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Home My WebLink About04/21/2026 09.E. Resolution amend master fee schedule_irrigation rates 2026-2031 r 'V ii _�ii •• i i t, gin.;—* _1a _- '^ BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 9.E. For Meeting of: April 21, 2026 ITEM TITLE: Resolution amending the Master Fee Schedule setting Irrigation Rates for 2026-2031 SUBMITTED BY: Scott Schafer, Public Works Director * Daniel Tiliano, Water/Irrigation Manager SUMMARY EXPLANATION: City staff had FCS Group prepare proposed rate adjustments for the City's Irrigation Water utility for 2026-2031. This is to ensure both operations and capital projects are properly funded such as the Nelson Diversion project. In developing and setting rates, it is important to base them on actual costs to ensure the rate structure for both Operational and Capital funds properly supports the cost of providing this essential service, but is also fair and equitable to the users. The principal objective of the rate design stage is to implement irrigation structures that collect the appropriate level of revenue. The Irrigation Rate is composed of two components Operation & Maintenance (O&M), and Capital Improvement Project (CIP). On November 18, 2025, FCS Group presented to City Council the following proposed rates for 2026- 2031: • The O&M charge to be increased 8.25% in 2026, 6.5% in 2027 and 2028 and then an annual 3°/0 inflationary increase is added for 2029—2031. • The CIP charge is not altered in 2026, but an annual 3°/o inflationary increase is added for 2027— 2031. A resolution adopting the rates is required by an amendment to the Master Fee Schedule. ITEM BUDGETED: No STRATEGIC PRIORITY 24-25: A Resilient Yakima RECOMMENDATION: Adopt Resolution. ATTACHMENTS: Irrigation Rate Resolution Final.docx Irrigation_Water_Rate_Study_Final 101 RESOLUTION NO. 2026- A RESOLUTION amending the Master Fee Schedule regarding annual rates and charges for irrigation rates for Operation and Maintenance and Capital Improvement Plan WHEREAS, the City wishes to amend the annual rates and charges for irrigation, including both operation and maintenance (O&M) charges and the capital improvement plan (CIP) charge to the Master Fee Schedule; and WHEREAS, the amendments do not alter the CIP rates for 2026; and WHEREAS, the City finds that a 3.00% irrigation rate increase each year for the years 2027-2031 is necessary to address increases in costs associated with operation, maintenance and capital improvements to the City's irrigation water system and facilities; and WHEREAS, the City Council finds and determines it is in the best interest of the City of Yakima and its residents to amend the Master Fee Schedule to increase the irrigation rates 3% each year for the years 2027-2031; now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: Section 1. The rates for irrigation water service authorized by YMC7.24, are hereby amended to state as follows in the City of Yakima Master Fee Schedule: Operation and maintenance charge x total square footage (annual fee, billed in 6 payments) O&M Rate 2026 2027 2028 2029 2030 2031 Rate per $0.0283 $0.0301 $0.0320 $0.0330 $0.0340 $0.0350 Square Foot Percentage 8.25% 6.50% 6.50% 3.00% 3.00% 3.00% increase 102 Capital improvement program charge x total square footage annual fee, billed in 6 payments). CIP Rate 2026 2027 2028 2029 2030 2031 Rate per $0.0206 $0.0212 $0.0219 $0.0225 $0.0232 $0.0239 Square Foot Percent 4.75% 3.00% 3.00% 3.00% 3.00% 3.00% increase Section 2. This Resolution will take effect immediately upon passage. ADOPTED BY THE CITY COUNCIL on this 21ST day of April 2026. Matt Brown, Mayor ATTEST: Rosalinda Ibarra, City Clerk 103 _,---- 0 r �r iii ii • 1i Irrigation Water Rate Study !j.i lii /17 ,• $QZ >FCS Slide 104 Irrigation Rate Structure Category/Description 2025 2026 Irrigation Operation and maintenance charge x total square footage (annual tee, billed S0.0261 $0.0269 in 6 payments) Capital improvement program charge x total square footage $0.0197 $0.0206 (annual fee, billed in 6 payments) 2019-2025 • Two components based on total square footage Adjustment • Operations & Maintenance (O&M): recovers ongoing operating cost O&M: 9.2% • Capital Improvement Program (CIP): recovers capital costs and debt CIP: 3.2% p p g ( ) p Inflation: 22.6% • Annual cost calculated with above rates and billed over six billing periods 105 Introduction to Utility Rate Making • Utility rates are set to recover cost of providing service • All utilities are self-supporting • Operating costs (regular / ongoing) Hypothetical Example • Employee salaries and benefits O&M Charge • Supplies and materials • Routine inspections and maintenance • Fleet