Nogales council weighs large water and sewer rate increases after manager cites infrastructure shortfall

City Manager Joel Kramer told the Nogales City Council on Nov. 25 that a consultant study and recent operational changes have clarified a major funding shortfall in the city’s water and sewer enterprise and that the council must decide how to restore the system’s financial health.

Kramer said relocating planned replacement gas tanks and installing above‑ground, secured tanks reduced the immediate replacement cost by about $140,000. He said the savings enabled the city to hire external consultants (Kramer referenced a consultant engagement estimated at about $70,000) to map the water and sewer network, locate shutoff and pressure points, and identify material types; Kramer said that study would take roughly six months and produce a complete map by June.

Citing consultant findings, Kramer said the system faces a significant funding gap and that the consultants’ modeling showed a 106% rate increase would return the system to an even keel, while a smaller minimum correction of about 56% would cover sewer needs for approximately five years. Keller and councilmembers discussed alternatives including an initial larger increase followed by smaller annual increments (examples discussed included a 50% initial increase with subsequent 15% steps, or 15% year‑over‑year increases) to spread the impact on ratepayers.

Councilmembers raised equity concerns for low‑income and fixed‑income households. Kramer said the city currently offers a 30% discount for qualified low‑income accounts but that any across‑the‑board increase would still raise bills for discounted accounts. Several members asked for more detailed revenue modeling, noting the city has about 6,000 water accounts and current annual revenue of roughly $3.0 million; councilors asked staff to produce precise numbers and to consider phased options that balance infrastructure needs and customer impacts.

Council directed Kramer to return with a concrete proposal (scenario options, revenue estimates and implementation schedules) at the January meeting; Kramer said staff could bring an initial package at the next meeting if council preferred an earlier review. No rate increase was adopted at the Nov. 25 session.