of going through rate increases, usually increases, but we really want to make sure that everybody understands tonight I have no formal proposal. I will show you some numbers up here. This is not a proposal that we are making. This is for an example for you all to consider, but we really are interested in what feedback we get tonight. We'll compile it with the rest of the feedback that we've gotten and use it as we're considering the proposal that we will end up making to the governing body in just a couple of weeks. So I will start, I will run through this. Again, try to be brief just because I can be long-winded. I don't want to do that too long. I want to make sure we save lots of time towards the end for question and answer. But we will go over some information about our utility system. We'll talk about why we're considering rate increases. We'll discuss some affordability and equitability considerations. And then again, gather your feedback and questions. So what do our utility rates support? Water, wastewater, and stormwater, three separate utility funds, separate from your taxes. They do not combine into the same pool of money. However, those dollars support safe drinking water, treatment of wastewater and stormwater, drainage and flood mitigation, regulatory compliance and environmental protection, emergency response and infrastructure maintenance, and workforce and operational sustainability. So all of those things we fund with our utility rates. The goal, we have a goal of maintaining reliable services for you guys. We would love to continue to reduce service interruptions and system failures, protect the public health and environment, less SSO, sanitary sewer overflows. We want to reduce service interruptions by continuing to reduce water main breaks. We want to improve operational efficiencies, of course. manage competing priorities so as we have priorities in the utility system that might be our top priorities, we also want to remain flexible and be able to support public works projects as they come through so that we can improve the infrastructure underground during a street improvement project so we don't blow up a nice new street later on. We want to be able to support future growth and economic development and maintain emergency preparedness. So we would like to continue the work that we've been doing to improve our systems and make sure that we can continue to provide reliable service no matter what comes in our way. So I have some links in your presentation. This is one of the little discrepancies. I think in your printouts, I don't believe this third link is on there. But the first link, if you are interested in going to that and when you get a chance, I don't know if it will show here. Okay, it's not showing. Anyway, that first link is going to take you to our Utilities Department webpage. On that website, you can find lots of Q&As, you can find information on the utility rate discussions, you can find out how to contact us, but you can also find a list of all of our assets All of the infrastructure that we maintain if you will cover a little bit of that today But there is a great deal of information on that website at the bottom that talks more about the department the functions that we perform for Topeka in the surrounding area and again our assets and the dollar value of those assets I also have a link to the GIS hub. If you were to go to the GIS system for the City of Topeka, there's an infrastructure exploration map that when you click on that map, it will light up with several different colors representing wastewater, stormwater, and water systems across the city. It will give you a very good glimpse of the vast amount of infrastructure that we have underground. And then last I have the Welcome to Topeka financial transparency link here. So if you want to know more about the city as a whole and utilities financial records, we have our budget information there. We have audit information there at that link. So all of that infrastructure I just spoke about, this information is what you can find there on our website. You can see we have over $2.7 billion worth of water assets, including 900 miles of water main. We have $2.6 billion of wastewater assets, over 815 miles of gravity mains and 21 miles of force mains. And then we have over $1 billion worth of stormwater assets. That includes storm lines, inlets, manholes, creeks and channels that we maintain, and then the levee system that we maintain as well. A lot of infrastructure that we are responsible for. To highlight, where does this money go? Just want to give you a brief glimpse of this, again, trying to be brief tonight, but the first line here, if you can read, 2021, the number of breaks in 2021 was 620. You can see how we ebb and flow year after year, but in 2025, we have had the lowest break count in the last 16 years, so 358 water main breaks in 2025. Well weather certainly has a lot to do with that. We also have been investing more in our infrastructure. We are doing repairs differently. We have seen many fewer returns where we've had a break and had to return because we're doing more repairs instead of just putting band-aids on water main breaks. So we've made a concentrated effort to invest back into the system and that has absolutely contributed to that lower number. Along with a lower break count, we get a lower water loss number. So water loss is the amount of water that we generate at the water treatment plant, what goes out versus what we bill for. Some of that water, it takes water to make water. So we use a little bit of water to make water at the plant. But as we lose water through water main breaks in the system, that has an impact and that's money down the drain. So the national average is 16% And we are the lowest in the last five years at 14% in 2025. So we had 14% water loss in 2025. In 2023, in the last five years, that was our highest number of breaks, 777. And we had 22 or 23% water loss in 2023. So you can see the difference that reducing our water main breaks has, 22% in 2023. Water main replacement. So here's where we get into some of the meat and