replacement contributions • Interfund charges for services 1114 • Capital costs Year1 Year2 Year3 Year4 Years • Infrastructure replacement CIP Charge • Facility upgrades Operating Capital • Debt service from previous capital projects 106 O&M Revenue and Expense Forecast — Current Rates � $3.5 2031 c 2025 Deficiency: Deficiency: ($650,000) $3.0 ($90,000) $2.5 $2.0 d $1 .5 $1 .0 $0.5 I : $- 2025 2026 2027 2028 2029 2030 2031 Operating & Maintenance —Revenue @ 2025 Rates 107 Fund Balance (without rate adjustments)) . $1 .0 C 0 ._ _, • • • • . • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • . • • • • • • • . • • • . • • • • • • f $0.5 $- 2025 2026 2027 2028 2029 2030 2031 $(0.5) $(1 .0) Without rate adjustment, $(1 .5) Irrigation O&M fund balance is negative by end of 2027 $(2.0) $(2.5) No Rate Adjustment — 60 day of O&M • • • 90 day of O&M 108 Rate Adjustment Recommendation Scenario 2026* 2027 2028 2029 2030 2031 1-Year 15.50% 3.00% 3.00% 3.00% 3.00% 3.00% 2-Years 9.50% 9.50% 3.00% 3.00% 3.00% 3.00% 3-Years 8.25% 6.50% 6.50% 3.00% 3.00% 3.00% • O&M fund balance allows for utility to phase in rates options • All scenarios reach and then maintain revenue sufficiency • 2026 rate increase would replace currently adopted rate 109 EndingFund Balance Scenario $1 .6 0 0 Funds in excess of 90 day $1 .4 target can be transferred to capital needs $1 .2 1 $1 .0 $0.8 1---• ; . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • . • . . • . • . . . . • . . • • • • . . • . . • • . . so.4 !ii. - - -, -, MID I OM =ID AL MO Mli SIM MINI MEI ME $0.2 $- 2025 2026 2027 2028 2029 2030 2031 1 -Year 2-Years 3-Years 60 day of O&M • • • 90 day of O&M 110 Phase 2A $5.4m is 2025-2026 spending Irrigation Capital Needs N 300k to be funded by utility $5.0 Phase2B 0 $4.5 Grant dependent, would only proceed if funded $4.0 100% through grants $3.5 Phase 2C $3.0 Grant dependent, would $2.5 only proceed if funded I. 100% through grants $2.0 $1.5 $1.0 $0.5 $- 2025 2026 2027 2028 ■ Phase 2A Phase 2B ■ Phase 2C 111 CIP Charge Revenue and Expense Forecast — Current Rates $3.0 2025 Deficiency: $960,000 c Covered by fund balance 0 $2.5 Current Rates allow for additional capital spending of $200k - $1 .45m from years 2026-2028 as interfund loans are repaid $2.0 1 .5 . ' $1 .0 $0.5 $- 2025 2026 2027 2028 m Interfund City Charges Debt Service Utility Funded Nelson Dam Capital Available for Additional Capital 112 Revenue @ 2025 Rates Rate Adjustment Scenarios • Rates forecasted to be sufficient at current levels • Maintain adopted increase in 2026, followed by no increases through forecast period • $1 .5m annually available for capital from 2028-2031 • City has adopted a 4.57% increase for 2026 • Maintain the adopted rate and increasing with inflation allows for additional capital to be completed within the utility • $1 .7m annually available for capital from 2028-2031 Scenario 111 2026 2027 I 2028 2029 2030 2031 No Adjustment Beyond 2026 4.57% 0.00% 0.00% 0.00% 0.00% 0.00% Adopted and Inflation 4.57% 3.00% 3.00% 3.00% 3.00% 3.00% 113 Rate Forecast Option per Total Square Foot O&M Rate Scenario 2026 2027 1 2028 2029 2030 2031 1-Year $0.0301 $0.0310 $0.0320 $0.0329 $0.0339 $0.0349 2-Years $0.0286 $0.0313 $0.0322 $0.0332 $0.0342 $0.0352 3-Years $0.0283 1 $0.0301 $0.0320 J $0.0330 $0.0340 L $0.0350 CIP Rate Scenario I 2026 2027 2028 2029 2030 2031 No Adjustment $0.0206 $0.0206 $0.0206 $0.0206 $0.0206 $0.0206 Adopted and Inflation $0.0206 $0.0212 $0.0219 $0.0225 $0.0232 $0.0239 114 Y Sample Bimonthl Bill - 8000TotalSquare Feet � O&M Rate Scenario 2025 2026 2027 2028 2029 2030 2031 1-Year $34.80 $40.19 $41 .40 $42.64 $43.92 $45.24 $46.60 2-Years $34.80 $38.11 $41 .73 $42.98 $44.27 $45.60 $46.96 3-Years $34.80 $37.67 $40.12 $42.73 $44.01 $45.33 $46.69 CIP Rate Scenario 2025 2026 2027 2028 2029 2030 2031 No Adjustment $27.47 $27.47 $27.47 $27.47 $27.47 $27.47 $27.47 Adopted and Inflation $26.27 $27.47 $28.29 $29.14 $30.01 $30.91 $31 .84 115 YBill -Sam le of Bimonthl 8 000TotalSquare Feet p � Sample Total Bill I 2025 2026 2027 2028 2029 2030 2031 O&M - 3-Year $34.80 $36.67 $40.12 $42.73 $44.01 $45.33 $46.69 CIP -Adopted + 3% $26.27 $27.47 $28.29 $29.14 $30.01 $30.91 $31 .84 Total $61 .07 $64.14 $68.41 $71 .87 $74.02 $76.24 $78.53 $ Change $3.07 $4.27 $3.46 $2. 15 $2.22 $2.29 % Change 5.0% 6. 7% 5.0% 3.0% 3.0% 3.0% 116 Summary ) ) 117 • • . Irrigation Water - Revenue Needs •• • O&M Charge: 1 -Year Adjustment 15.5% in 2026; 3% annually 2-Year Adjustment 9.5% in 2026-27; 3% annually 3-Year Adjustment 8.25% in 2026, 6.5% in 2027-28; 3% annually • CIP Charge: No rate adjustment beyond 2026 Maintain adopted 2026 rate and inflationary increase from 2027-2031 Slide 1 118 a Bowmen company