Committee flags reclaimed-water maintenance gaps and fund shortfall; fee study to follow

Devin Schmidt, finance director, told the committee the reclaimed-water enterprise fund shows an operating expense forecast that exceeds revenues absent general fund transfers. Schmidt presented options including an emergency bridge loan for operations while the city addresses capital needs.

Why it matters: Committee members and staff said the reclaimed-water fund has a structural shortfall that could require fee increases or transfers from other funds; the committee requested data to understand how many customers use reclaimed water and what a per-user shortfall would mean.

Staff described two recurring capital/maintenance needs: annual lateral pipe replacement and the installation of pig ports to enable internal cleaning. A committee member said the system has lost original pig ports “due to infrastructure changes, development, and lack of maintenance.” Staff said pig port installation allows maintenance that the system currently lacks.

Schmidt explained the city has been subsidizing the reclaimed-water fund with a general fund transfer and is pursuing an “emergency bridge loan that is specifically for operations only” to cover shortfalls while the fee study is completed. The fee study, which staff said is tracking toward a July timeline for a preliminary version, will present enterprise fee proposals, parking enterprise conversion, and development/impact fee recommendations.

Committee members asked for reclaimed-water connection statistics and per-user cost estimates. One member noted, “If we charge more for reclaimed water, I'm afraid that a lot of people reduce their water and the yards will not look nice,” signaling concern about equity and behavioral responses if fees rise.

Next steps: Staff will provide reclaimed-water connection statistics, projected per-user impacts, and fee-study timeline details at the next committee meeting and will outline bridge-loan parameters if staff can secure one for operations.