potatoes. We have been reviewing our assets, making sure that we have up-to-date information on the lifecycle costs, the replacement costs of that infrastructure that we currently have throughout the city. If we were to, our goal of course would be to replace all of our infrastructure per industry standard rates or per those life cycles. So if a PVC pipe has an average life cycle, best practice to replace that every 100 years. We are not there. We are currently hovering around that 150 year replacement cycle, which has been a goal of ours. We were far beyond that prior to the last rate package that was passed. But if we were at a 200 year replacement cycle for water lines, that equals about four and a half miles of replacement a year. If we're trying to move closer to that 100 year replacement goal and we're at 150 year, that is going to look like six miles a year. And then if we were at 100 year replacement, we would need to be replacing nine miles plus a year of water main. So between 2023 and 2025, we replaced a total of 12.34 miles of water line. So we have the flexibility to spend those dollars across years. That's why this is a compilation. But over those three years, we replaced 12.34 miles. And then in 2026, using 2026 funds and some of 2027 dollars through the projects that we have slated to be finished this year, we have about 12.71 miles scheduled for replacement. In the last four years, we're hitting a little over 6.25 miles per year. So we again are really trying to hit that 150 year replacement mark. That is not ideal, but it is much better than where we have been historically. If you take that same concept over the water, wastewater, and stormwater assets, we are trying to push for a more responsible replacement cycle. So how do we compare? Nationally, again, this will be in your handouts, but nationally, the capital spending by drinking water utilities averages about $33.6 billion a year, while the annual investment needed to meet projected requirements is approximately $90.28 billion. So there's a huge need across the country that everyone is falling short on. Topeka is no different. However, we are trying to continue to make progress. With the last rate package that was passed, we have a current capital improvement plan and budget over the next 10 years of 433 plus million dollars. That is what that last rate package was supposed to be getting us. We know that that number, it's not going to extend as far as we had planned because of the continued rate of inflation. However, that is currently what we have in place and plan for. To maintain that, we would have one number to present. Yes, Mr. Ledbetter.

I have a question on this one. Sure. I know I said this to Steve Way when I was consulting for him. I said, you've got to get out in these neighborhoods and start replacing the six and eight inch lines. and you will see yourself actually replace these lines a lot quicker and a lot more miles but of course that has not been happening correct and so you you bump up the number for this year which isn't complete yet and say you're going to do 12 miles okay well where are you doing those projects i know you're doing some streets but that is not where you make up the models you do it out in these neighborhoods where they've been breaking. So what neighborhoods are you actually targeting this year? Neighborhoods.

If you give me just a few minutes, I do have another slide. It's not in our slides. It's a map that I will pull up at the end to show you that. I do have information for you there that Nicole and I just talked about this afternoon about our neighborhood. We were just talking about how we can explain where these dollars are going. Absolutely. Yep. Sure. So if we were to take all of our pumps, all of our valves, all of our hydrants, all of our lines throughout the system and replace them at the recommended rate of replacement, that dollar instead of $433 million is $1.2 billion invested over the next 10 years. We know that our community cannot support a rate increase that bumps us to that level in 10 years. So how can we, again, just shorten that gap a little bit, continue to make progress there instead of going backwards? We took some time, we looked at what does between 40 and 50% reduction look like. Instead of that $1.2 billion, we were able to whittle it down to $839 million over the next 10 years. Okay, if that's a goal of ours, How can we stair step into that to make an increase, whatever that increase looks like, to make it more palatable for folks? If we were to phase into this reduced schedule, we have whittled that number down to almost $775 million that we would like to recommend investing in our infrastructure over the next 10 years. To do that, just again, to just explain the gap, What we had planned on spending in 2027, $40.6 million, we need to really be spending almost $55 million in that first year and then continue to graduate up. Now, again, these are just numbers to consider. Traditionally, Topeka has seen an across-the-board rate increase, meaning if we're recommending a 6% or a 4% increase, we have traditionally assigned that increase over all of our customer classes. This table shows SF, which means single-family, approximately an average 3,500-gallon-a-month user at a 5-eighths-inch meter. A 6% increase would look like $2.73 on their bill. The commercial user at 10,000 gallons a month, you can see that 6% increase would be $22.21 a month. And then one of our industrial users at 10 million gallons would be a $3,200 increase. We show you this to start explaining a complicated rate structure. Our current single family residential rate is more per gallon than a commercial or an industrial user. We have a declining rate structure that has again historically been in place here in Topeka where the more you use, the bigger discount per gallon you get. So we could recommend a traditional across-the-board rate increase here for water, wastewater, and stormwater. If we were to recommend these numbers, that would get us to that reduced schedule of replacement and rehab that we showed you on this last slide. But this is where