Consultant recommends 9% water, 11% wastewater increases as North Texas pass-through costs surge

Dan Jackson, vice president of Willdan Financial Services, told the council the city faces outsized wastewater cost pressure from the North Texas Municipal Water District and large capital spending across the regional system. Jackson said NTMWD projects multi-year increases — including out-year wastewater increases in the double digits — and that those wholesale costs are largely uncontrollable pass-through expenses for McKinney.

"As North Texas increases their rate, you as a city have no choice but to pass that rate increase through to your customers," Jackson said. He recommended a rate plan that raises water charges 9% and wastewater charges 11% effective October 2026; staff showed that the typical residential bill for a 10,000-gallon water / 5,000-gallon wastewater household would rise from about $142.60 to roughly $156.70 (an increase of about $11–$14 per month for many residents).

Jackson and staff framed the increases as necessary to: (1) pay higher NTMWD charges (which the presentation said account for nearly 60% of the water and wastewater cost of service), (2) fund an expanded capital-improvement plan (McKinney has identified roughly $334 million in distribution/collection CIP, about $214M water/$119M wastewater), and (3) maintain a fund balance to protect bond ratings and cash flow during the debt issuance schedule.

Council members asked staff about the fund balance, CIP timing and how much of the higher bills are debt service versus NTMWD pass-throughs. Staff said the recommendation is intended to keep the utility self-sustaining and to phase-in increases to mitigate immediate impacts. The council did not adopt a rate at the workshop; staff said more detail and public input would follow.