A new study commissioned by the City of Morgan Hill has found that the city needs to raise its wastewater customers’ rates by 8-9% per year through 2029 in order to keep up with the system’s ongoing operating expenses and debt payments.
City officials will present and discuss the wastewater rate study at the June 26 Morgan Hill City Council meeting, which will begin at 6pm at the Council Chamber Meeting Chamber building, 17555 Peak Ave.
The Morgan Hill wastewater rate study was completed earlier this month by consultant NBS. The city retained NBS for the study in 2023.
The last time the city updated its wastewater rates was in 2019.
“The city had several objectives and goals in mind for this study including meeting revenue requirements, reviewing the rising costs of providing services, funding necessary capital improvements, and complying with certain legal requirements,” says the study’s summary. “The city’s broader objectives in this study include ensuring adequate funding for operating and capital costs, maintaining reasonable reserves, and ensuring revenue stability in utility rates.”
The study includes a detailed five-year analysis of the city’s projected expenditures and revenues—and to increase and maintain reserve fund targets—related to its wastewater service delivery. NBS concluded that in order to meet the city’s financial requirements and goals, the city will need 9% more revenue from ratepayers for fiscal years 2024-25 and 2025-26; and 8% more rate revenue for 2026 through 2029.
“With the planned rate increases, the city is projected to run a small surplus each year, which will be used to replenish reserve funds, with the intent of meeting the reserve targets,” says the report from NBS.
For 2023-24, with current wastewater rates, the city’s wastewater fund is projected to collect about $15.2 million from ratepayers.
The study includes extensive vital statistics about Morgan Hill’s wastewater services, including the total number of customers which currently stands at 13,413. The vast majority of those (about 12,500) are residential customers served by one-inch water meters.
Current monthly wastewater rates vary depending on the size of the meter serving the customer. For most customers, the monthly rate is $27.05 for accounts served by meters up to one inch.
The study’s proposed new monthly rate for those customers would rise to $38.89 as of Oct. 1, rising incrementally each year up to $53.40 by July 1, 2028.
But the study also proposes an “alternative rate structure” that relies on a fixed wastewater charge for residential customers. That rate would start at $71.89 per month (for single family homes) in October, and rise to $98.72 by July 1, 2028.
The public can attend the June 26 council discussion in person or online. Those who want to participate in the meeting remotely are required to register in advance by visiting https://bit.ly/MHCityCouncilMeeting.
