G. • CALL WORK SESSION TO ORDER - 5:30 P.M.City of Richland Hills (Tarrant County)

Discuss Utility Rate Updates for FY27

Presented in: City of Richland Hills City Council Meeting on 2026-09-14

Staff Report & Agenda Item Details

Discuss adjustments to our current water and sewer rates effective October 1, 2026, the start of FY2027. Our budget was planned around this increase. Before Council approval, we will verify the expected revenue and explain the effect on customer bills. At the same time, I recommend updating our longer-term rate plan using Waterworth. This tool will help us determine when further increases are needed for service costs and major improvements. Waterworth personnel will be giving a presentation during the work session to showcase what their tool will help us do going forward. Why We Are Reviewing the Earlier PlanCouncil approved a five-year rate plan in 2024 to help pay for daily operations, rising costs from our water and sewer providers, and replacement of aging infrastructure. We are still charging the FY2025 rates. The increases scheduled for FY2026 were not put into effect, so the proposed October adjustment would be based on what customers pay today.The earlier study also assumed we would borrow approximately $5.8 million for utility improvements during FY2025 and FY2026. By FY2027, it expected about $453,700 each year in payments on that new debt. We have not issued new bonds since 2023, so those anticipated payments have not become part of our current costs.That change gives us reason to revisit future increases. We still must operate and repair the system, purchase water, treat wastewater and repay existing debt. My goal is to match rates to the costs and projects we actually expect. Why an October Increase Is Still NeededOur adopted budget already counts on revenue from the planned increase. Even with that revenue, the Utility Fund budget calls for using approximately $145,500 from savings during FY2027.<table border="0" cellspacing="0" cellpadding="0" width="1057"><tbody><tr><td valign="top" style="width: 50%;">FY2027 Utility Fund budget</td><td valign="top" style="width: 50%;">Amount</td></tr><tr><td valign="top" style="width: 50%;">Expected revenue</td><td valign="top" style="width: 50%;">$5,896,200</td></tr><tr><td valign="top" style="width: 50%;">Planned spending</td><td valign="top" style="width: 50%;">$6,041,739</td></tr><tr><td valign="top" style="width: 50%;">Savings needed to cover the difference</td><td valign="top" style="width: 50%;">$145,539</td></tr></tbody></table> <p style=