The Water & Sewer Advisory Board on Wednesday voted unanimously to recommend water and sewer rate increases to the Select Board in June.

After reviewing three options for each rate included in a rate study presented at the meeting, members recommended to increase water bills by 15% and sewer bills by 30% for the upcoming fiscal year that begins July 1.

Plan details financial impact of MWRA connection prep

Consultant Matt Abrahams explained that the town plans to connect to the Massachusetts Water Resources Authority system “in the very near future.”

At this time, he estimated that the project’s construction costs to be about $33 million. The financing will be phased out over two borrowing periods in 2028 and 2030.

“Once both of those borrowings are on your books, we’re projecting the total debt for those to be $2.5 million annually,” said Abrahams. “So that’s just borrowing, let alone anything else that’s going on with water.”

After the town is connected to the MWRA, the MWRA will charge an assessment fee based on the amount of water drawn from the system. He projected this to cost more than $2 million per year. This amount is determined by how much water flow the town used in comparison with the other member communities.

One key point Abrahams made was that the water budget of $3 million is expected to triple over the next five years. The projected figure for FY 31 is $9.3 million, which would include the MWRA debt and assessment fee.

Also, the 10-year capital plan calls for $65 million in investment in water projects and equipment.

La Pierre: Poor past planning led to increases

Abrahams said that Kerry Reed, the director of the Department of Public Works, has “done a good job” since she took over the department nearly three years ago.

Kyla LaPierre, the town’s chief financial officer, explained that before Reed’s leadership, “we really did a disservice to the town with the minimal increases.” Rates only went up slightly from 2017-2021. They began to jump in 2022 but skyrocketed to 40% in FY 25 before going down to 25% in FY 26.

“A lot of the capital projects just weren’t done,” LaPierre said. “And they’ve just continued to be pushed up the line. If we would have been more continuous along the way, we would have been keeping up with the infrastructure.”

Added LaPierre: “I just don’t think they realized the extent that retained earnings plays in the enterprise [fund] and the need to self-fund [it] in totality.”

For FY 27, LaPierre said the goal is to use retained earnings to fund capital projects. But because of the “significant costs” and number of projects, the town will need to borrow $13 million in FY 28.

“Revenues are still outpacing expenses at this point,” said Abrahams, “although that’s going to be changing in the future without action.”

LaPierre pointed out that she and Abrahams have focused on trying not to increase the town’s debt because of the cost of the recent school construction projects that will strain property owners financially beginning in FY 28.

She added: “Everything’s going to be hitting at the same time, which is really concerning to everybody.”

Water consumption, dry weather factor into rate changes

Abrahams pointed out that because of the rate hikes, some residents may become more conscientious about how much water they consume. LaPierre noted that the outdoor water use ban due to the ongoing drought “hopefully” will lead to decreased water consumption.

On the other hand, she said decreased usage will lead to decreased revenue without a rate increase.

Reed said the town pumped 400,000 more gallons per day in April than it had at that time last year, showing greater water use.

Some residents have ignored the water restrictions, Reed and others noted. This prompted a conversation about a potential future tiered rate structure that would charge a higher rate to residents who consume more water. Another possibility is charging higher rates in the summer.

Water rate options presented

The first water rate increase plan presented and ultimately chosen was to raise the water rate by 15% for FY 27. This would be a jump of $96.84 for the average homeowner. The five-year plan projected 15% increases for the following four years.

Abrahams noted that the Select Board will only set rates for FY 27 in June. The projections he provided show the financial landscape moving forward due to the school and MWRA projects.

The second option would increase the rate by 10% for FY 27, leading to a $64.99 increase for the average homeowner. The rate would increase to 12.5% in FY 28 and then stabilize to 20% for the next three years.

The third scenario would up the FY 27 rate by 7%, increasing the average homeowner’s bill by $45.51. FY 28’s rate would be a 10% increase. The following three years called for a 20% jump per year.

“Given that this will be a difficult thing for the Select Board to swallow, I would vote for the first plan,” said chair Paul Gallagher.

The other members agreed. Donald Sutherland noted that it “gives certainty in an uncertain world.”

Sewer rate plans reviewed

The sewer rate discussion was less detailed. Abrahams noted that the town has an agreement with Westborough in which it sends some of its sewer flow there. Hopkinton equipment is used on Westborough land, Reed explained.

Because Westborough is planning capital improvements to the system, $60,000 of the cost of the $12.5 million project will be borne annually by Hopkinton beginning in FY 28.

While the budget will not increase significantly on the sewer side, Abrahams said that revenue is not keeping up with expenses. There are multiple sewer capital projects on the horizon that must be funded.

The first plan would raise sewer rates by 30% in FY 27. This would raise the average homeowner’s sewer bill by $279.83. The rate increase over the following three years would be 10%. FY 31’s increase would be 5%.

The second option, which Abrahams did not recommend, would raise the sewer rate by 20% for FY 27, costing residents an extra $186.52. Then the rates would go up by 20%, 10%, 10% and 7.5% in subsequent fiscal years.

The third proposal would raise the sewer rates by 15%, 25%, 15%, 5% and 5% over the respective fiscal years. The price jump for the average resident in 2027 would be $139.93.

Reed said the staff is recommending the first option because “it most closely aligns” with the policy to build retained earnings.

Sutherland called it “a bitter pill.” But all members agreed it was a necessary move to build up a rainy day fund for emergencies.

Other agenda items tabled

Because the one-hour meeting spanned more than two hours, Gallagher requested that the remaining agenda items be tabled. The board approved this measure unanimously. Topics include the drought status, water quality concerns and the proposed MWRA connection.