we are having lots of discussion. When you see a commercial user At 10,000 gallons a month, this slide's a little, we're trying to pack a lot of information into a few slides, so bear with me, but in 2026, this black line represents the average across this multitude of communities. Communities like size and like characteristics to Topeka, also neighboring communities like Lawrence and Manhattan. So if this is the average in 2026 numbers, forget the colored lines, Topeka falls right here, less than half, less than half of that average. So for our commercial users, you see we have a gap from our rate to the average. And if we were to propose those rates that we just showed you across the board in 2027, we'd creep up to that average line. And then in 28, we'd creep up a little bit closer. Compare that to Wichita's 2027 number for commercial and 2028 number. So that's just a comparison. For our industrial users, that gap exists as well. Topeka's industrial rate for a 10 million gallon a month user has a bigger gap in 26. If we did it across the board rate, you can see we shortened that gap in 27 and 28. Compare that to Wichita's numbers. Why so high? Many of you have probably heard of Wichita's last major water plant. They built a new water plant to the tune of $400 million. So some of that rate increase is attributed to that. However, our average residential user, this is again a five-eighths because we have different rates depending on your meter size, a five-eighths inch customer that uses approximately 3,500 gallons a month. You can see our current 2026 rate is higher than the average across these same communities. If we did that across the board increase, it pushes up even higher still in 2027 and 2028. So we're moving down the line towards the higher end. So instead of just doing an across-the-board rate increase, we want to continue to talk about some of those things that were discussed during the last rate package. How can we do things a little differently and impact customers a little differently as we're asking for increased rates? We want to make sure that we're balancing our system needs with the impacts that it's making to our customers. Reviewing a phase implementation option like we just discussed, how can we graduate everyone into this so it's not a huge pain point at the beginning. And then looking at our assistance and support programs and seeking input before we make these decisions. So again, potential considerations. We just talked about the across the board uniform increases. That is consistent with our trends historically. It continues that declining rate structure where our largest users have a bulk discount. Single family classification is going to pay more per gallon If we eliminated those customer classes, if we had a goal of eventually eliminating them by slowly incrementing up to the same rate across all customer classes, so we'd have a standard consumption rate, that would be more consistent with modern rate structures. It would reduce the impacts to our residential customers. However, that impact is going to be absorbed by our commercial and industrial classifications. So there's going to be a give and take as we look at these things. And that's what we want to propose to you all today are what are some of the other considerations that you guys have on your minds that you would like us to take into consideration. Some of the feedback that we have that we've discussed previously and some of the other discussions have been outside customers versus inside customers. Currently, our residential rates, our commercial rates, an outside the city customer pays 75% higher rate than the inside city customer currently. We could say, let's go up to 100%. That's going to have, there's pros and cons. It's going to have a negative impact somewhere if we did that. However, that's an option we can do. We can say, let's adjust some of our fees and charges schedule. We've done that. We've tried to do some things internally that can put some of the burden onto the users that are using our systems, for instance, our high strength waste. If we have an industrial customer who's putting a lot of high strength waste into the sanitary sewer system, it's not fair to apply the work that needs to be done to that high strength waste across the customer classes. So we charge that high strength waste charge to the industries that are releasing that into our system so it doesn't come on the back of all of our customers. We also have an irrigation rate that is currently 25% more than our residential rate. So should that be higher? Should people pay more for water that they're using to irrigate their lawns? Lots of different options here. So as I am wrapping up with this part of the presentation and getting into Q&A, I definitely want to emphasize the fact that we are collecting feedback today to make this proposal. We don't have anything set in stone right now. As we met with individual governing body members, we did not propose a rate to them either. So they don't have any idea of what number we're going to ask for outside of the information that we've shared with you today. We want to make sure that we have lots of open communication and offer up whatever data that you all would like to see to help with these discussions and look at that implementation strategies and timeframes and how we're going to roll this out. So after tonight, we have one more meeting tomorrow night. Some of you guys were talking about that earlier, 5.30 at Garfield Community Center. We also have comments and questions that we're taking at citycommunicationsattopeka.org. We are... There's an emergency going on somewhere. We are collecting Q&A there and we also have a survey that we have put out there. We have paper copies of it in the back, a QR code as well. If you after tonight think about this some more, have some more considerations, feel free to either email your comments or questions or fill out that survey or do both and we're going to compile all of that information as well make sure the governing body has that as they consider the proposal that we end up putting in front of them.