Agenda Date: 05/12/2026
Subject:
Title
Utility Rate Study Results - Part I
Body
|
From: |
James L. Becklenberg, City Manager |
|
Prepared by: |
Ryan Germeroth, Deputy Public Works Director |
|
Presentations: |
Brent Soderlin, Director of Public Works & Utilities |
|
|
Laurie Matta, Director of Finance |
|
|
Ryan Germeroth, Deputy Public Works Director |
|
|
Todd Cristiano, Vice President Raftelis |
PURPOSE:
The purpose of this item is to provide Council with an overview of the draft financial plan and proposed revenue increases for the Utility Rate Study. The content will cover the projected costs of both the sanitary sewer and stormwater utility capital and maintenance plans. Public engagement and the timeline for the review and future rate approval will also be discussed.
LONG-TERM OUTCOME(S) SERVED:
Sustainable Community with Natural Beauty; Safe Community; High-Quality Governance
DISCUSSION:
Littleton is planning for the future with a comprehensive study to update sewer and stormwater rates. These updates are essential to funding critical repairs and maintaining the infrastructure that protects Littleton homes and businesses, public health, and the South Platte River. While our 129 miles of sanitary sewer, 53 miles of storm drains, and 30 miles of drainage ways operate 24/7, many parts of the systems are aging. Proactive upgrades will prevent service disruptions and public safety concerns by providing resilience through fiscal responsibility.
Sewer and stormwater bills directly fund essential infrastructure improvements and proactive maintenance. Over the next 10 years, the City plans to repair or replace 24 miles of sanitary sewer, work with partners to modernize the South Platte Renew wastewater treatment facility to meet federal environmental requirements and replace 15 miles of storm drains. By addressing these needs now, Littleton avoids the significantly higher costs and public safety risks associated with emergency repairs like those on Jackass Hill Road or Broadway and Lee Gulch. It also assures the City charges a fair and consistent rate to the nine water and sanitation districts that connect into the sanitary sewer system for treatment only.
Over the past few months, City staff have partnered with the staff from Raftelis to create a 10-year financial plan that accounts for the costs of the day-to-day maintenance and annual capital project needs of the sanitary and storm sewer systems. The goal is to align future bills with the actual cost of service, including upgrades to critical infrastructure and regular maintenance, and ensure the City can continue to provide reliable service. Below is a summary of the findings of the 10-year plan:
• The total capital program need for the sanitary sewer system is projected to be about $264 million over the next 10 years. About $180 million of that is needed for projects at South Platte Renew. Rate increases and tap fees would fund about $139 million in projects while about $123 million would be funded with revenue bonds and loans.
• To meet the need for the sanitary sewer program a revenue increase of 25% will be needed for 2027 and 2028 with increases dropping to 3% per year for 2029 through 2035.
• The total capital program need for the stormwater system is projected to be about $73 million over the next 10 years. The largest portion of that funding would cover stormwater pipe replacement projects. Rate increases and tap fees would fund about $50 million in projects while about $23 million would be funded with revenue bonds and loans.
• To meet the need for the stormwater sewer program a revenue increase of 60% will be needed for 2027 and 2028 with increases dropping to 5% per year for 2029 through 2035.
• The plan also includes the addition of three staff in 2027 and three staff in 2028. Four of these staff would join the Water Resources Engineering team and two would join the field operations team. These additional staff will be needed to keep up with the engineering and maintenance work needed on the system as the additional revenue is put to work.
• Even with the proposed rate increases, Littleton’s rates would still be less than many of the other comparable jurisdictions along the Front Range.
The next steps will be to complete a cost-of-service analysis for residential, multifamily, and commercial class customers. This information will then be used to create a rate structure so that each class of customers is paying their appropriate share for the cost-of-service they are receiving. Once complete, the impact to the bill for each rate paying customer will be better quantified and a rate comparison will be made to surrounding utility providers both using an across-the-board rate increase and one that is tailored to the actual use of each customer. Recommendations will also be made for billing frequency to move away from the current annual bill. Finally, tap fees will be reviewed and updated to ensure those connecting to the city system are paying their fair share for access to the existing capacity. This final information will be presented to the Council at the June 16th, 2026 meeting.
Public outreach and communication will be a part of the project over the next several months as well. The current plan is to hold two public meetings and at least one meeting with the connector districts. One of the public meetings will be virtual and the other in-person. Both will be held sometime between July and September. These meetings will inform attendees of the purpose and need of the rate study and communicate the new rate structure and any proposed changes to the frequency of billing. The feedback gathered from these meetings will be shared with Council in advance of the 2027 budget being finalized.
BACKGROUND:
To continue delivering the high-quality sewer and stormwater services Littleton customers expect and deserve, the City must periodically adjust utility rates to recover the costs of operating, maintaining, and providing these services. The City is reviewing its stormwater and sewer rates to ensure that future revenues are sufficient to operate and maintain each utility and to support the reliability and resilience of our critical infrastructure in the future.
Prior Actions or Discussions
Council approves the utility rates for stormwater and sanitary sewer each year as a part of the annual budget process. The last rate study was completed in 2020 with presentations to Council occurring at that time.
Staff provided an overview of the goals and objectives for the Utility Rate Study and gathered initial feedback at the March 10th, 2026, study session.
FISCAL IMPACTS:
The 10-year financial plan is projected to need about $264 million in capital funding for the sanitary sewer system and about $73 million in capital funding for the stormwater system. To fully fund both programs, this will require an initial revenue increase of 25% per year for 2027 and 2028 for the sanitary sewer system and 60% per year for the same two years for the stormwater system. The annual increases would then reduce to 3% and 5% per year for the remainder of the 10-year planning timeframe.
STAFF RECOMMENDATION:
N/A
ALTERNATIVES:
N/A